Original video title: Crypto Winter or Buying Opportunity? Dan Morehead’s 4-Year Outlook
Original video source: The Master Investor Podcast with Wilfred Frost
Original translation by: Baihua Blockchain
In this interview, Wilfred Frost had a second in-depth conversation with Dan Morehead, the founder of Pantera Capital. They discussed the cycle positioning of Bitcoin after a 50% pullback from its peak; how fiat currency depreciation creates intergenerational wealth conflicts; and why this round of "smart money" is actually the last to enter.
Key insights summary
· Most institutional investors still have a position of 0.0% in blockchain, literally zero.
· It is not that gold hit a new high, but that paper currency is at a historic low.
· This may be the first instance in history where "smart money" enters the market last.
· The average age of first-time homebuyers in the U.S. has risen from 28 to 40 years.
· We are facing an intergenerational turning point where money is separating from the state.
· Stablecoins are very likely to take half of bank deposits within the next decade.
· Bitcoin has reached escape velocity, and I can't find any factors that can derail this process.
· If you have no exposure to blockchain, in a way, you are shorting this trend.
01, "Still the most asymmetric trade in history"
Host: Last time you were here, we delved into the macro logic of cryptocurrencies. What was the astonishingly low price at which you first bought Bitcoin?
Dan Morehead: $65.
Host: $65, compared to today’s price of about $66,000, it’s like two different worlds. In that episode, you described Bitcoin as "the most asymmetric trade in history." Do you still stand by that today?
Dan Morehead: Yes, I still believe that. Throughout my career, I have been looking for asymmetric opportunities where the upside potential far exceeds the downside risks. Bitcoin, and the broader cryptocurrency space, is the most asymmetric trade I have ever seen.
Early on, I would tell others: you could completely lose all your principal, so do not invest more than you can afford to lose. But at the same time, you could gain 5x, 10x, or even thousands of times in return.
The reason I remain optimistic is that we are still in the very early stages. Most institutional investors still have a position of 0.0% in blockchain and cryptocurrency. Literally zero. As long as the downside risk is negligible compared to the enormous volume of global financial assets, and the upside potential is to redefine the entire currency system, this asymmetry will not disappear.
02, The four-year cycle has been proven again
Host: Our last recording was on October 12, and the timing was interesting. Around October 6, cryptocurrencies reached a local peak, followed by a pullback. Since then, Bitcoin has fallen by about 50%. As someone who has gone through several cycles, how do you interpret this sharp decline?
Dan Morehead: Anything that tries to change the world will come with a lot of hype and volatility. Optimism is rampant at the peaks, while pessimism prevails at the lows. Pantera has been in this industry for 13 years and has experienced four complete four-year cycles. These cycles are actually very regular and even predictable.
When we met in October, we happened to be near the peak we predicted two to three years ago. Based on the models from the first three cycles, we expect Bitcoin to reach a local peak around August 2025. While we hoped to see a different outcome this time, such as new government policies breaking the cycle, it seems that the cycle's patterns have once again self-fulfilled. The market has dropped by 50%. It sounds like a lot, but compared to the 85% declines in previous cycles, this time it is actually much milder. The market may need about a year to bottom out, which is consistent with past patterns.
Host: You didn't show a bearish outlook at that time. Do you think this cycle will eventually drop by 75% to 80% like in the past?
Dan Morehead: That is a key question. I did not predict such a large drop at that time, as there were many positive factors. But the market has its own rhythm. I want to point out that at previous peaks, prices have greatly deviated from the long-term logarithmic trend line, showing a parabolic rise. For example, in 2013, the price increased tenfold four months before the peak. This time, however, the price did not show that level of extreme overheating; it just roughly returned to the 2021 levels.
So I think the current price may be roughly at the bottom range. Although it may take another six to eight months to build a bottom, if you have a four to five-year investment horizon, now is a very attractive position.
Host: The current price is around $66,000. Many technical analysts say that $60,000 is a key support level, and if it falls below, it could drop all the way to $25,000. Do you agree?
Dan Morehead: I am not good at technical analysis. We never try to make ultra-short-term timing trades. We manage money more like venture capital, with a perspective of 5, 10, or even 20 years. From this standpoint, the current price is already quite cheap.
03, Why does Bitcoin always get hit first?
Host: Why is Bitcoin always the "punching bag" among risk assets? When the Nasdaq and S&P 500 peak, cryptocurrencies are often the first to be sold off. Will this situation last forever?
Dan Morehead: This is a very astute observation. Think about it: if a major shock happens outside of trading hours from Monday to Friday, you cannot sell stocks. Whereas cryptocurrency is the only high-liquidity market in the world that has a scale of $2 trillion and is open 24 hours a day, seven days a week.
When geopolitical crises erupt, institutions want to immediately reduce their risk exposure, and Bitcoin becomes the only asset they can realize in real-time. This leads to excessive selling pressure on it in the short term. But please note that even though 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 span of years, cryptocurrencies generally move independently upward, while traditional assets may just stay stagnant.
04, It’s not gold hitting new highs, it’s paper currency hitting historic lows
Host: Let’s talk about gold. Gold has risen 55% over the past 12 months, while Bitcoin has basically remained flat. Does this shake the narrative of Bitcoin as "digital gold"?
Dan Morehead: Gold is an interesting "old-school" asset. It periodically enters the public eye. Before 2025, gold ETFs actually saw net outflows for several years, while funds poured into Bitcoin ETFs. But by 2025, people suddenly realized that the dollar was accelerating in depreciation, and this sense of urgency led funds to flow back into gold.
But my perspective on this issue is a bit different: it is not that gold or real estate is hitting new highs; it is that paper currency is hitting historic lows. As the printing presses keep running, the amount of paper currency needed to buy a fixed quantity of assets will inevitably keep increasing. The term "pound" originally represented one pound of pure silver; now you need to pull out several hundred bills to buy the same weight of silver. Governments can print currency infinitely, and that is the core of the devaluation trade.
Host: Aren't we currently in an incredible devaluation cycle?
Dan Morehead: Absolutely. The Federal Reserve defines "price stability" as a 2% depreciation per year, which is absurd. Stability should be zero. Even with just 2% annual depreciation, a person’s purchasing power would shrink by nearly 90% over a lifetime. (Editor’s note: At a compounded 2% annual depreciation rate, purchasing power shrinks by about 80% after 80 years.) I believe people are waking up to the need to hold a fixed quantity of hard assets, whether it is stocks, gold, or cryptocurrencies.
This devaluation trade also has clear intergenerational characteristics. Massive money printing has driven up asset prices, benefiting the older generations who already own real estate and stocks, while compressing the upward mobility of younger people. The average age of first-time homebuyers in the U.S. has risen from 28 to 40 years. Since traditional paths to wealth accumulation are no longer viable, it is a very rational choice for the younger generation to turn to cryptocurrencies. If you look at the wage growth and housing price growth curves since 1990, you will find that this gap has reached outrageous levels.
05, Separation of money and state
Host: How does geopolitical conflict change the logic of cryptocurrency?
Dan Morehead: War always brings persistent inflation. But more importantly, we are witnessing the "separation of money and state." In ancient times, money was gold, inherently independent of government. Later, governments monopolized the printing of money, but it turned out they didn't manage it well.
In the next decade, people will gradually realize that currencies do not need state endorsement. Geopolitical conflicts are making this trend more apparent— the world is becoming polarized. If you are a country that does not belong to the American camp, or if you worry that your assets may be sanctioned or frozen, you will want an asset that is not controlled by any single country. China once invested a large amount of foreign exchange reserves into U.S. Treasuries, which is becoming riskier in the current international landscape. Bitcoin, as an asset independent of the banking system and sanction regime, is even more valuable in times of conflict.
06, "Smart money" actually enters last
Host: How many people currently truly hold cryptocurrencies? Are there any substantial institutional positions globally?
Dan Morehead: Still very few. Although there are about 300 to 400 million people holding cryptocurrencies globally, most have small positions that are more like "play money". However, I believe that within ten years, due to the proliferation of smartphones (with 4 billion users worldwide), most people will use cryptocurrencies. Their cross-border transfers are fast, nearly free, and do not require anyone's permission.
This may be the first instance in history where "smart money" enters last. In the past 40 years, all the investment opportunities I have seen typically involve Wall Street getting in first with retail investors picking up the pieces last. This time it has completely reversed, with individual investors leading the way. I have shared stages with many alternative investment tycoons managing hundreds of billions of dollars, many of whom know nothing about Bitcoin.
This is why I am so optimistic— these smart, wealthy institutional funds will surely enter one day. Currently, Coinbase has already been included in the S&P 500 index. If you have no exposure to blockchain, in a sense, you are shorting this trend.
07, Policy shifts from hostile to favorable
Host: The shift in attitude of the new government 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, chasing after Coinbase and cracking down on Ripple. The current government is willing to build up this industry. Although the pace of legislative progress is always frustrating, frankly, the fact that the U.S. Congress can spend time discussing topics like "stablecoin market structure" indicates a qualitative change in the industry's status.
As for stablecoins, this is a revolution that is unfolding in phases. Currently, stablecoins may not yet be widely paying interest, but that is just a matter of time. Stablecoins are eating into the market of bank deposits. Currently, the scale of stablecoins is about $400 billion, while bank deposits total $17 trillion. (Editor’s note: As of March 2026, the total market capitalization of stablecoins is about $300 to $320 billion, based on multiple data platforms including DefiLlama and CoinDesk.) In the next decade, stablecoins are very likely to take half of bank deposits because they are available 24/7 on mobile phones, providing a much better experience than traditional banks.
08, Will strategic Bitcoin reserves be established?
Host: You are also paying attention to digital asset treasury companies like MicroStrategy. Do you think governments will establish strategic Bitcoin reserves in the future?
Dan Morehead: I think it is extremely likely to happen. The U.S. already holds a certain amount of digital asset reserves, most of which come from law enforcement seizures. And now they are no longer selling these assets, and they may even start to accumulate. Countries allied with the U.S. will follow suit for strategic reasons, while countries opposing the U.S. will buy in for defensive purposes. It will take time to advance in the political machinery, but this trend is irreversible.
09, Why Solana?
Host: In the competition of Layer 1, why do you particularly favor Solana?
Dan Morehead: We hold Bitcoin long-term, but Bitcoin focuses on value storage and cannot handle high-frequency trading that processes thousands of transactions per second. Solana is designed for high performance—cheaper, faster, suitable for complex application scenarios like gaming and high-frequency trading. The internet has Google and Facebook, and the blockchain space will also have a few core Layer 1s. Bitcoin is gold, while Solana may be the digital highway.
10, Nasdaq down 12%, Bitcoin down 50%, is it reasonable?
Host: The Nasdaq has dropped 12.5% from its peak, while Bitcoin has fallen 50%. Is this disconnection reasonable?
Dan Morehead: I think it is very unreasonable. Currently, stock valuations are at historical highs, with very low risk premiums, while interest rates are still high, meaning stocks are very expensive relative to bonds.
There are also signs of overheating in the AI sector, with many AI companies' valuations far exceeding trend lines.
In contrast, cryptocurrencies are 50% lower than the long-term trend line. From an asset allocation perspective, cryptocurrencies are currently in a very attractive oversold range. Even if the Nasdaq continues to decline in the future, I believe cryptocurrencies will outperform over a two-year horizon.
11, "I cannot find any factors that can derail this process"
Host: How do you feel now compared to during the bear markets of 2014 and 2018?
Dan Morehead: Completely different. In the early days, I did have moments where I broke into a cold sweat, worried that this entire experiment would be completely ruined by a hack or regulatory crackdown. But having gone through the collapse of Mt. Gox, multiple 85% pullbacks, and relentless regulatory squeezing, this industry has not only survived, but has become stronger. It has reached escape velocity.
Host: Is there any event that could make you completely give up your bullish stance?
Dan Morehead: A few years ago, I had a long risk checklist, including custody security, hacking, and regulatory uncertainty. But looking back now, most of these risks have been addressed. While nobody can guarantee that unexpected events won’t happen tomorrow, logically, I can't find any factors that could completely derail this process. A smartphone-based, global monetary system is the inevitable direction of human society. There are 4 billion smartphone users globally, and the financial accessibility brought by blockchain is far more important than sharing photos on social media.
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