In this interview, Wilfred Frost engages in a second in-depth conversation with Dan Morehead, founder of Pantera Capital. They discuss Bitcoin's cycle positioning after a 50% retracement from its highs; how currency devaluation creates intergenerational wealth conflict; and why the "smart money" is actually the last to enter this cycle.

Key Insights Summary

· The majority of institutional investors still have a 0.0% allocation to blockchain, literally zero.

· It's not that gold is hitting new highs; it's that paper currency is hitting historic lows.

· This might be the first trade in history where the "smart money" enters last.

· The average age of first-time homebuyers in the U.S. has already been pushed back from 28 to 40.

· We are facing an intergenerational inflection point of monetary and state separation.

· Stablecoins are highly likely to capture half of bank deposits within a decade.

· Bitcoin has reached escape velocity; I can't find any factor that could derail this process.

· If you have no exposure to blockchain, to some extent, you are already shorting this trend.

01. "Still the Most Asymmetric Trade in History"

Host: Last time you were here, we delved deep into the macro logic of cryptocurrency. The price at which you first bought Bitcoin was astonishingly low; what was it again?

Dan Morehead: $65.

Host: $65, compared to today's price of around $66,000—it's like two different worlds. In that episode, you described Bitcoin as the "most asymmetric trade in history." Do you still hold that view today?

Dan Morehead: Yes, I'm still convinced of it. Throughout my career, I've always looked for asymmetric opportunities where the upside potential far outweighs the downside risk. Bitcoin, and the broader crypto space, is the most asymmetric trade I've ever seen.

Early on, I would tell people: you could very well lose your entire principal, so don't invest more than you can afford to lose. But at the same time, you have the potential for 5x, 10x, or even thousand-fold returns.

The reason I remain bullish is that we are still in the very early stages. The majority of institutional investors still have a 0.0% allocation to blockchain and cryptocurrency. Literally zero. As long as the downside risk remains negligible relative to the vast size of global financial assets, and the upside is the redefinition of the entire monetary system, this asymmetry will not disappear.

02. The Four-Year Cycle Holds True Again

Host: Our last recording was on October 12th, which was interesting timing. Around October 6th, cryptocurrencies reached a阶段性 high, followed by a pullback. Since then, Bitcoin has fallen about 50%. As someone who has experienced multiple cycles, how do you interpret this decline?

Dan Morehead: Anything trying to change the world comes with a lot of hype and volatility. At the highs, optimism is rampant; at the lows, pessimism prevails. Pantera has been deeply involved in this industry for 13 years and has experienced four full four-year cycles. These cycles are actually very regular, even predictable.

When we met in October, we were恰好 near the high point we predicted two or three years ago. Based on our model from the previous three cycles, we estimated Bitcoin would reach a阶段性 high around August 2025. While we hoped then that this time would be different—perhaps new government policies could break the cycle—in hindsight, the cycle规律 has once again asserted itself. The market fell 50%. That sounds like a lot, but compared to the 85% drops in previous cycles, this is actually much milder. The market probably needs about another year to bottom out, which is consistent with past patterns.

Host: You didn't seem bearish at the time. Did you think this cycle would ultimately fall 75% to 80% like before?

Dan Morehead: That's a key question. I确实 didn't predict it would fall that much at the time because there were many positive factors. But the market has its own rhythm. I want to point out that in previous highs, the price deviated far from the long-term logarithmic trend line, showing疯狂 parabolic movements. For example, in 2013, the price increased 10-fold in the four months before the high. This time, the price didn't show that kind of extreme overheating; it just roughly returned to the 2021 level.

So I think the current price level is大概 the bottoming range. Although it might take another six to eight months to form a bottom,if you have a four to five-year investment horizon, now is a very attractive entry point.

Host: The current price is around $66,000. Many technical analysts say $60,000 is a key support level; if it breaks, it could fall all the way to $25,000. Do you agree?

Dan Morehead: I'm not very good at that technical analysis stuff. We never try to do ultra-short-term timing. Our approach to managing funds is more like venture capital, with a perspective of 5, 10, or even 20 years. From that angle, the current price is already quite cheap.

03. Why is Bitcoin Always the First to Get Sold Off?

Host: Why is Bitcoin always the "whipping boy" among risk assets? When the Nasdaq and S&P 500 peak, cryptocurrency is often the first to be sold. Will this continue forever?

Dan Morehead: That's a very astute observation. Think about it: if a major shock occurs outside of Monday-to-Friday trading hours, you can't sell stocks. Cryptocurrency is the only globally available, highly liquid market with a scale of $2 trillion that operates 24/7, 365 days a year.

When a geopolitical crisis erupts, institutions want to immediately reduce risk exposure, and Bitcoin becomes the only asset they can liquidate in real-time. This causes it to bear excessive selling pressure in the short term. But please note, although correlation spikes during "flash crash" moments, over the long term, Bitcoin's correlation with the S&P 500 is actually very low, around 0.1 to 0.2. Over a multi-year horizon, cryptocurrency moves independently upward, while traditional assets might just be treading water.

04. It's Not Gold Hitting New Highs; It's Paper Currency Hitting Historic Lows

Host: Let's talk about gold. Gold is up 55% over the past 12 months, while Bitcoin is basically flat. Does this shake the "digital gold" narrative for Bitcoin?

Dan Morehead: Gold is an interesting "old-school" asset. It periodically comes into the public eye. Before 2025, gold ETFs actually experienced net outflows for many years, with funds flowing into Bitcoin ETFs. But in 2025, people suddenly realized the U.S. dollar was depreciating faster, and this sense of urgency drove money back into gold.

But I think about this issue differently:It's not that gold or real estate is hitting new highs; it's that paper currency is hitting historic lows. As the money printers keep running, the number of paper notes required to buy a fixed quantity of assets必然 keeps rising. The word "pound" originally meant one pound of pure silver; now you have to fork over hundreds of paper notes to buy the same weight. Governments can print money indefinitely—this is the core of the devaluation trade.

Host: Aren't we in a staggering devaluation cycle right now?

Dan Morehead: Absolutely. The Fed defines "price stability" as 2% depreciation per year, which is本身 absurd. Stability should be zero. Even at just 2% annual depreciation, a person's lifetime purchasing power shrinks by nearly 90%. (Editor's note: Calculated with compound interest, at a 2% annual depreciation rate, purchasing power shrinks by about 80% after 80 years.) I think people are waking up to the realization that they must hold hard assets with fixed quantities, whether stocks, gold, or cryptocurrency.

This devaluation trade also has a clear intergenerational character. Massive money printing drives up asset prices, which benefits the older generation who already own property and stocks, but squeezes the upward mobility of young people. The average age of first-time homebuyers in the U.S. has already been pushed back from 28 to 40. Since they can't accumulate wealth through traditional paths, it's a very rational choice for the younger generation to turn to cryptocurrency. If you look at the wage growth and house price growth curves since 1990, you'll see this剪刀差 has become outrageously large.

05. The Separation of Money and State

Host: How do geopolitical conflicts change the logic for cryptocurrency?

Dan Morehead: Wars always bring lasting inflation. But more importantly, we are witnessing the "separation of money and state." In ancient times, money was gold, which was naturally independent of government. Later, governments monopolized the right to print money, but history shows they haven't managed it well.

In the next decade, people will gradually realize that money does not need state endorsement. Geopolitical conflicts make this trend clearer—the world is阵营化. If you are a country not aligned with the U.S., or you worry your assets might be sanctioned or frozen, you will want an asset not controlled by any single country. China once invested a large portion of its foreign exchange reserves into U.S. Treasuries, which is increasingly risky in the current international格局. Bitcoin, as an asset independent of the banking system and sanction regimes, sees its value highlighted even more during conflicts.

06. The "Smart Money" is Actually Entering Last

Host: How many people actually hold cryptocurrency right now? Globally, are there truly large institutional positions?

Dan Morehead: Still very few. Although 300-400 million people globally hold cryptocurrency, most are small, "dabbling" holdings. But I believe within a decade, due to the proliferation of smartphones (4 billion users globally), most people will be using cryptocurrency. Its cross-border transfers are fast, almost free, and require no one's permission.

This might be the first trade in history where the "smart money" enters last. In all the investment opportunities I've seen over the past 40 years, typically Wall Street eats first, and retail investors are left holding the bag last. This time it's completely reversed; individual investors are out in front. I've been on stage with many alternative investment heavyweights managing hundreds of billions, and many of them know nothing about Bitcoin.

This is why I'm so bullish—this smart, wealthy institutional money will enter someday. Coinbase is already included in the S&P 500 index. If you have no blockchain exposure, to some extent, you are already shorting this trend.

07. Policy: From Hostile to Tailwind

Host: The new administration's attitude shift is a key variable this cycle. How do you assess the current policy environment?

Dan Morehead: It's a huge tailwind. The previous administration took a hostile stance towards blockchain, pursuing Coinbase and cracking down on Ripple. The current administration is willing to build this industry. Although the pace of legislative progress is always frustrating, frankly, the fact that the U.S. Congress spends time discussing topics like "stablecoin market structure" itself indicates a qualitative change in the industry's status.

Regarding stablecoins, this is a revolution unfolding in phases. Currently, stablecoins might not yet pay comprehensive interest, but that's only a matter of time. Stablecoins are eating into the market share of bank deposits. The current scale of stablecoins is approximately $400 billion, while bank deposits are $17 trillion. (Editor's note: As of March 2026, the total market capitalization of stablecoins is approximately $300-320 billion, sources: DefiLlama, CoinDesk, among others.) In the next decade, stablecoins are highly likely to capture half of bank deposits because they are available 24/7 on mobile phones, with a far superior user experience compared to traditional banks.

08. Will a Strategic Bitcoin Reserve Come?

Host: You also follow digital asset treasury companies, like MicroStrategy. Do you think governments will establish strategic Bitcoin reserves in the future?

Dan Morehead: I think it's highly likely. The U.S. already holds a certain amount of digital asset reserves, mostly from law enforcement seizures. And now they are no longer selling these assets; they might even start accumulating more. Countries allied with the U.S. will follow suit for strategic reasons, and countries opposing the U.S. will also buy for defensive purposes. This takes time to work through the political machinery, but the trend is irreversible.

09. Why Solana?

Host: In the Layer 1 competition, why are you particularly bullish on Solana?

Dan Morehead: We hold Bitcoin long-term, but Bitcoin focuses on store of value; it can't handle tens of thousands of high-frequency transactions per second. Solana was designed from the outset for high performance—cheaper, faster, suitable for complex application scenarios like gaming and high-frequency trading. The internet has Google and Facebook; the blockchain field will also have several core Layer 1s. Bitcoin is gold, and Solana might be the digital highway.

10. Nasdaq Down 12%, Bitcoin Down 50%—Is That Reasonable?

Host: The Nasdaq is down 12.5% from its high, while Bitcoin is down 50%. Is this disconnect reasonable?

Dan Morehead: I think it's very unreasonable. Current stock valuations are at historic highs, risk premiums are extremely low, and interest rates remain high, meaning stocks are very expensive relative to bonds.

The AI field is also showing signs of overheating, with many AI company valuations far exceeding trend lines.

In contrast, cryptocurrency is 50% below its long-term trend line. From an asset allocation perspective, cryptocurrency is now in a highly attractive oversold zone. Even if the Nasdaq continues to fall in the future, I believe cryptocurrency will perform better over a two-year span.

11. "I Can't Find Any Factor That Could Derail This Process"

Host: How is your mindset now different from during the 2014 or 2018 bear markets?

Dan Morehead: Completely different. In the early days, I确实 had moments of cold sweat, worried this whole experiment could be completely destroyed by a hack or regulatory crackdown. But after experiencing the Mt. Gox collapse, multiple 85% drawdowns, and repeated regulatory crackdowns, this industry not only didn't fall, it grew stronger. It has reached escape velocity.

Host: Is there any event that would make you completely abandon your bullish view?

Dan Morehead: A few years ago, I had a long list of risks, including custody security, hacking, regulatory uncertainty. But looking back now, most of these risks have been resolved. While no one can guarantee an accident won't happen tomorrow, logically, I can't find any factor that could completely derail this process. A smartphone-based, global monetary system is an inevitable direction for human society.There are 4 billion mobile phone users globally; the financial inclusivity brought by blockchain is far more important than sharing photos on social media.

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