How much cheaper is the crypto market compared to AI? Pantera's CEO's long-term outlook on Bitcoin is worth paying attention to.

Over the past two years, artificial intelligence technology has accelerated from concept to industry implementation. Capital has rapidly flowed into leading companies in the sector, driving their stock prices significantly higher. Dan Morehead, founder and CEO of Pantera Capital, stated at an industry event in New York on April 29, 2026, that according to internal data tracked by Pantera, the index price of a basket of top AI companies is approximately 33% above the logarithmic trend of the past four years. He also pointed out that although the AI industry has a promising outlook, current prices have already fully incorporated these expectations. Based on historical valuation frameworks, the AI sector is trading above its trend line, in a typical “fully priced” zone.

Bitcoin is 43% below its historical trend; how to understand this valuation gap

In contrast to the overvaluation of the AI sector, Bitcoin’s current price is significantly below its historical valuation trajectory. Morehead cited data from Pantera indicating that Bitcoin is about 43% below its four-year logarithmic trend line, calling this the “largest deviation on record.” It’s important to clarify that this valuation gap does not imply an imminent sharp decline in Bitcoin’s price but is a relative judgment based on historical pricing models. Over the same time scale, Bitcoin’s valuation level is notably below its historical average, while the AI sector is significantly above its historical average. These two asset classes exhibit a directional divergence in valuation dimensions.

Why capital has long favored AI while neglecting the crypto market

The valuation divergence is driven by selective capital flow concentration. Morehead analyzed that institutional funds shifted heavily toward large tech companies and AI-related assets between 2025 and 2026, pushing the valuation levels of this sector higher. A survey of institutional investors managing over $60 billion in assets showed that 79% plan to allocate to crypto assets within three years, but most are still in evaluation stages with limited actual exposure. This “cognitive recognition but delayed action” manifests in capital allocation as the crypto market not receiving the same level of incremental funding support as AI. Differences in supply and demand structures are also key reasons for the current valuation gap between the two asset classes.

How much room is there for future demand given the low institutional allocation ratio

The low participation of institutions is both a reason for the current undervaluation of the crypto market and a potential source of future demand. Morehead pointed out that most large investment institutions have not yet materially held crypto assets, with only a few early movers involved. In contrast, the valuation rise of the AI sector has almost synchronized with the accelerated influx of institutional funds. The same survey indicated that about 65% of responding institutions view crypto assets as a diversification tool, planning to allocate between 2% and 5% of their portfolios. Based on the total assets managed by global institutions, even a modest increase in allocation ratios could mean substantial new net capital inflows. The process of institutional exposure returning from low levels to more reasonable levels is a core dimension in understanding the long-term valuation repair potential of the crypto market.

How the four-year supply cycle of Bitcoin influences short-term and long-term trends

Beyond capital flows, the structural cycles of crypto assets themselves also shape their pricing trajectories. Bitcoin’s block reward halving occurs approximately every four years, creating a unique supply rhythm. Morehead explicitly stated that the four-year cycle is “a real phenomenon,” and if historical patterns continue, the crypto market may remain relatively weak in the short term. Looking at the halving timeline, after the fourth halving in April 2024, based on the pace of the previous three cycles, the 12 to 18 months following the halving—roughly from late 2025 to 2026—are historically the most active windows for price discovery. The four-year cycle does not overlay on capital flows: it provides structural support on the supply side, while institutional demand is the key variable driving valuation back toward the mean.

How macroeconomic devaluation and inflation environments reinforce the underlying logic of crypto assets

In addition to capital flows and supply cycles, macroeconomic changes are continuously reshaping the valuation logic of crypto assets. Morehead describes crypto assets as a hedge against the “erosion of paper currency value,” emphasizing that the core narrative in the current market is not the absolute price movements of various assets but the systemic decline in fiat currency purchasing power. Under inflationary pressures and monetary expansion, the strategic value of scarce assets is being reevaluated. Bitcoin’s fixed supply, along with traditional reserve assets like gold, is structurally comparable; both are based on the premise of supply scarcity. The macro narrative’s underlying logic offers an analytical framework that transcends short-term capital flows, aiding understanding of the medium- and long-term pricing of crypto assets.

What are the potential cross-fusion opportunities and landing scenarios between AI and blockchain

The macro logic outlined above forms the foundation of the long-term value of crypto assets, while the intersection and integration of AI and blockchain technologies offer new incremental demand possibilities. Morehead believes that the next stage of AI development will increasingly rely on blockchain infrastructure, including scenarios such as prediction markets, verifiable data, and autonomous payments for AI agents. Pantera has already invested in a series of projects at the intersection of AI and blockchain. Overall, the valuation divergence does not imply direct competition or substitution between the two industries but reflects a mismatch in technological evolution—crypto assets’ valuation repair needs could be catalyzed by AI industry penetration, helping to reverse the current pricing gap.

Summary

The current valuation divergence between AI stocks and crypto assets essentially reflects the differences in capital concentration and institutional participation across these two technological sectors. Data from Pantera Capital shows that top AI companies are valued about 33% above their four-year logarithmic trend, while Bitcoin is about 43% below its historical trajectory, representing the “largest deviation on record” as described by Morehead. From the perspectives of institutional allocation, the four-year supply cycle, macro hedging attributes, and AI integration potential, the relatively low valuation system of the crypto market is accumulating long-term momentum for valuation repair. However, in the short term, attention should still be paid to the pace of institutional capital reflow, macro policy directions, and the intrinsic cyclical rhythm of the crypto market itself.

FAQ

Q: Does Bitcoin being 43% below its historical trend mean it’s a good buying opportunity now?

A: The 43% discount is a relative valuation judgment based on Pantera Capital’s tracked four-year logarithmic trend line, indicating Bitcoin is significantly below its average within the historical pricing framework. This data points to valuation attractiveness rather than price prediction. Any investment decision should be made based on personal risk tolerance and investment horizon.

Q: Will the high valuation of AI stocks necessarily lead to a correction?

A: The 33% valuation premium suggests that the AI sector has already incorporated market expectations fairly fully, but this does not necessarily mean an inevitable correction. Valuations can revert through price adjustments or through earnings growth absorbing high valuations. The relative direction of these changes depends on the actual growth trajectory of the AI industry and macroeconomic developments.

Q: What conditions are needed for large-scale institutional capital inflows?

A: According to the 2026 institutional survey data, nearly 80% of institutional investors plan to allocate between 2% and 5% of their managed assets to crypto, but most are still in a wait-and-see phase. Main constraints include regulatory framework improvements, market liquidity depth, and the maturity of custody and compliance infrastructure. As these conditions improve gradually, the proportion of institutional allocations is expected to rise from current lows toward target ranges.

Q: Is Bitcoin’s four-year halving cycle still valid in the ETF era?

A: Bitcoin’s halving mechanism continues to operate according to its coded schedule. The introduction of ETFs has not changed the supply rhythm. However, ETFs facilitate easier access for institutional funds, which has altered the demand side of the market. Some believe that sustained institutional participation may weaken the pulse-like impact of halving events, leading Bitcoin’s price trend toward a smoother long-term trajectory. The four-year cycle’s shape may evolve, but the supply-side scarcity logic remains valid.

Q: When will the integration of AI and blockchain be reflected in crypto market valuations?

A: The intersection of AI and blockchain is still in early development, with infrastructure projects and payment standards being refined. It is more of a three- to five-year long-term narrative rather than a short-term pricing driver. From a medium- to long-term perspective, this integration trend could generate additional demand sources for the crypto market.