"Public markets have a huge demand for publicly listed assets in the cryptocurrency space."

Compiled & Edited by: Deep Tide TechFlow

Guest: Dan Morehead, Founder of Pantera Capital

Host: Jason

Podcast Source: Empire

Original Title: Phase II of The Bull Market | Dan Morehead

Broadcast Date: September 22, 2025

Key Points Summary

This week, Dan Morehead joined the show to share his views on the current market conditions and to look ahead at the trends in the cryptocurrency space from 2025 to 2026. In the episode, we delved into how Dan built confidence in cryptocurrency as an asset class in 2013, whether the four-year cycle still applies, financial instruments in the cryptocurrency space, Dan's investment theory regarding Solana, and other exciting topics. Tune in!

Highlights of Insights

• We have been selling Bitcoin to invest in other projects. Our investors have also received good returns as a result. Currently, we still hold about $1 billion worth of Bitcoin.

• Bitcoin does not have a strong correlation with traditional risk assets; we are in a multi-decade bull market for cryptocurrency.

• Bitcoin is not a bubble; most people have not really entered this space yet, and we are still in the early stages of industry development.

• Many altcoins have not performed as expected. The current market focus remains on the three major coins: Bitcoin, Ethereum, and Solana.

• The Federal Reserve should not only refrain from cutting interest rates but should even consider raising them further.

• It is not impossible for the dollar to be replaced. This process may take 10 to 20 years and will not happen in the short term. Over the next decade, some countries will gradually incorporate Bitcoin into their reserve assets.

• The higher the interest rates, the higher the cost for the government to borrow. The only way to hedge against future risks is to invest in hard assets like Bitcoin.

• In the blockchain space, Pantera's investment success rate has reached 86%. Among the companies Pantera has invested in, 25 have become unicorns.

• Past cycles have been very consistent, always featuring two years of bull markets followed by two years of bear markets. Therefore, we usually advise founders to ensure they have a two-year cash reserve to weather the bear market.

• Public markets have a huge demand for publicly listed assets in the cryptocurrency space. The returns on Bitcoin and this generation of cryptocurrency assets are astonishing, with almost no other assets able to compare.

• Solana DATS, even if it performs modestly and trades close to par, can still provide about 7% returns through staking, which is far more attractive than traditional ETFs.

• Currently, our investment in Solana has reached $1.3 billion. Solana's market cap is currently only 5% of Bitcoin's, but in the long run, we believe it has the potential to surpass Bitcoin.

• Age is not the only factor determining success; what truly matters is the founder's capability and deep understanding of the industry.

Sharing Early Investment Experiences in Bitcoin

Jason:

I've heard many different stories, like how you advised Mike to buy his first Bitcoin, or he advised you, or someone got Lubin involved in their first investment. Can you tell us what the original story was?

Dan:

I first came across Bitcoin through Peter Berger, who asked me if I wanted to chat about it. I had actually heard about Bitcoin back in 2011, introduced to me by my brother John. At that time, Gavin Andresen had developed a website called "bitcoin-faucet," where users could claim free Bitcoin. Almost no one knew about Bitcoin back then; you just had to log onto the site to claim it. I was very interested in the idea of libertarianism, so I thought it was cool to see this content and hoped it would succeed, but I didn't take any real action. Later, I had coffee with Pete, Mike, and a few of their colleagues, and that conversation lasted a full five hours. I found the concept of Bitcoin to be so mind-blowing; it was the coolest thing I had ever seen. They even set up a space for me in the office to focus on researching this field. From that day on, March 12, 2013, I fully immersed myself in the world of cryptocurrency and never looked back at other investment directions.

Jason:

I found an email you wrote in July 2013, stating: "The predicted Bitcoin correction is happening soon. Bitcoin is now trading at $65, exactly half of what it was during our first meeting. I think we should actively buy now. I will personally buy 30,000 Bitcoins this weekend. The fund can choose whether to participate in this purchase; I just want to be involved." Dan, can you tell us what the situation was like at that time?

Dan:

At that time, everyone really thought I was crazy. No one wanted to invest. I sent that email, but almost no one responded. Before that, I had a very traditional career, working in hedge funds and Tiger Management, where everything was very stable and predictable. So suddenly shifting to what seemed like a sci-fi tech project was indeed hard for many people to understand. When I sent the email, the response was lukewarm, and no one wanted to invest. So I decided to buy Bitcoin myself. The market was very small back then, and liquidity was poor. We originally planned to launch this project under the Fortress brand, but it was vetoed by the board at the last minute. So we had to set up independent accounts and funds because the preparations were already in place.

In the end, I wired money to two exchanges to start buying Bitcoin. One was Bitstamp in Slovenia, and the other was a startup called Coinbase with only one employee. When I tried to buy, the system showed my trading limit was $50. I was working on Wall Street at the time, where limits were usually in the millions, not just $50. So I emailed them to request a higher limit. I said, "I just wired $2 million; please adjust my limit." Four days later, their only employee, Olaf, replied, "Okay, now the limit is $300." At that limit, I could only trade $300 a day, which would take seven years to complete the transaction!

Jason:

I think many people, especially those who entered the industry in 2020, like those who experienced the 2020 DeFi summer, may not know how the early cryptocurrency industry gradually built its infrastructure, such as custody services, exchanges, and so on.

Dan:

Yes, it was indeed very chaotic in the early days. I remember we owned 2% of the world's Bitcoin. There were no professional custody services back then; Coinbase hadn't been established yet, and the largest custodian was Mt. Gox. So I had to memorize a lot of Bitcoin private keys myself.

But we have been selling Bitcoin to invest in other projects. Our investors have also received good returns as a result. Currently, we still hold about $1 billion worth of Bitcoin.

Dan's Macroeconomic Predictions for 2025

Jason:

Before diving into Pantera Fund and investments, I want to talk about the macroeconomy first. You discussed macroeconomics and Federal Reserve policies with my co-founder Mike and Dan Tapiero at Permissionless 2024. At that time, you mentioned concerns about the Federal Reserve, especially in December 2021, when you predicted that interest rates would rise from zero to 5% and remain at that level for a long time.

Now the Federal Reserve has just started to cut interest rates. What is your view on the current macroeconomy? How does the situation of Bitcoin in 2025 compare to when you invested heavily in Bitcoin in 2013?

Dan:

Regarding the Federal Reserve, I remember in December 2021, the federal funds rate was zero, the ten-year Treasury yield was only 1.3%, and inflation was as high as 8%, which seemed completely unreasonable to me.

Therefore, since 2013, aside from investing in cryptocurrency, the only trade I made was shorting. At that time, I predicted that both the Federal Reserve's fund rate and the ten-year Treasury yield would rise to 5% (the bond market might see price declines), and I believed they would remain at that level for a long time. Now, I still think these rates should stay high.

Currently, the inflation rate is 3%, and the unemployment rate is at a historical low. It is very unwise for the Federal Reserve to choose to cut interest rates. In fact, a 3% inflation rate means that money will depreciate by 90% over a person's lifetime, which is devastating for the economy. So I believe the Federal Reserve should not only refrain from cutting interest rates but should even consider raising them further. Especially since inflation has a significant impact on housing prices, the younger generation is particularly affected. To stabilize the economy, the Federal Reserve should maintain high interest rates.

Jason:

Speaking of housing, I heard you mention that the Federal Reserve injecting trillions of dollars into the mortgage market is one of the biggest policy mistakes in history. How do you think we should address this issue?

Dan:

Frankly, the Federal Reserve's purchase of $9 trillion in mortgages was indeed a major mistake. They artificially pushed mortgage rates down to 2.5%, creating an environment of low rates that almost "forced" people to buy homes, as the cost of buying a home significantly decreased, making it very attractive. As a result, many people did choose to buy homes during this period. The issuance of mortgages surged by 200% in 2020 and 2021. This policy led to the expansion of the Federal Reserve's balance sheet while also driving up national housing prices by as much as 40%. This is very unfair to the younger generation, especially the 35% of Americans who do not yet own homes. This is also why cryptocurrency is popular among young people; it is not only an investment but also a tool to combat these policy mistakes. Additionally, the U.S. government is operating with a budget deficit of $2 trillion annually, which is overly loose fiscal policy that further exacerbates economic instability.

Jason:

Do you think we can escape this predicament? The interest expenditure in the U.S. has already surpassed military spending.

Dan:

To be honest, I'm not sure how to solve this problem. This situation has created a vicious cycle: the higher the interest rates, the higher the cost for the government to borrow. I believe the only way to hedge against future risks is to invest in hard assets like Bitcoin.

Jason:

What are your thoughts on the possibility of Bitcoin becoming a global reserve currency? Currently, Bitcoin has a certain status as an asset, but the dollar remains the primary global currency. How do you see Bitcoin's position on this spectrum?

Dan:

History tells us that global reserve currencies change every 80 to 100 years. This has been the case from the Portuguese cruzado to the pound, and then to the dollar. So it is not impossible for the dollar to be replaced. I believe this process may take 10 to 20 years and will not happen in the short term.

However, we are already seeing some signs, such as the U.S. and Wyoming starting to establish strategic Bitcoin reserves, and the UAE and other Gulf countries considering similar initiatives. Particularly, countries closely allied with the U.S. often peg their currencies to the dollar. Countries like China and Russia may gradually shift part of their reserves to Bitcoin as they realize the risks of holding large amounts of U.S. Treasury bonds. For example, China holds $1 trillion in U.S. Treasury bonds, which the U.S. could effectively cancel at any time, posing a significant threat to China. Therefore, I believe in the next decade, some countries will gradually incorporate Bitcoin into their reserve assets.

Jason:

I think this process could be faster. Look at the trend of gold; central banks are driving the gold rush. If this trend shifts to digital assets, what changes do you foresee in the macroeconomy in the coming months?

Dan:

I believe the risks in the bond and currency markets remain high due to persistent inflation and overly loose fiscal policies. While the dollar is still strong, it has begun to weaken. Additionally, events like Terra have impacted confidence in the dollar. As a reserve currency, the dollar needs stability and predictability, and the more such events occur, the more people tend to seek alternatives like gold and Bitcoin.

Is the Four-Year Cycle Still Applicable?

Jason:

What are your thoughts on the halving and the four-year cycle, as well as Bitcoin's relationship with traditional risk assets? Over the past decade, there has been a certain correlation between Bitcoin and risk assets; do you think this will change?

Dan:

I believe the correlation between Bitcoin and traditional risk assets is not strong. In the 13 years of managing Bitcoin investments, Bitcoin, as a representative of the cryptocurrency industry, has had a correlation of only 0.17 with the S&P 500 index. This indicates that the correlation between Bitcoin and traditional risk assets is very low. However, in 2022, there was a period when Bitcoin's correlation soared to 0.76, which was an extremely rare phenomenon. At that time, there was a lot of excessive leverage in the market, with many hedge funds, as well as platforms like Celsius and BlockFi, and the liquidation of FTX all happening simultaneously. Additionally, this was related to a phenomenon similar to "tech stock investing," where Ark Invest held Bitcoin, Tesla, and other assets simultaneously, leading to a higher correlation in the short term. However, this situation has largely disappeared, and Bitcoin has returned to a low correlation with risk assets.

I believe we are in a multi-decade bull market for cryptocurrency, although there will be some cyclical fluctuations along the way. For example, if the S&P 500 were to drop 30% tomorrow, Bitcoin might not rise either. So in the short term, Bitcoin will indeed be influenced by traditional markets, but in the long run, they are not directly related. The reason many risk assets show high correlation is not because they are inherently connected, but because investors' asset allocations tend to converge. In the 1980s, when I first started trading bonds, the bond market was an independent field, and I didn't care at all about the performance of stocks or other assets. However, with the success of modern portfolio theory, investors' asset allocations have gradually converged, leading to increased correlation between assets.

Interestingly, most institutional investors currently have a weight of 0 in cryptocurrency and blockchain investments. This means that cryptocurrency has not yet entered the asset allocation of mainstream institutional investors, which is also why it has a lower correlation with traditional risk assets.

Jason:

What about the supply shock of the four-year cycle? Your team has been publicly publishing excellent market analysis letters for years, and I noticed you still use traditional indicators like the four-year cycle and halving in your analysis, which have indeed proven accurate. What are your thoughts on the concept of the four-year cycle?

Dan:

I strongly believe in the four-year cycle. We have experienced three halvings in this industry, each following a very predictable pattern. I remember a professor in college wrote a book called "A Random Walk Down Wall Street," which mentioned that markets are efficient. But Warren Buffett once said that markets are usually efficient, but the difference between "usually" and "always" is worth $80 billion to him.

While everyone knows that halving will occur on a certain date, when it actually happens, the number of Bitcoins miners sell daily will be cut in half. If demand remains stable while supply decreases, prices will naturally rise. During the first halving, we studied the total existing Bitcoin supply and the impact of halving on issuance. The impact of that halving was very significant, equivalent to a 15% reduction in supply, as there were only about 12 million Bitcoins in circulation at that time. Over time, the impact of each halving will gradually diminish as the total circulating Bitcoin supply increases, and the proportion of the reduction in new supply from halving becomes smaller. By 2035 or 2040, the impact of halving may only be 35% to 40% of the previous one. For example, a few years ago, when Bitcoin was priced around $17,000, we recalculated the halving data and predicted that Bitcoin would reach $118,542 on August 11, 2025. It actually reached that price, just a day early, on August 10. I really liked that outcome because it completely aligned with our prediction. So, I do believe in the four-year cycle.

Jason:

If someone missed it, your prediction in November 2022 was that Bitcoin would reach $117,482 on August 11, 2025, and it was only a day off?

Dan:

Yes, it reached that on August 10. So I do believe in the four-year cycle. However, it is important to note that the impact of each cycle is only 35% to 40% of the previous cycle. Therefore, the fluctuations in the next cycle will be more subdued. In another 20 years, there may only be minor fluctuations.

Jason:

According to the cycle theory, December 2017 was a peak, and November 2021 was another peak. Now some say the market looks a bit overheated, driven by positive regulation, somewhat like the ICO bubble period. Do you think this is the end of the four-year cycle?

Dan:

An investor once praised us for accurately predicting price points, but he asked if that meant prices would start to decline from today. According to past cycles, this could indeed be a peak, followed by about two years of a bear market. However, the most dangerous phrase in investing is "this time is different." But I do believe the regulatory environment in the U.S. has changed dramatically, which could extend the cycle for a longer period, perhaps six months to a year. Therefore, I do think the regulatory changes in the U.S. could prolong this cycle.

Jason:

What do you think the next bear market will look like? Many founders may be concerned about this, such as when to reduce business risks, implement hiring freezes, or how to manage their companies during a bear market. What are your thoughts on the intensity of the next bear market?

Dan:

Past cycles have been very consistent, always featuring two years of bull markets and two years of bear markets. Therefore, we usually advise founders to ensure they have a two-year cash reserve to weather the bear market. As more people invest in cryptocurrency, market fluctuations will become more subdued. Early market conditions, like those in 2013, saw a tenfold increase in three to six months, which was astonishing. But then the market dropped 85%, and this has happened three times. My prediction is that the next bear market will not be as severe, but I said the same thing last time, and it still happened.

Jason:

The bear market in 2022 did not drop 85%, right?

Dan:

Yes, although Bitcoin fell from $70,000 to $15,000, which was indeed a significant drop. Our market is always full of speculation, and people start to believe their own hype. Former CFTC Chairman Christopher Giancarlo reminded me that the peak in 2017 was precisely on the day futures were launched. Then the market began to decline, ultimately dropping 85%. The peak in 2021 was on the day Coinbase went public. After the listing, the market began to decline, and it also dropped 85%.

Jason:

What do you think the "Coinbase listing moment" of this cycle is?

Dan:

That's a good question. The Coinbase listing did not bring any new funds into the market; it simply transitioned from a private company to a public one. The current situation is different, as many IPOs and bonds have indeed injected funds into the cryptocurrency space, which is a permanent driving force. Therefore, I remain optimistic about the market performance in the next six to twelve months. We try to stay honest and look for signs of the market reaching a peak, but we haven't seen that yet. Additionally, you mentioned that bonds might be like ICOs; I believe we are still in the early stages of the bond concept, and the market has a long way to go.

Jason:

By the way, I actually don't think bonds are like ICOs. I just think they are the eye-catching thing in this cycle. As someone who has almost bet their career on cryptocurrency, how would you respond to signs of a market bubble? For example, in July 2026, if you see signs of a market bubble, how would you adjust your positions? Even if you don't want to sell Bitcoin, you might feel the market is overheated. How do you balance these two conflicting thoughts?

Dan:

We have always tried to capture these cycles and return funds to our LPs (limited partners) at the right time. In our venture capital fund, we can choose when to sell assets and return funds. Therefore, our current view is that in the next six to twelve months, we will reduce risk at the peak of the cycle and return funds to LPs. This is a good goal, but it's easier said than done.

The Second Phase of the Bull Market: Opportunities and Challenges

Jason:

You recently published an article discussing the second phase of the bull market cycle. The article mentions a widely recognized view in the industry that Bitcoin typically leads the charge in the early stages of a bull market, followed by a gradual rotation of funds into other mainstream coins. We have already seen funds flowing from Bitcoin to Ethereum, and now Solana has become the market's focus. In your view, what characteristics will the second phase of this bull market present?

Dan:

From historical experience, Bitcoin often dominates the first half of the bull market, while other coins gradually catch up in the later stages. As you mentioned, Bitcoin's market share reached a peak about 6 to 8 weeks ago, followed by significant gains for Ethereum, and now it's Solana's turn to shine.

However, I am somewhat surprised that many smaller coins have not performed as expected. Theoretically, the SEC's policy adjustments should be more favorable for non-Bitcoin assets. After all, in the previous regulatory environment, Bitcoin was seen as a "safe haven," while coins like XRP faced strict scrutiny from the SEC. Therefore, I initially thought these smaller coins would perform better after the policy changes, but in reality, the current market hotspots are still concentrated on Bitcoin, Ethereum, and Solana.

Jason:

I remember Jeff Dorman from Arca did a categorical analysis of this year's market performance. He mentioned that the assets performing well this year can be divided into several categories: the first category includes tokens supported by ETFs (Exchange-Traded Funds) or bonds, such as Bitcoin, Ethereum, and Solana; the second category consists of cryptocurrency-related stocks, like Circle, Galaxy, and Coinbase; the third category includes coins closely related to the U.S. government, such as XRP and LINK; and the final category consists of companies with strong profitability that return earnings to token holders, like Hyperliquid and Pump. In addition, mainstream coins have also performed well. He also noted that the market differentiation this time is more pronounced than ever before.

Dan:

The point you mentioned is very important. The assets currently performing well in the market are those with publicly traded channels, such as tokens supported by ETFs or companies like Figure and Circle that have gone public. This indicates that the tradability of public markets is becoming a key factor driving the value growth of these assets.

The Cryptocurrency IPO Window Has Opened

Jason:

Let's talk about the public market. This can be divided into two main topics: one is bonds, and the other is cryptocurrency IPOs. I'm curious about your thoughts. Recently, it seems that any company that can go public attracts a lot of investment; what do you think about this phenomenon?

Dan:

My understanding is that many companies have been preparing for an IPO over the past few years but have been stuck in the pipeline for various reasons, and now they are finally starting to burst forth. For example, Circle attempted to go public a few years ago and finally succeeded this year. There’s also Figure, and companies like Bitgo are also expected to go public soon. I believe that there is a huge demand in the public market for publicly listed assets in the cryptocurrency space. The returns on Bitcoin and this generation of cryptocurrency assets are astonishing, and there are almost no other assets that can compare. Now, investors can finally purchase these assets in the public market. I think getting cryptocurrency companies into the S&P 500 is a very important milestone. Index investors (amounting to trillions of dollars) now have to hold positions in the cryptocurrency space. If you benchmark against the S&P 500, you need to have a clear investment strategy for cryptocurrency-related companies. This trend forces investors to make choices and engage in this field.

Jason:

Which companies might go public next? I know you already have four companies that have successfully gone public. I tried to recall, like Circle, Figure, Amber, and there might be one I temporarily forgot, but at least these three have completed their IPOs. What do you think about the companies that might go public next?

Dan:

I think this is a positive signal for the entire industry. Clearly, there is currently a very strong demand in the market for publicly listed cryptocurrency companies. So I hope the companies you mentioned can successfully go public, as I believe this will be very beneficial for the industry's development. For example, Ripple Labs is also a potential candidate. While it is difficult to predict exactly who will go public, I believe that most of the companies you mentioned are likely to complete their IPOs within the next 12 months.

Analysis of Financial Management Tools for Cryptocurrencies

Jason:

As always, investing in blockchain technology comes with risks. Speaking of DATs (Digital Asset Treasury), you may be one of the institutions managing the most DATS capital globally.

Dan:

Currently, we manage about $1 billion in DATS capital. This summer, we launched a dedicated DATS fund and entered the market with two DATS projects. One is Helius, which is Solana's DATS, and I temporarily forgot the name of the other project.

Jason:

It sounds like you are very optimistic about these DATS projects. Can you share their investment logic?

Dan:

Everything revolves around creating opportunities for investors. Back in 2013, we provided investors with the first opportunity to invest in Bitcoin because it was very difficult to acquire and store Bitcoin at that time. The emergence of DATS can be seen as the next evolution of this investment opportunity. In the past, our fund had a minimum investment of $1 million, and most investors also needed to meet the SEC's accredited investor standards, which was too high a barrier for many. DATS lowers the participation threshold, allowing anyone with a brokerage account to invest.

Our average transaction amount for DATS is $1,000, which is 1,000 times smaller than the average amount for traditional fund investors. This approach allows more people to enter the market, truly achieving financial inclusion. More importantly, DATS can also increase the number of tokens per share. For example, in the case of Bitcoin, the number of tokens per share increased by 76% last year and grew by about 30% this year. Even in the worst-case scenario, DATS can provide returns similar to ETFs. For instance, Solana DATS, even if it performs mediocrely and trades close to par, can still provide about 7% returns through staking, which is far more attractive than traditional ETFs.

Jason:

A few days ago, we spoke with Kyle Simone, and their plan is to reinvest capital into the on-chain ecosystem. Their idea is to arbitrage the interest rate differential between on-chain and off-chain, such as borrowing from banks at 6% or 7% and then moving it to Solana to earn 14%, thus achieving about 7% net profit. What do you think of this arbitrage method? Or have you considered moving capital on-chain?

Dan:

From our perspective, our advantage lies in acquiring Solana tokens at prices below the spot market, such as trading with large holders who lock blocks. We used this strategy in the early stages of our Bitcoin fund and achieved good results. At that time, our Bitcoin fund even outperformed Bitcoin itself because we could purchase large amounts of assets at discounted prices. Companies like Expedia had no place to sell Bitcoin, and there were no exchanges, so we seized the opportunity to buy at low prices. Now, we hope to use a similar method to purchase tokens at prices below the spot market to add value to Helius DATS. If we can time the trades well, we can attract more capital, creating a virtuous cycle.

Jason:

So is Helius the first DATS project you launched?

Dan:

Yes, we place great importance on this project. We spent several months executing this plan. If in the next four to five months we find another ecosystem with similar opportunities, we will consider launching a new DATS, but nothing is confirmed yet.

Jason:

Have you considered tokenizing your fund?

Dan:

Indeed, some have suggested it, but I am very cautious about it. Our products are essentially securities, and if we tokenize, it would involve SEC regulatory issues. While I am optimistic about blockchain technology, not everything needs to be tokenized. I believe tokenizing funds does not bring many advantages. In contrast, the design of DATS is very straightforward and aligns better with market demand. As for complex fund tokenization, it may happen one day in the future, but it won't occur in the short term.

Solana Investment Theory: Why Pantera Invested Over $1 Billion in Solana

Jason:

I would love to hear your investment theory on Solana.

Dan:

It can be understood this way: Solana performs excellently across multiple key metrics, such as daily active users and platform revenue. This indicates that it is very practical and has been widely applied in various commercial transaction scenarios, and its transaction throughput is very high. In contrast, some earlier blockchain technologies can only handle a small number of transactions per second and require L2 and other complex solutions to enhance performance. Over the past year, our confidence in Solana has continued to grow, and it has now become the largest project in our portfolio. Currently, our investment in Solana has reached $1.3 billion because we believe its potential is enormous.

Jason:

How does this compare to your investments in Bitcoin and Ethereum? I'm curious.

Dan:

Our investment amounts in Solana and Bitcoin are comparable, while our investment in Ethereum is relatively smaller. We are very optimistic about Solana's future. Frankly speaking, Solana's market cap is currently only 5% of Bitcoin's, but in the long run, we believe it has the potential to surpass Bitcoin.

Jason:

Is this judgment based on how you think institutional investors will view Solana, or is it based on where you think developers will choose to build their projects? How did you form this investment theory?

Dan:

All these factors influence our decision-making. The number of developers is a very important metric, and we have observed that although Solana started later, the number of developers it attracts is growing rapidly each year, even surpassing Ethereum's growth rate. Additionally, many people have already invested in Bitcoin through ETFs and other means, but attention to Solana is still relatively low. Therefore, we believe providing investors with opportunities to enter Solana and showcasing its investment potential will attract more participants. Over time, Solana is likely to surpass Bitcoin.

Are Institutions Still Underinvested in Cryptocurrency?

Jason:

Do you think institutional investors are still underinvested in cryptocurrency?

Dan:

In the early days, many investors had limited understanding of cryptocurrency, and they would ask very basic questions, such as, "Why is the total supply of Bitcoin 21 million?" or "How do we know there are really only 21 million?" But now, the situation is very different; investors have a deeper understanding of the field and ask more professional and detailed questions.

Jason:

So why are there still so many institutions that have not invested in cryptocurrency at all? The regulatory environment has improved, and there are publicly traded crypto companies in the market; why are so many people still not venturing into this field?

Dan:

I think this is related to a series of events in 2022. At that time, some large public pension funds and sovereign wealth funds announced investments in cryptocurrency, but unfortunately, many of them chose the wrong projects, such as FTX and Luna, which quickly collapsed. These high-profile failures made many institutions wary of cryptocurrency. Additionally, the SEC's lawsuits against Coinbase and Ripple Labs also made investors uneasy. The market experienced many negative events between 2021 and 2022, which made the outlook for cryptocurrency seem less optimistic.

However, I believe that the situation will improve in the future. The outcomes of the White House and congressional elections are likely to affect the level of support for cryptocurrency. If policies become more favorable, it will unlock more investment opportunities. I believe that in the coming years, most institutions will gradually enter the cryptocurrency space. For example, in donor funds, even the most optimistic funds regarding cryptocurrency currently have less than 2% of their capital allocated to this field. I think this percentage could eventually increase to 8%. Starting from zero is indeed a significant breakthrough, but next, we need to see gradual growth from 1% to 2%, and then to 4%. This is why I am confident about the future of cryptocurrency, as there is still a lot of room for development.

Jason:

What do you think is the main entry point for institutional investment? Is it Bitcoin ETFs or other investment tools?

Dan:

I think there will be multiple ways to access it. In the early stages, even buying Bitcoin was very difficult, so they usually invested through funds like ours. But now, as you mentioned, we have many excellent companies managing funds in this field, as well as publicly listed companies like Coinbase and Circle, along with some listed companies providing digital asset investments, which offer investors a broader range of investment channels.

The Story of Creating the Longest-Running Fund in the Cryptocurrency Space

Jason:

Let's talk about the story of the Pantera fund. As the longest-running fund in the cryptocurrency space, what makes you unique? Can you share the scale of the company and the team?

Dan:

Pantera was founded in 2003, after I left Tiger Management. In the first ten years of the company, we primarily focused on managing macro hedge funds. By 2013, we launched the first cryptocurrency fund and the first venture capital fund. At that time, our first investment was in Ripple Labs, which had a market cap of only $17 million.

We have always been committed to providing diverse investment opportunities for our investors. To date, we have launched four venture capital funds and are currently preparing for the fifth. Additionally, we have engaged in about 10 to 12 other types of investment activities. For example, we have a fund specifically investing in private tokens that are in the pre-public phase, previously known as ICOs. We have also provided various investment channels for projects like Solana and Worldcoin, helping investors better access the cryptocurrency space. Currently, we manage $6 billion in assets, and our team has grown to 85 people. One of our notable features is our focus on creating returns for investors. Through a buy low, sell high strategy, we have generated $6 billion in direct profits for investors and distributed 105,000 Bitcoins to limited partners. Overall, we have helped investors earn about $60 billion in returns.

Jason:

What is your investment success rate?

Dan:

In traditional venture capital, about 65% of projects fail. In the blockchain space, our investment success rate has reached 86%, which is indeed very surprising.

Jason:

How many of the startups you invested in have grown into unicorns?

Dan:

Among the companies we invested in, 25 have become unicorns.

Jason:

That's incredible! Do you think this represents an opportunity for intergenerational wealth?

Dan:

I have said on CNBC that Bitcoin is not a bubble because most people have not really entered this field yet. In fact, 67% of institutional investors have no investment in cryptocurrency. This means we are still in the early stages of industry development. The internet has existed for 52 years, yet new innovations continue to emerge. Similarly, blockchain technology is still in its infancy, and there is enormous potential for future development. I have always encouraged young people to enter the cryptocurrency space and consider it as a direction for their career development.

Jason:

Would you consider entering fields like robotics or artificial intelligence?

Dan:

I wouldn't say we absolutely won't, but at least for the next 10 years, we will focus on the cryptocurrency space. There are simply too many opportunities in this field, and we discover many exciting things every day.

Practical Advice for Entrepreneurs

Jason:

You have invested in 25 unicorn companies; can you share some stories about these founders? For example, recently, a founder achieved significant success in managing the board; can you talk about his experience? I'm curious about the secrets to these founders' success.

Dan:

We recently talked about Mike Cagney, the founder of Figure. His greatest characteristic is his extreme focus on execution; what sets him apart is that he can not only envision a future blueprint but also put those ideas into practice. In venture capital, many founders are dreamers who excel at painting a vision of the future, but Mike's execution ability impresses me. He proactively presents specific needs to the board, such as, "Who do you think would be suitable for the Chief Marketing Officer position?" If someone offers a suggestion, he immediately follows up to ensure things get done. His proactive approach has brought continuous progress to the company. I am very confident about his future. I have known him for 25 years, back when he was a macro hedge fund manager in San Francisco, and I was just starting to establish Pantera. He is truly an outstanding founder who can both foresee the future and create plans to motivate the team to achieve goals.

Jason:

I notice that many successful cryptocurrency founders are older, like Cagney, Belshi, and recently Jeremy with Circle's IPO. These experienced founders have achieved remarkable success in the industry. Many might think cryptocurrency is a young person's field, but in reality, older founders seem to have an easier time succeeding. How do you view future entrepreneurs in the cryptocurrency space? What kind of founders should we support?

Dan:

That's a very interesting question. We can analyze the 25 unicorn companies we invested in to see the average age of their founders and other relevant data. The successful founders you mentioned indeed have rich experience. However, there are also some very young entrepreneurs who are only in their twenties. It is important to note that the cryptocurrency space has been developing for 12 years, and even young founders have accumulated considerable experience. Therefore, age is not the only factor determining success; what truly matters is the founder's ability and deep understanding of the industry.

The Biggest Opportunities in the Cryptocurrency Space in the Next Five Years

Jason:

In the next five years, what do you think are the biggest opportunities in the cryptocurrency space? What directions will your investments focus on?

Dan:

If we can achieve an ideal vision, it would be to see more consumer-facing blockchain applications. Currently, we are laying the groundwork, such as providing storage services and building exchanges, and we are also starting to develop more complex infrastructure. But in the next five years, I hope to see some truly everyday applications that can be widely used by ordinary users.

Jason:

Projects like Polymarket are already considered consumer-facing. There is now a broader trend of increasing connections between trading and consumers. So, have you identified any overlooked opportunities? Perhaps something that is "obvious but ignored by most people"?

Dan:

There is indeed one area worth paying attention to, which is Decentralized Autonomous Organizations (DAOs). Although this topic may raise some doubts, with some people thinking it is a bubble or unrealistic, I believe many underestimate the potential of DAOs. They are attracting more capital to the entire industry. If we can continuously increase the value of each token, DAOs will unleash tremendous potential.

In my view, the advantages of DAOs even surpass those of ETFs, and ETFs are already a very successful investment tool. I believe the impact of DAOs may exceed people's expectations. When I discuss this topic with others, I often encounter some skeptical voices. In fact, I have experienced a similar shift myself. When I first heard about Microstrategy, I thought the idea was a bit crazy. But my friend Mark Casey, who was a fund manager at Capital Group, held 10% of Microstrategy's shares before it was widely recognized. I asked him, "Why did you invest in this? It seems too outrageous." His response impressed me: "As a fund manager, I am very bullish on Bitcoin, and this is the only way I can express that view."

As a result, his investment of less than $1 billion at the time has now turned into $6 billion. This deal is simply astonishing. It made me realize that sometimes the most obvious opportunities are the ones that are easily overlooked. My confidence in DAOs is based on this deep research and understanding. I believe that in the coming years, when people look back, they will find that DAOs represent a huge opportunity.

Jason:

Do you think DAOs and ETFs can coexist?

Dan:

Absolutely, everyone has their preferred investment methods, but I believe DAOs have the ability to achieve things that ETFs cannot. The trading method of ETFs is fixed, and you cannot increase the number of tokens per share. Moreover, most ETFs do not involve profit distribution or staking mechanisms. DAOs, on the other hand, have inherent advantages in these areas, providing a more flexible and efficient investment model. Therefore, I believe DAOs are at least on par with ETFs, and in some aspects, they may even surpass them.

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