Pantera Founder: After Bitcoin is cut in half—this is the entry moment you absolutely shouldn’t miss

Author: The Master Investor Podcast

Compiled by: Baihuai Blockchain

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In this interview, Wilfred Frost and Dan Morehead, the founder of Pantera Capital, held a second in-depth conversation. They discussed Bitcoin’s cycle positioning after a 50% pullback from its peak; how fiat depreciation creates generational wealth conflicts; and why this round of “smart money” is actually the last to enter.

01 “Still the most asymmetric trade in history”

Host: Last time you were here, we dug into the crypto macro logic. When you first bought Bitcoin, what was the price—surprisingly low, right? What was it exactly?

Dan Morehead: 65 dollars.

Host: 65 dollars—compared with today’s price of roughly 66,000 dollars, it’s like two different worlds. In that episode, you described Bitcoin as “the most asymmetric trade in history.” Do you still hold that view to this day?

Dan Morehead: Yes, I’m still confident about it. Throughout my entire career, I’ve been searching for those asymmetric opportunities where the upside potential is far greater than the downside risk. Bitcoin—and the broader crypto sector—is the most asymmetric trade I’ve ever seen.

In the early days, I would tell people: You could very well lose all your principal, so don’t put in money beyond what you can afford to lose. But at the same time, you might achieve returns of 5x, 10x, or even thousands of times.

The reason I remain bullish is simple: we’re still in the very earliest stage. The majority of institutional investors still have positions in blockchain and crypto that are 0.0%. Literally zero. As long as the downside risk is negligible relative to the massive size of global financial assets, and the upside is redefining the entire monetary system, this asymmetry won’t disappear.

02 The four-year cycle has played out again

Host: We recorded last time on October 12, and the timing was interesting. Around October 6, crypto hit a local high and then saw a correction. Since then, Bitcoin has fallen by roughly 50%. As someone who’s been through multiple cycles, how do you interpret this drop?

Dan Morehead: Anything that tries to change the world is always accompanied by a lot of hype and volatility. At the peak, optimism runs rampant; at the low, everything is filled with pessimism. Pantera has been deep in this industry for 13 years, going through four complete four-year cycles. These cycles are actually very regular—so much so that they’re even predictable.

When we met in October, we happened to be near the highs that we predicted two or three years ago. Based on models from the first three cycles, we expected Bitcoin to reach a local high around August 2025. Even though at the time we hoped this time would produce a different result—such as new government policies breaking the cycle—looking back, the cycle pattern has once again fulfilled itself. The market pulled back 50%. It sounds like a lot, but compared with the previous cycle drawdowns of 85% on a typical basis, this one is actually much more moderate. The market may still need about another year to form a bottom, consistent with past patterns.

Host: Back then, you didn’t come across as bearish. Do you think this cycle ultimately falls the way it did before, down 75% to 80%?

Dan Morehead: That’s a key question. I didn’t predict it would drop that much, because there were many positive factors at the time. But the market has its own rhythm. What I want to point out is that in the previous cycle highs, the price was far away from the long-term logarithmic trend line, showing a crazy parabolic pattern. For example, in 2013, in the four months before the high, the price rose by 10x. And this time, the price didn’t show that kind of extreme overheating—it only broadly reverted to the level of 2021.

So I think current prices are roughly in the bottoming range. It may still take another six to eight months to build a bottom, but if you have a four- to five-year investment horizon, this is a very attractive position.

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

Dan Morehead: I’m not good at that kind of technical analysis. We never try to do ultra-short-term timing trades. How we manage capital is more like venture investing, with a perspective of 5, 10, or even 20 years. From that perspective, prices are already quite cheap.

03 Why is Bitcoin always the first one to get smashed?

Host: Why is Bitcoin always the “scapegoat” among risk assets? When the Nasdaq and the S&P 500 top out, crypto is often the first to be sold. Will this keep happening forever?

Dan Morehead: That’s a very sharp observation. Think about it: if a major shock happens outside Monday through Friday trading hours, you can’t sell stocks. But crypto is the only highly liquid market of its scale—about 2 trillion dollars—and it’s open 24 hours a day all year round.

When local geopolitical crises break out, institutions want to immediately reduce their risk exposure, and Bitcoin becomes the only asset they can liquidate in real time. This makes it absorb too much selling pressure in the short term. But please note that although correlation spikes during “flash crash” moments, in the long run Bitcoin’s correlation with the S&P 500 is actually quite low—around 0.1 to 0.2. Over a multi-year timeframe, crypto moves independently to the upside, while traditional assets may just tread water.

04 It’s not gold hitting new highs—it’s paper money hitting record lows

Host: Let’s talk about gold. Over the past 12 months, gold is up 55%, while Bitcoin is basically flat. Does this shake the “digital gold” narrative for Bitcoin?

Dan Morehead: Gold is an interesting “old-school” asset. It periodically returns to mainstream attention. Before 2025, gold ETFs were actually seeing net outflows for multiple consecutive years, while money flowed into Bitcoin ETFs. But in 2025, people suddenly realized that the dollar is accelerating in value decline, and this sense of urgency caused funds to flow back into gold.

But my angle on this is a bit different: it’s not that gold or real estate created new highs—it’s that paper money is creating record lows. As the printing presses keep running, the amount of paper money needed to buy a fixed quantity of assets must keep increasing. The word “pound” originally meant one pound of pure silver; now you need several hundred banknotes to buy the same weight of silver. Governments can print money endlessly—this is the core of the depreciation trade.

Host: Aren’t we in an astonishing depreciation cycle right now?

Dan Morehead: Absolutely. The Fed defines “price stability” as depreciation of 2% per year, and that alone is absurd. “Stability” should be zero. Even if it depreciates by only 2% per year, a person’s purchasing power over a lifetime will shrink by nearly 90%. (Editor’s note: With compound interest calculations, a 2% annual depreciation rate means purchasing power drops by about 80% after 80 years.) I think people are waking up and realizing that they must hold hard assets with fixed quantities—whether that’s stocks, gold, or crypto.

This depreciation trade also has a clear generational characteristic. Large-scale money printing boosts asset prices, which benefits older generations who already own property and stocks, while compressing the upward mobility of younger people. The average age of first-time homebuyers in the U.S. has already shifted from 28 to 40. Since wealth can’t be accumulated through traditional paths, turning to crypto is a very rational choice for the younger generation. If you look at the curves for wage growth and home price growth since 1990, you’ll find that this “scissors gap” has become ridiculously wide.

05 Separation of money and the nation

Host: How do geopolitical conflicts change the logic of crypto?

Dan Morehead: War always brings persistent inflation. But more importantly, we’re witnessing the “separation of money and the nation.” In ancient times, money was gold, and it naturally existed independently of the government. Later, governments monopolized the power to print money, but it turns out they don’t manage it very well.

Over the next decade, people will gradually realize that money doesn’t need state endorsement. Geopolitical conflicts make this trend even clearer—the world is fragmenting into blocs. If you are a country that doesn’t belong to the U.S. bloc, or you worry that your assets might be sanctioned or frozen, you’ll want an asset that isn’t controlled by any single country. China once placed a large share of its foreign exchange reserves into U.S. Treasuries; under today’s international landscape, the risk is growing. As an asset independent of the banking system and the sanctions regime, Bitcoin’s value actually stands out even more in times of conflict.

06 “Smart money” actually enters last

Host: Right now, how many people actually hold crypto? Are there big institutional positions globally?

Dan Morehead: Still very few. Although there are 300 to 400 million people worldwide who hold crypto, most of them have small “for fun” positions. But I think that within ten years, because of the widespread use of smartphones (4 billion users globally), most people will use crypto. Cross-border transfers are fast, almost free, and don’t require anyone’s permission.

This may be the first trade in history where “smart money” enters last. In all the investment opportunities I’ve seen over the past 40 years, it’s usually Wall Street that gets the meat first, while retail investors are left to make the final pickup. This time, it’s completely reversed—individual investors are the ones walking at the front. I’ve shared stages with many alternative-investment bosses who manage hundreds of billions of dollars, and many of them know next to nothing about Bitcoin.

That’s exactly why I’m so bullish—these smart, well-capitalized institutional funds will eventually enter. Already, Coinbase has been included in the S&P 500 index. If you have no blockchain exposure, in a sense you’re already shorting this trend.

07 Policy shift from hostile to tailwind

Host: The new government’s attitude shift is an important variable in this cycle. How do you assess the current policy environment?

Dan Morehead: This is a huge tailwind. The previous administration took a hostile stance toward blockchain—going after Coinbase and targeting Ripple. But now the government is willing to build this industry. Although the pace of legislative progress always makes people impatient, honestly, the fact that the U.S. Congress can spend time discussing topics like “stablecoin market structure” in itself shows that the industry’s status has fundamentally changed.

As for stablecoins, this is a revolution unfolding in phases. Stablecoins may not yet fully pay interest, but that’s only a matter of time. Stablecoins are already eating into the market for bank deposits. Stablecoins’ current size is about 400 billion dollars, while bank deposits are 17 trillion dollars. (Editor’s note: As of March 2026, the total market cap of stablecoins is about 300–320 billion dollars, source: DefiLlama, CoinDesk, and multiple other data platforms.) In the next decade, stablecoins are very likely to take half of bank deposits, because they’re available 24 hours a day on mobile phones, and the user experience is far better than with traditional banks.

08 Will a strategic Bitcoin reserve happen?

Host: Are you also watching digital asset treasury companies, like MicroStrategy? Do you think the government will build a strategic Bitcoin reserve in the future?

Dan Morehead: I think this is extremely likely to happen. The U.S. already has a certain scale of digital asset reserves, mostly from law enforcement seizures and forfeitures. And now they’re no longer selling these assets—maybe even starting to accumulate them. Countries aligned with the U.S. will follow for strategic reasons, while countries opposing the U.S. will buy for defensive purposes. This takes time to push through the political machine, but the trend is irreversible.

09 Why Solana?

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

Dan Morehead: We hold Bitcoin long-term, but Bitcoin is focused on value storage, and it can’t handle tens of thousands of high-frequency transactions per second. Solana was designed from the outset for high performance—cheaper, faster—and it’s well suited for complex application scenarios like gaming and high-frequency trading. Just like the internet has Google and Facebook, in the blockchain space there are also a few core Layer 1s. Bitcoin is like gold, and Solana could be the digital highway.

10 Nasdaq down 12%, Bitcoin down 50%—does that make sense?

Host: The Nasdaq has fallen 12.5% from its peak, while Bitcoin is down 50%. Does this disconnect make sense?

Dan Morehead: I think it’s completely unreasonable. Currently, stock valuations are at historic highs, with extremely low risk premia, while interest rates are still high—which means stocks are already very expensive relative to bonds. In the AI sector, there are also signs of overheating, and many AI companies’ valuations have already far exceeded the trend line.

On the other hand, crypto is 50% below its long-term trend line. From an asset allocation perspective, crypto is now in an extremely attractive oversold range. Even if the Nasdaq continues to fall in the future, I still believe crypto will perform better over a two-year span.

11 “I can’t find any factor that would derail this process”

Host: How is your mindset different now compared with when you were in the bear markets of 2014 and 2018?

Dan Morehead: Completely different. In the early days, I really did have moments of cold sweat—worrying that the whole experiment could be completely wiped out by a single hack or regulatory crackdown. But after experiencing the collapse of Mt. Gox, multiple 85% drawdowns, and waves of regulatory crackdowns, the industry didn’t die—it actually got stronger. It has already reached escape velocity.

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

Dan Morehead: A few years ago, I compiled a very long list of risks, including custody security, hacker attacks, and regulatory uncertainty. But when I look back now, most of those risks have already been addressed. Of course, no one can guarantee that nothing unexpected will happen tomorrow. But logically, I can’t find any factor that would derail this process entirely. A smartphone-based, globalized monetary system is the inevitable direction for human society. With 4 billion smartphone users worldwide, the financial inclusion brought by blockchain is far more important than sharing photos on social media.