Finding 1,000x Assets & Asymmetric Returns | Dan Morehead of Pantera Capital

How do you find an asset with 1000x asymmetric return? How do you find the next bitcoin? Our guest today is Dan Morehead, founder and managing director at Pantera Capital. He has been buying bitcoin since 2013 when the price was just $65. His fund is up over 100x since then. There’s a lot to learn from Dan’s story, about early bitcoin history, but also the pattern recognition required to identify asymmetric assets. We cover price predictions, 4 year cycles vs a supercycle, how much upside is still in crypto, the trump administration and his thoughts on a strategic bitcoin reserve ------ 📣SPOTIFY PREMIUM RSS FEED | USE CODE: SPOTIFY24 https://bankless.cc/spotify-premium ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2 ⁠ 🦄UNISWAP | BUG BOUNTY PROGRAM https://bankless.cc/Uniswap-Bug-Bounty ⚖️ ARBITRUM | SCALING ETHEREUM ⁠https://bankless.cc/Arbitrum 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle ⁠ 📈 iYield: YOUR FINANCIAL PICTURE, SIMPLIFIED https://bankless.cc/iYield 🗣️TOKU | CRYPTO EMPLOYMENT https://bankless.cc/toku ------ ✨ Mint the episode on Zora ✨ https://zora.co/collect/base:0x4be6cd4d402fed49eb2de95fbc8e737e8ffd3e7f/1?referrer=0x077Fe9e96Aa9b20Bd36F1C6290f54F8717C5674E ------ TIMESTAMPS 0:00 Intro 6:00 The Email from 2013 14:15 Asymmetric Patterns 17:50 Buying Bitcoin in 2013 26:25 Onboarding Investors 32:12 Crypto's Global Adoption 37:15 Bitcoin's Escape Velocity 43:19 US Government Impact on Crypto 52:21 Global Bitcoin Race 56:14 Institutional Adoption for Crypto 1:04:37 Crypto Cycles 1:09:20 2025 Bull Market? 1:12:53 Macro Environment 1:16:50 Tokenization 1:21:18 Thoughts on AI 1:24:19 The Next Bitcoin 1:26:46 Future Plans 1:27:23 Closing & Disclaimers ------ RESOURCES Dan Morehead https://x.com/dan_pantera Pantera Capital https://panteracapital.com/ ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures⁠

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Ryan Sean Adams?

  We should buy Bitcoin now at $65 from Dan Morehead. This email is dated July 5, 2013. Your brief thoughts were, I'm going to buy 30,000 Bitcoins this weekend with personal money. The fund can have this purchase or not, as others wish. Give us the context and the lay of the land at that time when you wrote this.

• 0:17Speaker 01

  Bitcoin's a serial killer. It is going to rip through so many different industries. But the only important part of that line is it will do it serially. And the hard thing in our space is that it's not going to do it all overnight. But it's probably going to take 10 years to compete with Visa, Mastercard.

• 0:37Ryan Sean Adams?

  Welcome to Bankless, where today we explore the frontier of asymmetric assets. This is Ryan Sean Adams, just me here today. David is out, and I'm here to help you become more bankless. The question for today's episode that I think you should be thinking about is, how do you find an asset with 1,000x asymmetric returns? At least a profile for that. How do you find something like Bitcoin early? Our guest today, Dan Morehead, has made his career on asymmetric investments. He's got this letter to investors from July 2013, and I think it's legendary. The email subject line is titled in all caps, "Very Timely. We should buy Bitcoin now at $65." Over the next two years, his fund then proceeded to buy almost 2% of all the world's Bitcoin supply. And at the time, this was a massively contrarian bet.

• 1:22Ryan Sean Adams?

  It was hard to raise the funds. It was hard to even purchase the Bitcoin itself. His fund is now up 1,000x since then. I think there's a lot to learn from Dan's story, like both about Bitcoin history, but also about the pattern recognition required to identify something with asymmetric returns, something like Bitcoin in the early days. We start with a story of why Dan decided to make a big bet on Bitcoin in 2013. And then we talk about where he thinks crypto and Bitcoin, the entire asset class, is headed over this next decade. Price predictions, four-year cycles versus super cycles, how much upside is still left in crypto, the Trump administration, his thoughts on a strategic Bitcoin reserve, and many more topics.

• 2:06Ryan Sean Adams?

  Let's get right to the episode with Dan Morehead. Bankless Nation, very excited to introduce you. Once again to Dan Morehead. He is the founder and CEO of Pantera Capital. If you're not familiar with Dan, he is a certified OG, let me tell you. So Pantera was one of the very first investment firms, particularly from the institutional side, to focus exclusively on Bitcoin and crypto. So at the time of recording, we're here to celebrate a big milestone, which is Bitcoin is now trading above 100K, which is amazing. Dan funded, founded Pantera, I should say, in 2013. And so Pantera's Bitcoin fund, in terms of percentage to date, lifetime percentage to date, has been a whopping 131,000%, okay? Growth, lifetime increase.

• 2:49Ryan Sean Adams?

  So obviously, we wanted to bring Dan on, talk about 100K, the future, talk about how we got here. Dan, welcome back to Bankless.

• 2:57Speaker 01

  Hey, Brian, thanks. It's great to be back on.

• 2:59Ryan Sean Adams?

  So I was thinking of you because I get the Pantera investment memo. And I saw enshrined inside of that investment memo was an email that you wrote in 2013, when you were just getting started. And the subject line is fantastic. I screenshotted this. I put it on Twitter. It says, "Very timely. We should buy Bitcoin now at $65 from Dan Morehead." This email is dated July 5, 2013. Give us the historical context for that date, this time, this email, in which your brief thoughts were, "I'm going to buy 30,000 Bitcoins this weekend with personal money. The fund can have this purchase or not, as others wish. I just want to get involved." Give us the context and the lay of the land at that time when you wrote this.

• 3:41Speaker 01

  No, it's great. It's fun. In March of that year, my friends Pete Brigger and Mike Novogratz, who I went to college with and we worked at Goldman together, and they founded Fortress Investment Group, called to ask if I want to talk about Bitcoin. My brother had mentioned it to me. A year or two before and I'm a libertarian, so I was thinking it'd be great if it happened, but I didn't actually do anything. And so when Pete and Mike called, it was great because, you know, it was something that was cool. And I thought it'd be wonderful for the world if it really happened, but I hadn't actually, you know, lifted a finger to help. And I went in for a coffee in their office in San Francisco and it lasted for like four

• 4:26Speaker 01

  hours. I was just like so mesmerized with all the stuff we were talking about. And I actually stayed in the office for years. Pete offered me space in their offices and we ultimately, they became part of our GP for a while. And I think we probably stayed like six years or something like that. So I went in for a coffee and stayed for six years because it was so compelling. And so as we thought about it, you know, it just seemed like an incredibly asymmetric trade. And that's what I had done in my career. I'd previously been the head of macro trading at Tiger Management when Julian Robertson was, you know, a very fantastic investor, looking around the world for trades that

• 5:10Speaker 01

  had way more upside than downside, right? Risk and reward go together. You're never going to find, quote, arbitrage or anything that's risk-free. You always have to take risk. And what I had been trained at Tiger and Pantera actually was founded in 2003. We started the crypto part of it in 2013. So what I'd been doing for all those years before is looking for things, you know, where obviously there's a lot of ways you could lose your money, but if it worked, it could go up more than that. And I had been working, our previous trade at Pantera actually was Tesla Motors. I had met one of the founders at a dinner in our little community of Woodside, California.

• 5:51Speaker 01

  His kids went to the same local public elementary school with my kids. And he told me about an electric car. And I was like, wow. That sounds dicey, right? Like, I had, actually, one of our partners at Pantera, a guy named Ron Glantz, used to be the number one II institutional investor, auto analyst for a long time. He was a partner with me at Tiger and then moved to California and we worked together at Pantera. He still edits our investor letter and still fantastic partner for us. He was an auto expert. And so, you know, I called him as soon as I got the idea to invest in Tesla. And he, he told me a fact that I loved, that prior to Tesla Motors,

• 6:35Speaker 01

  the last auto company to go public was Ford Motor Company. Like, everybody else failed. All the John Deloreans and whatever, you know, like, it was just a zero chance anybody could ever make a car company to work. So ultimately, we did a bunch of work and I had a view on Tesla that, hey, it's, it was a couple billion market cap at the time. Great idea, really cool. If it works, it could go way up, right? And the fun fact is there were, there was a period in 2013 that Tesla Motors and Bitcoin traded at the same price per share. And so, we were very big in Tesla and then we decided, hey, let's, let's swap that in. And we literally sold all of our Tesla Motors and went all into Bitcoin at the time.

• 7:20Speaker 01

  So it was very paired trade, but it's very similar. So the point of that very long thing is looking for trades like that. They're very asymmetric. The upside's way more than the downside. And although Bitcoin has gone up a ton, I still think it's true. I still think, you know, yeah, it could, it could definitely go down. You know, we've lived through three down 85% bear markets. I don't think you could do that anymore, but you know, it could go down a lot. But it really still could go up an order of magnitude, right? And there's so few. Investments out there that actually could do that. And so when Mike and Pete and I sat around and thought about it,

• 8:02Speaker 01

  you know, I was, I just spent, you know, I got sucked in. I just, you know, people say, you know, got rabbitholed. I just couldn't think of anything else. And I essentially haven't traded anything but crypto since 2013 because it's so captivating. I still think, you know, we're, we're in the early days of this huge thing. And the reason I love it is there's so many things that crypto can do. You know, when you have a new technology, everyone always wants an analog to the old school world, right? Like S M T P became electronic mail, even though it really does, they're totally different than snail mail. And so everyone's always trying to come up with a new word for things.

• 8:45Speaker 01

  And so Bitcoin and other blockchains have been called cryptocurrencies. A lot of people call them commodities. The CFTC calls them commodities. But, you know, they're a wholly new thing that has hundreds and hundreds of use cases. And that's why I'm, you know, so excited as an investor. It, you know, really is going to rip through so many different use cases. And I guess one other analog would be, you know, when you have a technology that's incredibly disruptive, they call it a category killer. Bitcoin's a serial killer. Like it is going to rip through so many different industries. And, but the only important part of that, that line is it will do it serially.

• 9:29Speaker 01

  And, you know, I think that's the, the hard thing in our space is that it's not going to do it all overnight, right? Like Bitcoin and other blockchains are really good at some things right now, but it's probably going to take 10 years to compete with Visa, Mastercard, or, you know, some of these other applications. They'll ultimately get to, ultimately, definitely, definitely.

• 9:50Speaker 01

  But you know, there are some things that they're not good at yet, you know? And so, you know, it's, I still have that view. It's, we're really early. You know, feels like the internet turned 50 last year, right? Like, I mean, Bitcoin's still a teenager, right? It's very young, still got a long way to go. And I think it is still one of those trades where, although it's definitely risky and you should only invest as much as you could afford to lose 80% of, you know, it's probably going to go up a lot more than it could be.

• 10:21Ryan Sean Adams?

  Dan, I want to kind of get into the, the way you think because you're calling it a trade, right? And some people think of a trade and they think of, oh, something like day trade or something a month trade. But like, you're talking about a trade in the context of you've been holding this thing for like 13 years plus. I want to get inside your brain and how it thinks. So it's interesting to me about the, the founding story of Pantera, where you guys actually started in, in 2003. And so you, you've already been in place for a decade looking for asymmetric upside opportunities. And there you see in 2013, the Bitcoin trade. And then you have the conviction to buy in size at that time, to write an investment memo like the one that we're looking at. And we're just basically saying, hey, if you guys, you're like, come, come with me or not. I'm buying 30,000 Bitcoin like right now.

• 11:05Ryan Sean Adams?

  And in 2013 to 2015, you guys proceeded to buy 2% of the world's Bitcoin. So you did this with conviction. You did this with size. I think there's a lot of like investors, like obviously everyone listening wishes they had more Bitcoin. That's a thing that we all wish. We also wish we had the skill to recognize asymmetric upside opportunities. What's the pattern there? How do you, how do you get the conviction on an asymmetric upside opportunity? Where, where do you just see that? Because, you know, some people will look at this and they'll say, Dan got lucky. I don't, I, there's always an element of luck involved to investing. I don't know what you call it, but maybe it's luck, maybe it's something else. But you also have this pattern of identifying asymmetric upside opportunities. How do you do that? Can you teach that to us?

• 11:49Speaker 01

  Well, I do, I do like you using the word pattern because I think it is pattern recognition. Like if you've seen these things happen, you know, time and time again. And I've actually been doing this for about 40 years. I'm, I started on Wall Street in 1987, so 36 years. And, you know, went through, you know, big SNL crisis, went through, you know, financial crisis, investing in.

• 12:15Speaker 01

  Commodities in the eighties, emerging markets in the nineties. And so that is one of the reasons I've had probably a better position than some of the younger people investing in the space in that I think I've seen this movie before. Like I was a Goldman when they did the GSCI. And now everybody considers commodities to be an asset class. I was doing emerging markets investing in the nineties and now EM is an asset class. In two thousand and six or seven, Pantera launched the first fund to invest in the GCC countries, the UAE and Saudi Arabia from the West, the first Western fund to do that. Everybody thought that was super crazy because it seemed really exotic and different.

• 12:58Speaker 01

  Now everyone thinks of, you know, the MENA region as a, you know, completely normal place to invest. So that's been the pattern. Oh, and I went to, I went to Russia when Gorbachev was still the premier and invested with some partners in Gazprom and their privatization. And, you know, so always looking for these kind of, you know, interesting.

• 13:18Ryan Sean Adams?

  Frontier. I mean, all of these things are the frontier asset classes.

• 13:20Speaker 01

  Frontier, in two thousand, we did a fund to invest in Argentine farmland after their penultimate crisis. They have, they have one often, you know, so it's just looking at things that are kind of off the run or not normal. And again, you know, if we want to come all the way back to present and blockchain, I think it's still true for blockchain that very few institutions really have a real sized position, right? Like, is this still frontier? It's a three trillion dollar asset that's still frontier, which is really weird. I've never seen one like that. And so, and so it really is this pattern of having seen this cycle a bunch of times, thinking about how disruptive blockchain could be.

• 14:03Speaker 01

  And in a couple of the subsequent memos that I wrote over the next few months, listed out all the use cases and how it's going to compete with gold. And it's just starting to do that right now. It's, that's a super exciting thing to talk about today. But, you know, ultimately it's going to compete with Visa, Mastercard. It's going to compete with, you know, all the big remittance companies that charge migrants an entire month's wages to move money across the border, which Bitcoin can do super easily and super cheaply. And so when you add up all those different use cases. You know, the value, the ultimate value of crypto is just so much higher than it is today. And that's why, you know, in our business, there's a huge race for pundits to come up with the craziest forecast for the price of Bitcoin.

• 14:47Speaker 01

  I don't know where it's going, but it's gone so much higher that we don't really have to think about it.

• 14:51Ryan Sean Adams?

  You know, this might also help people to get into your pattern recognition skill with asymmetric opportunities. Could you just describe in 2013 what it was like to try to buy Bitcoin in the type of size that you're talking about? So I purchased my first crypto assets in 2014. And so a year after, like you were doing some of this, not in size, like not like this. And I remember like how sketchy it felt. I opened up like accounts on like you just five different exchanges. I didn't really know what was happening. The websites was like janky. It felt like I was doing almost like some back alley type deal. And for a lot of investors at that time, they would see all of that as reasons to stay far, far away. They're bearish, given that.

• 15:35Ryan Sean Adams?

  You somehow, I navigated through all of this and came out bullish on the other side. But what was it like to purchase Bitcoin in the size that you're talking about back in 2013?

• 15:47Speaker 01

  Well, yeah, it's so different than it is today. And if you remember local bitcoins.com where you'd like meet somebody in the alley.

• 15:56Ryan Sean Adams?

  That was too sketchy for me. I was like, I never did that.

• 15:59Speaker 01

  Yeah, I mean, it's like literally, I was one of the best ways to get crypto back then is meeting some random person in some, you know, random area and try and, you know, hand cash and get Bitcoin. So it was really hard. And that's the thing, people don't really appreciate how much the world's changed. We were potentially going to do this fund as a part of a bigger public company's brand. And so we. Tested out all the systems, had all the funds set up, you know, made sure everything really worked. But that company ultimately decided not to do it. So we had to do it as a Pantera branded product with not much notice because the price of Bitcoin had fallen 50%, which it, you know, often does.

• 16:44Speaker 01

  And we really wanted to get it launched. And so we, we had accounts at a couple of exchanges, but we frankly hadn't tested any of them. And so when the price of Bitcoin at 65, I was like, man, this is just it. We gotta go. And it's having done this so many times, I was like, this has to be it. Gotta go. So we decided to launch and buy. It was over a 4th of July weekend and we had sent money. We'd totally tried to prepare and we'd sent money to a couple of exchanges. We had everything dialed. We had our funds, you know, we really had it all tested, we thought. I guess we hadn't really done the one last thing is try and buy a few Bitcoins. So we go in and I was using this little startup, nobody ever heard of, and try and buy some Bitcoins.

• 17:29Speaker 01

  And there was a pop up on the screen that said our limit was 300 bucks.

• 17:37Speaker 01

  And you're trying to deploy what millions, a couple of millions? Yeah. And so in Wall Street, sometimes people use the word bucks to say millions. I mean, this was like 300 US dollars. Like we couldn't buy anything. And so then I sent and it was a trendy little startup. So they didn't have an address, a phone number. They just had like a little help email address. So I hit that and I wrote in uncharacteristically all caps, I'm trying to buy $2 million worth of Bitcoins. And hit send.

• 18:11Speaker 01

  You'd think you'd get a reply, right? Because they, nothing was happening at their little company at the time. Four days later, their only employee, a guy named Olaf, wrote me back and he said, okay. Oh no, that was it. Sorry. We start out, our limit was $50. Yeah. One Ulysses grant per day. And they upped it to 300. And I was like, dude, I'm trying to buy $2 million of Bitcoins. And it would take it.

• 18:39Speaker 01

  6,000 days or something like that. It would've taken forever. So luckily, we'd already sent money to Ljubljana, Slovenia to Bitstamp. And I totally hear you.

• 18:50Ryan Sean Adams?

  Slovenia, the country?

• 18:52Speaker 01

  Slovenia, yeah. Spell that out on a wire transfer. Feels super sketchy. And the manager, the branch came over and was totally hassling me like, what's this for? Who are you? What are you doing? And what's Bitcoin? And that's, you know, it just sounded so sketchy. And even that, that was like an hour to send a wire. Like, I had to sit there and like, talk to all the managers and all that stuff. And the funny thing is, I've since spent a lot of time in Slovenia. And it's a very lovely country to the right of Venice and below Austria, right? But at the time, I was like, wow, this money could be gone, right? And so, so we sent a bunch of money there and luckily that worked.

• 19:34Speaker 01

  And we did a bunch of trades with Bitstamp. We ultimately became their only shareholder for a long time. And I was the chairman of Bitstamp for six, three years. And they're super nice people and great group of people. But it was really hard, really hard.

• 19:48Ryan Sean Adams?

  Because the startup you were talking about couldn't fulfill the order. They blocked your, you know, 300.

• 19:52Speaker 01

  Like, literally Coinbase had one employee.

• 19:55Ryan Sean Adams?

  That was the startup, right? It's Coinbase you're talking about?

• 19:57Speaker 01

  It was Coinbase. Sorry, I forgot the punchline here. It was Coinbase. They had one employee. And I went and visited them. They were in a split level condo over in, you know, by the ballpark in San Francisco.

• 20:07Ryan Sean Adams?

  That looked sketchy too, I bet.

• 20:09Speaker 01

  I mean, honestly, yeah, like, you know, you're trying to meet a company. You're going up to somebody's apartment like, you know, it's 17F or whatever, you know, it's all so funny. And honestly, I thought it was great. I love that whole era. That was a super fun era. All these very creative people. I went over to Slovenia with Pete Brigger and we met the team in Bitstamp. And ultimately, you know, we became investors. And it was super fun, meeting people. And like, for example, I flew all the way to Tokyo to meet the two guys that were running Mt. Gox. And obviously.

• 20:42Ryan Sean Adams?

  When you were buying, I'm just like hazy on my timeline here because I came in a little bit after Mt. Gox blew up.

• 20:48Speaker 01

  Yeah, Mt. Gox, like 85% of the market cap at the time.

• 20:50Ryan Sean Adams?

  Okay, so that was still, when you were buying, yeah, okay. Gox was still operational, had not yet, you know, been wrecked.

• 20:57Speaker 01

  Yeah, Gox was massive and.

• 21:02Speaker 01

  A little fact that's not well-known is a person who was a venture partner with us for a while, Jed McHale, who was one of the founders of Ripple Labs and Stellar. He created Mao Gaox, right? He's a genius. He's created so many, three massively cool projects. But then he sold it to Mark Karpelis and had nothing to do, obviously, with the blow up. But this is a great example of like, you just gotta do the work. Before I sent all the money, I was gonna fly over and like, see who we're talking about. And so I went all the way to Japan and I met Mark and one of his lieutenant guys. I spent two days there because we were gonna send millions of dollars to these people.

• 21:47Speaker 01

  And none of it made sense. The stuff they were saying, I was like, man, this just doesn't feel right. Like, they're either incompetent or fraudulent. I haven't followed it since then, but I think it seems like they were both. But I was just like, I can't send any money here. These guys, super sketchy, even though they were dominant. Like, it was so, everybody was trading there. So, we did decide to send money to a little startup that's now called Coinbase and to Bitstamp, which is the oldest exchange in the world. It's been around since 2011. Mates and Domi, the two guys that founded that, were way ahead of their time. So, all that was mega sketch.

• 22:30Speaker 01

  Oh, and, you know, I mean, as you know, Mao Gaox, just like, they couldn't do wires in the US because the Department of Justice had shut them down.

• 22:40Ryan Sean Adams?

  Yeah.

• 22:40Speaker 01

  Like, you know, literally, like, and, you know, it's just all kinds of Wild West-type stuff happening. And it was, you know, it was, it was fun. But, and so, you know, we flew around and actually met. You know, went to all these countries and met people in person because it's so easy to kind of sense what's going on.

• 22:58Ryan Sean Adams?

  I think this is what sort of if people are looking for patterns in the future for these asymmetric opportunities, you're like, they should expect to be having to machete their way through a jungle here, right? It shouldn't, it shouldn't feel easy, right? The clues where you have to go fly and you see sketchy people and you can't wire the funds, that, I mean, you interpreted that as bullish. You know, like weaker investors would interpret that as, ah, can't do it, I'm done, it's bearish, the whole asset class doesn't make sense, they don't have these wires. But like, it was to you as an indication of how early we actually were. Can you talk about, so if that was the, the, the way to purchase Bitcoin at that time, how did you get investors on board? I know your, your memo talks about doing, you flew all around the world and did 170

• 23:42Ryan Sean Adams?

  investor meetings that year. The sum result of that effort, we could only raise a million dollars. So talk about trying to raise the capital from people in this like magic internet money, sketchy drug deal money type of thing, which is, which is Bitcoin. Were you just like trying to evangelize and they just kept telling you no? And how did, how did those meetings go and how did you persist?

• 24:04Speaker 01

  Well, so a couple of cool threads in there is, the first one is you're right. Like, if you want to make outsized returns, you can't be investing in things that every Wall Street firm has like 20 analysts covering.

• 24:15Ryan Sean Adams?

  Right.

• 24:16Speaker 01

  Hedge funds are doing it, right? Like by then, most of the alpha is, is out of the industry. So you really, you know, at least my style, I love these things that nobody's focused on yet and they're still kind of funky or whatever. And, and we even have a little tagline at the bottom of our investor letter that says, put the alternative back in alts. And I really think that's true is when I started in hedge funds in 1991 or whatever, they were super different. Like hedge funds were really edgy, alternative. And now there's, you know, trillions of dollars of hedge funds and they're all kind of the same, right? And so that's why I think blockchain should be in somebody's portfolio. It's alternative still, right? Like it's different when most hedge funds are the same.

• 24:59Speaker 01

  But so the funny thing is that, that story you're quoting, that's not 2013. That's three years later.

• 25:06Ryan Sean Adams?

  Oh, really?

• 25:08Speaker 01

  That's the real.

• 25:09Ryan Sean Adams?

  2016, this was during kind of the winter?

• 25:12Speaker 01

  Six of it is like, you know, we got in, we were evangelizing, trying to get people to invest in Bitcoin and blockchain and our venture fund and everything. That was three years later. We're still doing it and nobody want to do.

• 25:27Ryan Sean Adams?

  Cause this is because Gox blew up. There was like a negative 90% you know, drop in Bitcoin price. That was the era of, you know, it's all about blockchain, not Bitcoin. There were these private ledgers. No one believed in a public chain. No one believed in Bitcoin, the asset.

• 25:42Speaker 01

  Yeah. So there've been three of those cycles. So, you know, I can't say, oh yeah, that was the one. Cause it's happened three times where the Bitcoin's gone down 85%. It just happened, you know, two years ago or whatever. Bitcoin's rated 16,000 at like two years ago. Right? So, uh, so in the first of those cycles, um, we started investing at $65 and went to a thousand and then crashed and it was down from 2014 to 2017. So in 2000 and we, you know, came to work every day and did our job, but like, nobody really cared. Uh, and in 2016, did 170 investor meetings. We raised $1 million. Nobody cared. Everyone's like, oh, isn't that that thing that died?

• 26:27Speaker 01

  Or, you know, Mal Gox or Silk Road guy, you know, just all the FUD that people have been saying all the time. You know, all that. The management fees from that entire year's worth of work was $17,132. So it was a hundred bucks a meeting and it was hard, right? Like so many people said no, and frankly, it's still kind of the same. Obviously we're raising more money in larger scale these days, but I still have that same feeling that so many people haven't said yes yet, right? Like they will. And so there's still just, I, I, I feel like we really are still at the beginning of it.

• 27:07Speaker 01

  Like very few people, there are very few institutions out there who are just max long, right? You know, they, they really couldn't put any more on. Most have zero or a tiny bit of it.

• 27:20Ryan Sean Adams?

  What was your pitch for crypto and blockchain and Bitcoin then in 2013 and then in 2016? And what is it now? Is it the same pitch or has it changed?

• 27:30Speaker 01

  Yeah, that's funny. Um, either I don't have any new material or the old stuff's still good. And so it's still the same, like, and that's why I wanted to share, uh, my original thoughts in our letter. Um, that is on our website or Twitter, if anybody wants to see it, but, uh, cause it's still the same. Like I, I get this a ton where. You tell people about the fixed quantity of Bitcoin and, you know, so it can't be debased by fiat currency and, you know, all this stuff. And then people are like, it's just like buying gold. And I'm like, no, it's like buying gold in a thousand B C, right? Like, gold's been great for 5,000 years, but it's past its sell-by date. And digital gold is the new version of, of gold, right?

• 28:15Speaker 01

  And so that, that's why I got so excited, you know, originally in 2013, still, is that Bitcoin is gonna replace gold. Bitcoin is gonna replace remittance companies. It's gonna replace Visa, Mastercard, you know, all these huge use cases. And I'll admit, it's gonna take 20 years. Like, it's not gonna happen overnight. And so it's gonna take a long time, but it will happen. And that's another reason I'm super convicted. It's inevitable. Blockchain is inevitable, right? Like, it might take longer than I think, and we might invest in some companies that burn through all their money before it happens or whatever. Like, there's definitely risks, but there's no chance migrants are gonna pay a month's wages to send money across the border five years from now, right? Like, no chance.

• 29:00Speaker 01

  And you're not gonna pay 300 basis points to swipe a credit card. Like, those things, they're, they're over. I don't know if it's gonna take 10 years to be over or like a year or two. But like, that's why I love staying long in this space is it, it will happen. Like, you know, big changes are certainly happening, but over the next 20 years, a big change will happen.

• 29:20Ryan Sean Adams?

  Where, where are we now? I think a lot of people looking at this, you know, asset class are, they, they say things like, okay, well, you know, sure, Dan, when you bought Bitcoin in 2013 or even, you know, like 2016, there was asymmetric upside opportunity. But like, they're looking at the price of Bitcoin, they're like, I missed it. It just doubled this year. I'm not gonna buy something that just like doubled in the year. So they think that it's like, okay, they're on the other side. They missed another bubble. It's, you know, like, it's, it's kind of too frothy to, to get in now. What, how much more upside do you think there is? Maybe first in Bitcoin and then just like in the crypto asset class as a whole? Maybe another way to ask that is like, what percentage of the way are we in terms of like global adoption? Are we talking like 20%? Are we 50% right now? You know, higher or lower?

• 30:05Ryan Sean Adams?

  How do you think about that?

• 30:06Speaker 01

  Yeah, so I just said this line on CNBC because I love it. In any normal asset class, if something doubles this year, you should not buy it, right? Because that's overvalued, it's totally crazy.

• 30:20Speaker 01

  And they asked like, what do you think Bitcoin's double isn't that wild and crazy? I'm like, it's not even interesting. Bitcoin doubling this year? We've been doing this for 11 years. It's done that on average every year.

• 30:33Speaker 01

  Seriously, our compounding annual growth rate of Pantera Bitcoin fund is 89%. It basically doubles on average, obviously, every year for 11 years. And one pitch is, well, what if it does it one more year? It doubles your money, right? Like, it's, it's just not that hard. You know, and again, you only should invest a small amount of capital that if it went down 85%, your spouse still loves you, right?

• 31:00Speaker 01

  That's the measure, huh? Yeah, don't, don't invest more than that. But like, if you invest- Don't invest your marriage in, in this asset class. Yeah, like, you know, if you can keep your sizing to that level, just hold it, right? It's, it's doubled on average for 11 years. Yeah, and obviously the past doesn't necessarily predict the future, but I've been saying this for 11 years and it keeps doing it. So if you, you know, that'd be my logic. So it's getting large enough.

• 31:28Speaker 01

  You know, it can't go 1,000x again, right? Because then it would literally consume all of the power of the planet. But if it went up another 10x,

• 31:40Speaker 01

  it'd be 15 billion for Bitcoin from when it hit the fourth, third order magnitude.

• 31:48Speaker 01

  All financial assets on earth are about 500. You know, so trillion, so, I mean, that's, that seems doable, right? It really does. And again, I don't, I'm not going to try and predict where it's going to be 50 years from now or whatever. But in our lifetime of investing, you know, like however long, you know, each of us, you know, can kind of hold a trade, you know, five, 10 year timeframe. It, it really can go up 10x from where it is today and still not be like, you know, crazy, overvalued. And then your question for how far are we? It's a fascinating one. I still think we're pretty early in this, right? Supposedly 300 million people have crypto globally. It's kind of hard to really know.

• 32:33Speaker 01

  And, you know, probably frankly, a lot of those people aren't really doing as much with it yet as they are going to do in the in the fullness of time. So my main benchmark on that is the only thing you need to operate Bitcoin is the possession of a smartphone. And there are 4 billion people that have one of those today. There's some cool projects actually trying to put that kind of stuff on feature phones too, like KaiOS is a cool company we're talking to now that does that. But let's just say 4 billion growing to five over the next 10 years or whatever. I mean, most of those people are probably going to have digital currency on their phone, right? Like, half of those people have photo sharing on Facebook, right? Like,

• 33:17Speaker 01

  you know, photo sharing is really cool and all, but like digital money is even cooler. So I really don't think it's hard to imagine three or so billion people using crypto in, you know, eight, 10 years, something like that. It just really feels highly likely. And then, once they start using it, you know, there'll be more applications and, you know, they'll start using it for more things in their life. But it's so, I guess the punchline would be, we can't be more than maybe 15% of the way into this. It really feels like it's not that many people yet and they're not doing as much as they ultimately will do.

• 33:56Ryan Sean Adams?

  So broad strokes, you think maybe we're 15% of the way into this crypto blockchain thing. You think Bitcoin maybe has another 10x in it over some indefinite time period. You made the point in your investor letter, just if the, you know, the 89% compound, uh, compound annual growth rate, if that just continues, then Bitcoin would hit 7,000 or 740,000 in 2028, right? It's just to be determined on whether that continues or not, I guess. But just in general, do you feel like the asset class and Bitcoin in particular has reached a escape velocity? Like, there was a time in 2013 where a popular narrative is like, the government's going to shut this down, okay? Like, they're gonna, they're gonna quash things. This is never going to make it. You know, it's a libertarian fantasy land.

• 34:41Ryan Sean Adams?

  Now we're in 2024, completely different picture. Is this escape velocity? Is that what this looks like? It's kind of like inevitable that it will continue, will not be killed, it will, you know, like propagate further?

• 34:52Speaker 01

  Yes, honestly, I think.

• 34:55Speaker 01

  I think that the kind of biggest change recently, and I think the election puts it right over the edges Bitcoin had escape velocity like it's not coming back. And I vividly remember in 2013, all the talk about the government outlawing it. And, you know, at the time, there was Silk Road guy and stuff like that. There's a lot of kind of, you know, high profile, not really great sounding, you know, newspaper articles about Bitcoin, right? And that's you read mainly that kind of stuff. No one was talking about, oh, 2 million Mexicans use it to do remittance and save themselves a month's wages right now. Like, there was no good stories like that at the time, right?

• 35:40Speaker 01

  It was all bad stories. So, you know, it seemed possible the government would outlaw it. The US government outlawed gold, right? Like, the criminalized possession of gold, when you could be walking around plutonium at the time, like uranium, whatever, that was cool, but you couldn't own the financial element, right? And so, yeah, it was totally plausible, but now 50 million Americans own crypto. And then one of the themes we've been writing on, it's going to go out tomorrow on our current blockchain letter, they vote. And I think, I gotta say, I think the Democrats misunderstood that, that, um, let's do the math, right?

• 36:22Speaker 01

  The majority of Americans are under the age of 40. 90% of all the wealth created by the feds, I'll call them policy mistakes over the last three years, and Congress's money printing went to people 70 or older. So, there's been a huge wealth transfer from the majority of Americans, you know, my kids' age and, you know, all that, to a very small fraction that are 70 or older, right? You know, this is not a poli-sai, uh, podcast, I'm not going to dig into that too deeply, but let's just say, those young people love crypto and they vote.

• 37:03Speaker 01

  And we put a couple of really cool stats on the change in voting behavior from the prior presidential election 2020 to today of people under 40. Amazing shift.

• 37:17Speaker 01

  To a phrase I haven't heard in decades, young Republicans. It's amazing. Same guy running all three times, right? And the only thing different, in my opinion, well, the only difference is unambiguously positive is crypto. President-elect Trump went super positive on crypto in May. Everyone that's been nominated a cabinet position for him is super positive on crypto. And he's gonna have a crypto czar, you know, like, it's just super positive. And I think when all the PhD theses are written, crypto is gonna have been the thing that changed this election.

• 37:56Speaker 01

  I think it's 100% that that's the fact, that that one decision to go super positive on crypto pushed the election. And in males under 29, under 30 years old, voted for the Republican for the first time, probably in like generations, right? And so, and again, maybe it was some other thing, but I think they're gonna figure it out that it was crypto that made people change their votes. And so, the other big thing that happened in Congress is a ton of anti-crypto

• 38:34Speaker 01

  senators and congresspeople got bumped out, right? And I think that's the thing that the press really hasn't picked up on. Everyone talks about the red sweep and all that stuff. But the big thing is, wow, I totally don't get why congresspeople were anti-crypto before. Because like, who's the no voter out there? Who's the, you know, the farmer in Kansas is like, hey, man, if you go pro-crypto, I'm gonna vote for the other guy. You know, like, it's who's, you know, I don't, I never understood that.

• 39:07Speaker 01

  But the people that are anti-crypto lost their seats and a lot of pro-crypto people came in. According to a tally I read, and you know, I'm not gonna be, I'm not 100% sure it's the exact perfect one. But suppose there's 274 pro-crypto people in the House of Representatives against 122 anti-crypto people. And then in the Senate, it's 20 pro-crypto senators and 12 anti. And what my prediction would be is if we look at this. In four years, I don't even know if any of those anti-crypto congresspeople will still be in Congress, because there's no website. Hopefully, they'll have changed their opinion, but if they haven't, they're probably going

• 39:48Speaker 01

  to lose the midterm election or the 2028 election.

• 39:53Ryan Sean Adams?

  It was a bizarre cellphone to see the Democratic Party shift to this anti-crypto army posture. It was hard to see. I kept thinking, Dan, that I was missing something in this shift. There's some strategy. I don't see some cohort of voters, because it seemed like an obviously lose-lose-type strategy. I want to ask you about 2025 and moving forward, and this is the context of crypto reaching its escape velocity. This is the first time in history, I think, we'll have a pro-crypto administration, the executive branch, and also you mentioned Congress. Let's slice those two apart and talk about them separately. So Chris Dixon made the comment to me earlier this year that the legislative is great,

• 40:36Ryan Sean Adams?

  because that's how you hard-code change in the system. You actually want to get persistent change across administrations. You pass laws, and that's one set of the change we can expect to see. But the first set is actually the administration. And under the Biden administration, the past four years, anybody who's listening to this, anybody who's been in crypto, knows that there actually has been an Operation Chokepoint war on crypto, Gary Gensler's SEC. It seems like overnight, all of that is reversing, and I want to ask you what you think the biggest effects a pro-crypto White House might be. And maybe the first place we can start is this idea of a strategic Bitcoin reserve. It's hard to know how much power the executive branch actually has over this.

• 41:18Ryan Sean Adams?

  Of course, listeners will know, the US government currently holds 200,000 Bitcoin. This is from seizures. They haven't purchased this on the market, but they own it. And the default process, I think, under an anti-crypto executive branch would probably be to proceed to sell this. Maybe the Trump administration doesn't. Maybe the Trump administration does more and establishes a Bitcoin reserve. That sounds, if you were to go back in time to 2013, you... I don't know if you could have foreseen that. That sounds like Fantasyland. That that sounds like beyond your wildest dreams type of success for this asset class, that the largest economic power in the world would start stacking crypto on its balance sheet. And yet, this is what's being circulated.

• 42:01Ryan Sean Adams?

  As recently as last week, Trump sort of semi-confirmed. I saw a Forbes piece having jumped into this about Trump talking about a strategic Bitcoin reserve and what that might look like. What do you think the likelihood of that in itself is? And what's the impact?

• 42:15Speaker 01

  Yeah, so I think you're right to bifurcate things that can be done by the executive branch from things that require Congress to prioritize and pass legislation. It is my understanding that the executive branch controls the US Marshals service and can decide just to stop selling Bitcoins. And that is very easy to do. And we participated in the first Marshals election in 2013 or 14, whenever that was. Super cool to see their five-pointed star on a Bitcoin sale poster, which is really cool.

• 42:48Ryan Sean Adams?

  What do you mean by that? Was that that was some Bitcoin was seized and you purchased it directly from the US government?

• 42:53Speaker 01

  Yeah, so the US Marshals service is the entity that seizes assets from criminals and sells them. And they did, they started doing Bitcoin sales in 2013 and 14. And they have a really cool logo. It's a five-pointed star like in the West Sheriff.

• 43:07Ryan Sean Adams?

  Okay.

• 43:08Speaker 01

  And so it's my understanding that the president can just unilaterally decide to stop doing that. And as you say, the United States already owns 1% of the world's Bitcoins, right? So that's awesome. And if they stop selling, that's good. I'm not even going to remotely try and guesstimate what Congress can do because, you know, it's a very wild animal out there. So that might be hard. But just not selling 1% of all the world's Bitcoin is huge. Because remember, the float on Bitcoin is pretty small. There's a lot of people, including Satoshi, never sell. They just have their crypto. So 1% is a big amount.

• 43:46Ryan Sean Adams?

  It seems like Trump could, or the executive branch could. Not only not sell, but they're also, of course, executive branch over treasury. It's like Fort Knox, where the US keeps its gold reserve. It seems like the presidential branch would have some executive powers over that. And so if you just sort of start custoding the Bitcoin that you haven't sold, that's kind of the beginnings of a strategic Bitcoin reserve. It may not be fully what people hope for. I know Senator Lummis was talking about like building up to a billion, or sorry, not a billion, a million Bitcoin worth of supply, which would have to come by way of purchase later.

• 44:26Ryan Sean Adams?

  But can you see the executive branch just at least keeping the 200K and setting up some sort of custody-type structure with its powers?

• 44:35Speaker 01

  Yeah, I think that one seems very likely because as far as I know, it's within the executive branch's purview to do that. And so I would say the US, which is currently moving Bitcoins around right now, the US government, and selling them, moving to exchanges, I think that'll stop and then that'll be great because it's a flow that at least neutralizes. Prices reach equilibrium with buying and selling matching. And when you remove a seller, it helps the price go up. But and I also think it's a great strategy, right? When you are the world's reserve currency, you don't have anybody else's currency to save in, right? Everyone else can save. Even the Chinese who are at war with us, saving US dollars, right? So does Russia. Like, that's the reality.

• 45:20Speaker 01

  You have to save in the world's reserve currency. The US is that currency, so we don't have somebody else's. You mentioned Fort Knox. It is totally anarchistic mechanism that the US stores 11 million years of wages in a stone pyramid in gold, just like the pharaohs like 40 centuries ago, right? Like, it's so out of date. And so, yeah, I would love to see the US increase its holding of digital gold. And then, you know, as a citizen, I'd love for them just to sell the old-school gold because, you know, it's not really doing anything. So I think that is coming, that the US will stop selling, which is really important. The fun bit, though, is to remind people, it's not radical. Like, Singapore's own...

• 46:05Speaker 01

  Cryptocurrencies for five, six, seven years or whatever, like, you know, very well-run countries like Singapore, they've been doing it. It's not, it's not like super crazy. Like, you know, they have all kinds of other assets. Like, why not own what I think is a very compelling asset, Bitcoin, right? So that's why I think we'll come around to it. And there is a petition in Congress to, to do this, to create a strategic Bitcoin reserve. And as you said, everything got really partisan, which is really weird because like Ro Khanna was a very intelligent congressman from California and a Democrat. He said, you know, it's like the cell phone. Like, why is it partisan? Like, you know, I don't know why. And frankly,

• 46:50Speaker 01

  if anyone should have made it partisan, it's the Democrats. Bitcoin's like the progressives' dream is amazing. And there's a great congressman from the Bronx, Richie Torres, who's really fun to listen to talking about it. So the, you know, I hope it isn't partisan. I hope that it can get done. But, you know, I think we will be storing at least the 1% that US currently owns in Bitcoin for at least the four years that the current president, the president-elect will be serving.

• 47:22Ryan Sean Adams?

  I'm wondering what you think that kind of kicks off. Let's say that's the base case, all right? That seems very doable. It seems like Trump has kind of the political capital and will to just, and the powers to kind of pull that off. Just keep the Bitcoin you have, the 1%, the 200,000, right? Let's say we're not able to get to the kind of the bull case, which is, you know, Congress legislative body goes and passes some bill to go purchase more Bitcoin. But even at the base case, we keep what we have and we sort of announce that, project that to the world, right? You have to wonder what the game theory of other countries will start to do in the wake of that news, right? So what does the US's chief economic rival, China, do with that? Well, they also have around 200,000 Bitcoin that they have seized from various, you know, like

• 48:06Ryan Sean Adams?

  seizures in their country. Do you think that they will proceed to sell that Bitcoin? If the US is like announcing that they're holding their own and Possibly buying it? Or do you think they'll keep it as well? Do you think that some countries around the world will, whether they broadcast it or not, maybe many of them would be wise not to broadcast this, will start stockpiling Bitcoin? It seems likely that they would. So like what we're kind of kicking off is a, you know, expansion of Bitcoin and this sort of, you know, race to acquire more Bitcoin, which is kind of what people talked about, what you talked about in your memo from 2013, where you talked about Bitcoin being gold, except gold in 100 B.C. before all of the different nation states and empires and powers collected a whole bunch of it.

• 48:51Ryan Sean Adams?

  And so do you think the race is basically on if the U.S. does this? And what does that do to price?

• 48:56Speaker 01

  Oh, you said it better than I could. Yeah. I think a strategic Bitcoin race is on, arms race is on. And it's going to take 10 years, but it will happen where the U.S. is going to hopefully retain 1% of the world's Bitcoins. China hopefully will. And again, think of the irony, right? There's these regimes like China that are in, you know, kind of, you know, semi, well, let's just call it competition with the U.S. Why are they storing all their wealth in U.S. dollars and U.S. Treasuries? Right? Like, it doesn't seem smart, right? And then the U.S. sanctions regime like can control every little check they write, you know? So, yeah, I think it seems pretty obvious that,

• 49:38Speaker 01

  that especially countries that are antagonistic to the United States or the West would want to store their wealth in Bitcoin. And even neutral countries like, you know, it just seems smart to have some of your wealth in a different form of reserves, you know? That's why some people use gold, because it has different properties than, than, um, than U.S. dollars, which have to go through U.S. banks and all that stuff. But Bitcoins, you know, it's another great alternative.

• 50:08Ryan Sean Adams?

  Let's talk about Congress for a second. So this is the most pro crypto Congress we've ever seen. Like to your point. Do you think we'll pass any meaningful crypto legislation? The stablecoin bills have seemed like they're almost bipartisan. There's certainly a lot of wins that the U.S. can lock in from good stablecoin legislations. Basically, you know, maintain and preserve the world reserve currency status of the dollar seems to be one key win. Do you think that passes? What happens with a pro crypto Congress?

• 50:41Speaker 01

  So I've been so excited about blockchain for 11 years. I come in every day with this list of super interesting things I could work on every day. Trying to figure Congress out is not one of them. First thing, nothing to add because it's just a machine that I just don't get like Chancellor Bismarck says, some things you don't want to see produced, laws and sausages, right? And I just, I, so I don't, I literally spend no time thinking about Congress because I can't really influence anything and, you know, it's too hard for me.

• 51:16Ryan Sean Adams?

  Talk to me about institutions then. Institutional ownership, this has been huge in 2024. People like Larry Fink basically saying, hey, I was wrong. I was wrong back in 2021 about Bitcoin and I've since revised my position. The ETF products, of course, have been smash hits, absolutely insane. I think the last time we spoke, Dan, was like 2022 and it was sort of before all of this institutional wave of adoption. And the, even from Mike Novogratz, you know, your, your former, you know, coffee colleague and who you went to school with, kept repeating this phrase, the institutions are coming, institutions are coming. And it seemed like they weren't coming. It seemed like, where are they? Well,

• 51:57Ryan Sean Adams?

  in 2024, the institutions did come. They're here now. We've got tokenization. We've got ETF products. Like, but how here are they? What's the institutional ownership and adoption of crypto right now in terms of like how far along we are?

• 52:13Speaker 01

  I think we all thought they were coming a few years ago. And we've had some big institutions invest with us for a decade, right? So there are some, but like, when you're talking about like, you know, huge stampede.

• 52:26Ryan Sean Adams?

  Yeah, he said the herd. He used that phrase, you know, the herd's coming.

• 52:28Speaker 01

  So we all, we did think it was coming, but FTX happened, you know, BlockFi, Celsius, Terra Luna, GBTC crushed discount stuff, you know? And then the Securities and Exchange Commission sued Coinbase and Ripple Labs and like all these great companies, right? Wow. Just polar ice cap on the whole thing, right? If you're, you know, public pension plan, what are you going to do? Run that up to your state legislature and go, hey, I'm thinking about Bitcoin today. Like it just, there's no chance, right?

• 53:05Speaker 01

  The thing I don't think enough people realize is how quickly that can go the other way, right? If we find ourselves in 2025 with a pro crypto congress, pro crypto president and regulatory agencies that are at least neutral.

• 53:18Ryan Sean Adams?

  Which we will, right?

• 53:19Speaker 01

  Yeah, which it seems like that's gonna happen. Wow, everything could flip. And that's why you're seeing the price surging, massive inflows into ETF. And I think you're right, the ETF is such, such an important thing, right? You know, we launched the first crypto fund in the United States and I thought, yeah, we launched as a Cayman hedge fund because I thought, hey, it might take a few years to get an ETF through. That was 11 years ago, right?

• 53:46Ryan Sean Adams?

  Well, didn't the Winklevosses apply for an ETF back in 20, like it was around that, that timeframe, right?

• 53:51Speaker 01

  Definitely a long time ago, yeah. And my point being, wow, having waited for 11 years since we started in 15, I guess, since Bitcoin was around, that we were kind of repressing this desire to invest, right? And so it's not surprising that the Bitcoin ETF has been epic huge thing. 35 billion has net flowed into Bitcoin ETFs. And you kind of have to also include MicroStrategy, which I know is not an ETF, but it kind of looks like one, that has 18 billion of inflows into it.

• 54:28Ryan Sean Adams?

  Now in the NASDAQ?

• 54:29Speaker 01

  Yeah, so that's, you know, better, more than 50 billion into ETF or ETF-like products. And then this is a really cool stat. The flows into all of the gold ETFs on earth are zero.

• 54:45Ryan Sean Adams?

  Wait, really?

• 54:46Speaker 01

  So no money's flowing into old school gold, the 79th element on the periodic table, and 50 billion flowed into digital gold Bitcoin ETFs. Like, that's the change. And that was the thing I was thinking, you know, 12 years ago when we started, is hey, you know, Bitcoin's gonna go up and, you know, replace gold and it didn't happen. The ETF is helping it happen.

• 55:09Ryan Sean Adams?

  Wow, so is that, is that kind of a base prediction? I mean, when you were talking earlier about, you know, the 15 trillion, that's about gold's market cap, what's gold at 18 trillion?

• 55:16Speaker 01

  That's why I think it's, it's gonna happen, right? Cause... You know, gold does everything, or Bitcoin does everything gold does, but you can ship it more easily, you can store it more easily, you can do fractional sales, all that stuff. And so I think it will eat into gold's market share, you know, that the US, like you said, why do we store all that gold into Fort Knox? Like, it's crazy, honestly. And I'm not in any way predicting the US will actually sell gold, but I think it will buy Bitcoin. So I think, you know, over time, countries and people will overemphasize buying Bitcoin and not gold. And we've seen that since January, when the first ETF was launched in Bitcoin, 50 billion

• 55:57Speaker 01

  into ETFs and MicroStrategy, and zero into all of the gold ETFs combined.

• 56:03Ryan Sean Adams?

  So what do you think of institutional adoption for crypto right now? Like, you know, back to that percentage scale, how far along are we, right? It seems like with people like Larry Fink pivoting, and you're talking about the setup for 2025, things could shift quickly, but there's still, you know, like Vanguard will not put, allow an ETF or crypto assets inside of the Vanguard ecosystem. There still seems to be some resistance. It doesn't feel like we're at 100% now. Like, how far along are we with institutional adoption?

• 56:35Speaker 01

  Well, one of my favorite lines about this is so many people say Bitcoin's a bubble. And I'm like, how can you have a bubble nobody owns? The median holding of blockchain in institutions is zero.

• 56:52Ryan Sean Adams?

  Wait, wait, what?

• 56:54Speaker 01

  The majority of institutions have no meaningful exposure to blockchain.

• 56:58Ryan Sean Adams?

  What do you mean by institutions? We're talking, what are we talking about?

• 57:00Speaker 01

  Life insurance companies, pension plans, you know, endowments, foundations, you know, all the kind of institutional investors that hold real estate and equities and private equity.

• 57:12Ryan Sean Adams?

  They still have zero? Nothing?

• 57:14Speaker 01

  I think the majority of them have. A number that basically rounds to zero of directly held blockchain. Maybe they invest in some generalist venture firm that, you know, invested in one blockchain company or something like that. But I think it's still true that the majority of institutions have not actively written a material check to blockchain.

• 57:38Ryan Sean Adams?

  Does that mean we got to 100K just on kind of retail? Like literally retail front running the opportunity here?

• 57:42Speaker 01

  Yeah. Yeah. The smart money isn't in it yet. It's all the dumb money.

• 57:48Ryan Sean Adams?

  That's great.

• 57:49Speaker 01

  Yeah. So that's why I'm so bullish. I think, you know, we really just haven't started yet. And, and the point being, when you have institutions like, you know, BlackRock's biggest manager on earth, you know, and, and they're out there very publicly and they have a great blockchain team, like Fink's, you know, always positively talking about it. That's very helpful. Fidelity was super early. They, they started their whole blockchain project in 2014. They've been very supportive of the space. You know, all that is so helpful. And I guess the, the reason I wanted to say that is I have been evangelizing for blockchain for a long time.

• 58:28Speaker 01

  And so many times I'd be in a room with a big bank or big whatever institutional type investor and they would say, oh, we can't do it for compliance reasons. And I'd be like, huh. Essentially, I, I've run a couple of compliance departments and I have no idea what you're talking about. What is the compliance reason you can't do it? And they're like, oh, it's because of compliance reason. Like, you know, it made no sense. They just use that as an excuse. There's no reason like you can't invest in, you know, a Bitcoin ETF or whatever. And so now BlackRock and Fidelity and Bitwise and all these people are selling very regulated, incredibly awesome products. You can't say, oh, we can't invest for compliance reasons anymore. And even like Vanguard, right?

• 59:11Speaker 01

  Like I, I don't know how long it's gonna be defensible to say, oh, we can't have Bitcoin in there or whatever. Like, I mean, if $80 billion wants to flow into MicroStrategy, like it seems relevant, right? Like, you know, who am I to kick them out or whatever?

• 59:25Ryan Sean Adams?

  Yeah. I, I just love this story. I mean, part of the line of bankless from the early days has been front run the opportunity. And it seems like there's still time to front run the institutions on crypto assets.

• 59:36Speaker 01

  No, no, it's a great line and it totally applies here.

• 59:39Ryan Sean Adams?

  Talk to us about cycles. So you've been through a number of cycles here and feels like we're in a bull cycle at 100K Bitcoin all-time highs. I'm sure you'd agree with that. What happens this cycle? Is crypto inevitably going to play out in four-year cycles? Traditionally, people have talked about that may be driven by the halving. Others have talked about this is just kind of like global liquidity, the ebbs and flows and these four-year cycles. And so when liquidity and the fiat rushes in the market, then crypto has a bull market and it'll bull and then it'll bust off the top. Is that where we're headed for in this current cycle? Is just repeating four-year cycles forever?

• 1:00:22Speaker 01

  I think so.

• 1:00:23Ryan Sean Adams?

  Really? That's your base case? You don't believe in the super cycle or that we just break the mold? It just seems so obvious.

• 1:00:31Speaker 01

  Yeah. And when I was in college, one of the professors wrote this very famous book, Random Walk Down Wall Street, about how everything, the market was totally efficient and all that stuff. And there's a great line supposedly by Warren Buffett that says, "The difference between the market always being efficient and often being efficient is 80 billion to me." And that would be my thought here. When I first heard about the halving, I had your kind of mentality. Like, if we all know it's going to happen, then it can't happen, right?

• 1:00:59Ryan Sean Adams?

  Right.

• 1:01:00Speaker 01

  But I lived through that in 2013, 12, or whatever that was, 16. It's true. It's true. I totally believe it. And the reason it's true is the way our, and it's the halving, in my opinion, that does it, is miners sell every Bitcoin they get to buy more machines and more hardware and more electricity, right? And they just do that. And in any other market like copper, if you said, "Hey, we're going to shut down half of all the copper mines on Earth," On, you know, August 12th, you know, 2023 or 2024. Man, copper go way up, right? And that's what happens here is that every four years, they shut down half of the mines on earth

• 1:01:44Speaker 01

  or the production, half of the production. And so when you have a constant demand and you cut this fly half, it does go up. So the market's gone through very pronounced cycles. Here's the only thing that is different. The kind of amplitude of the cycles is moderating each time.

• 1:02:01Ryan Sean Adams?

  Okay.

• 1:02:02Speaker 01

  The thing to remember is that in the first halving, the amount that was reduced over the next year was equivalent to 15% of all of the above ground Bitcoin at the time, right? Like the halving was big and there weren't too many Bitcoins outstanding. Obviously, the next halving was half as big and there were more Bitcoins outstanding. So it was about a third as big as an impact. So each halving is getting lesser and lesser of importance. And obviously in 2136, the last halving, it's not going to have much of an impact, right? But right now it still does have an impact. And I have the stats here is that we think our data is that the halving is,

• 1:02:44Speaker 01

  starts about 400 days before the actual halving, the impact, the low in the markets. And then the high is another 480 days actually after it. And it has done that each time. And two years ago, when Bitcoin's at 17,000, we forecast that it would hit 28,000 at the halving and then 117,000 next August at the 480 days after the halving peak. The trough was within a couple of days, I think, of what we had forecast, you know, that it did bottom in. And it's a bit ahead of itself right now. It's almost at, you know, it's getting closer to 117. But it has been predictable.

• 1:03:26Speaker 01

  In the last halving, we put out on Twitter a forecast where it would be each month through 2020.

• 1:03:34Speaker 01

  And we said that in August 2020, if my memory is right, it'd be $62,642 on August 15th of 2020. It hit it that day, like literally that number on that day. And so I still believe in it, right? It keeps happening. And so I think we are going to have a big bull market and then we're going to have a bear market. But the only thing I would say is I think that having done three 85% downdrafts in the 12 years we've been doing this, the next one, hopefully, God willing, will be, you know, 50 or 60 rather than 80.

• 1:04:09Ryan Sean Adams?

  At least for Bitcoin, maybe not the long tail of crypto assets.

• 1:04:12Speaker 01

  And so, yeah, so I do think the four year cycle is totally real. I think we're still kind of, you know, in the up phase of that. And then the next downdraft probably be less.

• 1:04:23Ryan Sean Adams?

  So the base prediction, just in case people aren't, you know, tracking this, right? So last year was the having, was it April 2023, I believe? So we're, you know, 400 days, I guess, within that, something like this. And so if we just follow the four year cycle, does this mean 2025 is basically a bull market? 2026, we start going down?

• 1:04:47Speaker 01

  Yeah, that's the format that I would have in my head. And I think it was April 19th, 2024, this year that we had the habit.

• 1:04:54Ryan Sean Adams?

  Yeah, I missed the year. Yeah, thank you.

• 1:04:55Speaker 01

  And so August of 2025 would be the peak.

• 1:04:59Ryan Sean Adams?

  Okay.

• 1:04:59Speaker 01

  And man, everything's kind of setting up for that, right? Like it just seems too easy. I know, I know, I know. Yeah, like I get it. And but, yeah, so it, and we've had this conversation every four years for 12. So, you know, I know it sounds ridiculous to say, but at least we always forecast it moderating, that the previous having cycles were way bigger in amplitude. This one is smaller, but you know, I still think it's pretty real. And so I, and everything in the, that's just the having thing. But everything in the political and macro thing is setting up for it to be great for crypto too.

• 1:05:42Speaker 01

  So it's hard now to be pretty bullish on 2025.

• 1:05:46Ryan Sean Adams?

  What's your take on macro stuff? Does this impact things in a positive, negative way?

• 1:05:50Speaker 01

  Bitcoin impacting macro or the other way around?

• 1:05:52Ryan Sean Adams?

  Wow, Bitcoin impacting macro is not the way I've typically heard that phrase, but maybe it's big enough to start impacting macro. I was thinking more macro on Bitcoin.

• 1:06:01Speaker 01

  Yeah, I would say from the macro side,

• 1:06:06Speaker 01

  I'm still super dubious on the ability for the Fed to cut. And in December of 2021,

• 1:06:14Ryan Sean Adams?

  You have been consistently, because I've been reading the Pantera like updates from you.

• 1:06:17Speaker 01

  In December of 2021, the Fed funds rate was zero and the 10-year note was 1.3. And I said both were going to go to five and stay there for years. And I still believe it, like, the economy's booming. Like, the Fed's going to cut. Have you ever been to an airport? Like, go to an airport and see if the Fed should cut. You can't even move. It's like physically impossible to walk through an airport right now. Unemployment's as low as it's ever been. Wage inflation is really high. Like, there is no reason to be cutting rates. And so, in the stock markets, at all-time record highs, and you know, like, people that think the Fed's going to cut are crazy, in my opinion. And rates should be where they are.

• 1:07:03Speaker 01

  Fed funds, let's see, the real Fed funds rate, we're only 80 basis points above core inflation, right? Like, that's not restrictive. That has averaged, ah, so, sorry, 140 above where core inflation is right now. So it's slightly restrictive, but not that much. So, you know, and, yeah, you know, it just seems like there's not much room for the Fed. And then the fiscal thing in the US, and potentially globally, but I know the US better, we are running a $2 trillion deficit in the best of times. Like, there's nothing better that could be happening. Everything's at record highs. Everybody who wants a job has a job, like.

• 1:07:48Speaker 01

  If we're running a deficit now, wow. I mean, there's some bad times coming and that's hashtag buy Bitcoin, right?

• 1:07:56Ryan Sean Adams?

  Okay, yeah, well, so translate all this. Is that, is that effectively what the signs you're reading in macro of like, we're running at a deficit? You know, the US is continuing to print more money. They're talking about cutting. You don't think that's possible. Maybe they cut, maybe they, maybe we keep like constant. But in general, what does all this mean? Is this basically like money printing? And so commodities go up and particular digital asset commodities number go up?

• 1:08:18Speaker 01

  Yeah, yeah, you said it well. Our country, and then again, I don't know the other countries well, but in, in the United States, there seems to be an addiction to printing money. Like, um, there was a, a slide this direction prior to COVID. And then any fiscal restraint is out the window. Like literally sending $1,200 to every person in America a couple of times. And they're like, wow, I wonder why groceries cost so much like, is that's why? You said money to all these people, right? And so, um, the fiscal thing is very hard to see how to get out of because running a massive deficit,

• 1:09:00Speaker 01

  biggest ever in the best of times, right? And so, uh, fiscal policy is supposed to be counter cyclical, right? You're supposed to be holding everything back when it's ripping. And then you have some ability to ease when it's not. And so, um, it does look difficult. The US now spends more on interest than it does in the military, which is fascinating.

• 1:09:25Speaker 01

  And like I, and the current administration financed it with an adjustable rate mortgage. You know, we brought the duration of the treasury debt down to an arm.

• 1:09:36Speaker 01

  And I think rates are going to stay at 5% or higher forever. So like, that's could be very expensive because you've got to refinance all that debt at higher and higher rates. And so, Again, I don't spend a lot of my time studying the fiscal and macro side. The only thing I know is I'd much rather own Bitcoin than US dollars. And you mentioned commodities. The way to think about it is not that gold's at a record high and Bitcoins at a record high and stocks at record highs and housing's at record highs. All those things are actually kind of not moving. It's paper money is crashing.

• 1:10:12Ryan Sean Adams?

  Denominator.

• 1:10:13Speaker 01

  Yeah, the paper money is crashing. Everything else is kind of doing its own thing, right? Like Bitcoin against gold, against stocks, against whatever, real estate, you know? And so that's really the right perspective. And we did a graph that I should update where we had the price of US dollars in soybeans, in real estate, in gold, whatever. That's the thing that's crashing. And so, yeah, I think you can't, you can't want to hold paper money, given what's going on the fiscal side. Like, it really, I don't see how they get out of it. And even a former negative crypto person, Ray Dalio, just was on the tape. And I apologize for not having read the whole article, but I did see the headlines that he's saying there's a debt crisis coming and you should probably own some gold and Bitcoin.

• 1:10:58Speaker 01

  And, you know, he's obviously a very smart guy and at least I agree with that headline. So.

• 1:11:03Ryan Sean Adams?

  It's notable, by the way, I've been following Dalio for a while because I think his basically, like, his ideas around kind of the monetary cycles are like spot on. But he's always, his answer to it has been commodities and particularly gold. And this is sort of, this year has been the first time that he has also included Bitcoin as an answer to that, which is kind of notable coming from Dalio.

• 1:11:24Speaker 01

  It really is. And I think you're right to focus on these incredibly talented people that used to be negative that now see it, right? And.

• 1:11:34Ryan Sean Adams?

  They were just waiting for it to be a bit more consensus, I guess, right? Part of the monetary phenomenon here is money has to be, it's a consensus technology. It's a social coordination technology. So it's not money unless it has the deep liquidity of being consensus, right?

• 1:11:50Speaker 01

  Yeah.

• 1:11:51Ryan Sean Adams?

  So that's part of the effect. Let's talk about some other crypto areas really quick. Tokenization, real world assets, that's the kind of an institutional play. Do you think all of the assets basically come on chain? Is are now we in kind of like a, an S curve where all the traditional finance assets, starting with stable coins, of course, the dollars on chain, which we're at 200 billion, but treasuries, you know, then later stocks and bonds, does all of that begin to come on chain now?

• 1:12:16Speaker 01

  No, it's a great point. And that's again, one of those serial killer type things. We've been talking about that for 10 years and, you know, we've made a few investments a little early that didn't work and now it is working, right? And you're right, stable coins, great example of bringing something kind of normal and boring, like treasuries, T bills on the blockchain, but then it helps people do really cool things. And then projects like Ondo and others that are trying to help people get access to financial markets in the US, super important. So it's a really important thing. And even putting treasury bills on the blockchain, you're like, ah, whatever. That's not that big a deal. It's a really big deal because there are a lot of people that don't live in the United States, right?

• 1:13:01Speaker 01

  So you've got 8 billion people that would love access to US dollars and to treasuries, but they can't. And then even American citizens, probably not too many youngsters have ever had one of these, but I used to have a Treasury Direct account. It's where you can buy treasuries directly from the US Treasury Service.

• 1:13:18Ryan Sean Adams?

  Wait, really? I didn't know that was a thing.

• 1:13:20Speaker 01

  Yeah, it's a thing. That was kind of back, you know, in the CD era and all that stuff like, you know, I know, not, you know, probably not that many people do it in your age group. But the hilarious thing about that is you used to buy treasuries directly from the US government. So you didn't have to use a broker and all that stuff. If you want to send your Treasury Direct balance to a broker like Merrill Lynch or whatever, you have to wait for a year.

• 1:13:44Ryan Sean Adams?

  Wait, what?

• 1:13:45Speaker 01

  There's some government worker with a stack of withdrawal requests for Treasury Direct that is so high, it takes a year to get your 90 day T bill out of the government into Merrill Lynch. And if that's not the best. Advertisement for blockchain and RWA ever, that's it is like you thought you were doing the smart thing, you try to buy it directly from the government and you get locked up for a year. So those are good. Another great example is Figure Markets, which is founded by Mike Cagney, who I've known for about 30 years, super intelligent, former founder of SoFi, doing what I started

• 1:14:27Speaker 01

  out as a mortgage backed securities trader. Mortgages go through so many little mouths that all take a little bite out of it. It takes 55 days to go from the person who borrowed the money to the person who actually is the owner. Doing all that on the blockchain. It's a great example of taking all these inefficiencies out and they have, I think, 10 billion of mortgages on the blockchain already, right? And it's a, you know, hundreds of trillion market, like that's massive. And so tokenization of real world things is happening. The only one I'd be dubious on is tokenizing things like hedge funds or, you know, private equity funds or even Pantera Capital's funds, you know, like, because we're not trying to

• 1:15:12Speaker 01

  distribute it to everybody with a smartphone. You're like, you know, we're trying to sell it to people that are qualified purchasers by the SEC and all that stuff. So that's the one area that I don't share. Sometimes you hear people go, you know, all these funds will be on the blockchain. They might, but like, it's not broken right now. Like we connect with sophisticated investors pretty easily. So, but all these other things like treasuries, yeah, you know, it's a great use case. And, you know, honestly, that's the funny thing about the US government. They should love blockchain. It's going to help pump the deficit to anybody on earth with a smartphone, right? That's great for the US government.

• 1:15:50Ryan Sean Adams?

  Yeah, you're 200 billion in net purchasers of treasuries. That's what stablecoins are doing. That's a huge use case. A big plus one on like, I own some kind of treasuries in the money markets locked inside of Fidelity, right? If that was, I tell you, Dan, if that was an ERC 20 and I could like do things with it, if it was liquid, if it was portable, if I could, you know, spend it. If I could transfer it, that would be incredible user experience. I mean, the fact that we're not there yet and, boy, we can go there with crypto is like all the upside you need. I want to ask you about one other area before we close, which is, do you have any thoughts on crypto and AI and everything that's going?

• 1:16:29Ryan Sean Adams?

  Because so another S-curve right now, I don't know if this is, I guess, a few years ago, it would have been a huge asymmetric upside opportunity. And, you know, many, many folks say we're still early, is artificial intelligence. But that is now meeting crypto in a very interesting set of ways, right? So with crypto, we've created programmable money effectively, particularly with chains like Ethereum and others, which is like, you could do things with them, you can program with them. Now we have AI, which is basically like some of these agents are literally machines that, you know, are they going to prefer money you can't program or money you can program? I think it's programmable money, right? And so we've built this entire blockchain ecosystem effectively for them. What do you think the intersection is going to look like with crypto and AI?

• 1:17:12Ryan Sean Adams?

  Are you looking into sort of AI stuff?

• 1:17:15Speaker 01

  Oh, definitely. No, it's a great question. Super important. Obviously, AI is huge and it's coming at a rapid rate.

• 1:17:25Speaker 01

  There are two very important reasons why blockchain and AI really do have to go together.

• 1:17:32Speaker 01

  The first one is, you know, AI is so important and it's going to be so impactful for society. It just seems obvious it'll be better for us all if it's decentralized and open rather than, you know, for-profit, single person running it, all that. So we've invested in a handful of projects like Sentient and Sahara that are helping build out the ability for AI to be built in a decentralized way. One kind of small point on that is these models have already read the entire internet, right? There's nothing more to learn from, right? And so next generation AI models need data that's not yet free.

• 1:18:16Speaker 01

  And wow, blockchain is really good at providing incentives. And so if, if the next generation of AI models needs stuff they can't get for free, they have to incentivize people somehow, and blockchain is a great way to do that. And then the last one about, you know, whether these AI agents, you know, want to use, you know, a normal Kind of money or programmable money. Yeah, they probably got programmable money, but they certainly can't get a Chase Manhattan Bank. Yeah. And so they have to use digital money of some kind. And again, like, I'm sure there's somebody out there with some idea of something other than blockchain, but it seems like it has to be blockchain, right? That if you're having, you know, computer agents interacting with each other, they

• 1:19:01Speaker 01

  have to use computer money, right? And so I think both of those are hugely important. And it just doesn't seem like AI is going to be able to function without blockchain. And obviously, you know, blockchain, you know, there's a lot of overlap already, but I think, you know, in the next five or 10 years, it can be even more.

• 1:19:21Ryan Sean Adams?

  So as we close this out, Dan, I want to get your takes on just some general advice for investors, you know, like right now. So the Bitcoin Fund, the original Pantera Bitcoin Fund, I said this in the intro, is up 130,000%. Okay, guys, like 130,000%. Is there anything like that? Is that like a once in a generation type of return profile? Or do you think there are opportunities, there will be opportunities like that for investors in the decades to come?

• 1:19:53Speaker 01

  Well, I'm a huge fan of promoting or suggesting blockchain to anybody entering business, you know, like any young person, is I'm all in. I think it's going to be so important and, you know, I'm devoting the second half of my career to it. But if you're starting out, definitely get into blockchain, right? Because what if I'm wrong? You spend a couple of years, then you have to go back and get a real job, you know? So you should definitely be in it. And the same thing with investing. And this is another thing that politicians haven't figured out, is these policies that Congress and the Fed has pursued have really frozen out a younger generation that is very difficult to afford to buy a house.

• 1:20:34Speaker 01

  It's very difficult even to, you know, to think, how should I save for my down payment? And all these old people are super negative on blockchain and talking about all this negative stuff, but they get it, right? The young people totally get blockchain is super important. And so I think it's entirely rational that they're saving slash speculating, investing, whatever you want to call it, in blockchain, right? Because policies have been tough on them in other markets. So why not kind of front run the opportunity, as you said, against the old people who don't get it yet, right? And so I'm a huge fan of young people investing in blockchain. The only thing I would say is try and buy a more diverse portfolio. Don't just buy one mean coin, you know, and hope it works.

• 1:21:19Speaker 01

  Buy enough stuff. So if a couple of things don't work, a couple of things do work, you end up doing well. But again, if you're just starting out, I really actually do think it's a great thing to be for young people to really invest big time in crypto. Obviously, the older you are, and if you have a spouse, you got a mortgage, you got to dial everything back. But I think it is just such an important space. And the cool thing is the young people are ahead of the older people.

• 1:21:50Ryan Sean Adams?

  Dan, what are your plans for the, I guess, rest of this decade? What are you planning to do? Just continue with Pantera, doing what you're doing? I mean, there's some spots opening in the government, I would say, in terms of like pro crypto policy. I don't know if you're going to get involved there. What's on your horizon?

• 1:22:08Speaker 01

  Yeah, I'm just focused on doing everything we're doing bigger and better. You know, like we manage money for our limited partners. It's a huge honor, but we don't want to sway, get distracted away from that. There's no other business lines we want to be in, but we just want to keep doing what we're doing, you know, bigger and better.

• 1:22:28Ryan Sean Adams?

  Amazing. Dan Morehead, it's been a pleasure. It's your ability to identify these asymmetric opportunities has been pretty legendary. Bankless listeners, we'll include some notes in the show notes here with the investor letters that I mentioned. It's kind of historic. And Dan, thank you for guiding us through the patterns to help us identify these opportunities. And your bullishness on crypto is certainly infectious. So I appreciate everything you're doing.

• 1:22:52Speaker 01

  Thanks. It's been a blast being back on.

• 1:22:54Ryan Sean Adams?

  Bankless Nation, got to let you know, of course, none of this has been financial advice. Crypto is risky, a lot less risky than when Dan started, but you could lose what you put in. But we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.