Founder, Managing Partner
@PanteraCapital
– the first investment firm in the U.S. to launch digital currency, early-stage token, and blockchain venture funds.
“There are decades where nothing happens; and there are weeks where decades happen.”
– Vladimir Ilyich Lenin
I’ve been investing in bitcoin/blockchain for over a decade. Nothing happened at the SEC and the presidential administrations the whole time. A decade’s worth
This is getting ridiculous. A year ago we predicted Bitcoin hitting $62,968 this week. It just did.
This Bitcoin rally is EXACTLY like previous halvings. Likely to reach $115k by August.
April 2020 Investor Letter:
On average,
#bitcoin
has more than tripled annually for eleven years.
There have been a couple bubbles, a couple bear markets, but when you look at it over a long period of time, it has remarkably stable growth.
PayPal+CashApp already buying more than 100% of all newly-issued bitcoins. PayPal alone likely buying all within weeks.
Where would Cash App get theirs? That’s where the finite-supply, inelasticity part comes in: At a higher price.
#bitcoinshortage
Read:
Pre-halving,
@CashApp
was buying 20% of all newly-issued BTC. Now it’s ~40%
You can go round and round with pundits on valuing
#Bitcoin
. One thing that is certain – when net supply goes way down – and demand is constant or growing – the price goes up.
Bitcoin’s four-year-on-year return is at the lower end of its historical return.
Again, doesn’t look overvalued.
We think we’ve seen the most of this panic.
More in our June investor letter:
For new investors, it’s best to buy when the market is well below trend. Now is one of those times.
#Bitcoin
has only been this “cheap” relative to its trend 20.3% of the past 11 years.
More perspectives on market timing in our June investor letter:
Narratives being pumped out:
"If you can’t trust FTX who can you trust?”
"Blockchain is a failure."
These are missing the point.
FTX's collapse had nothing to do with blockchain tech. It’s not crypto that failed. The protocols worked perfectly.
Read:
As we approach what appears to be the worst kept secret in blockchain, will the launch of a spot Bitcoin ETF be a “Buy the rumor, sell the news” event?
I share my long explanation in our newly-published Blockchain Letter here:
I'll summarize my thoughts
Let me pitch a stablecoin idea:
I invest $15 million in equity in my project.
Then I sell to the public $195 million stablecoins.
With those proceeds I buy $210 million in risky assets.
I promise the stablecoin holders incredible liquidity. With just one click on their
Actually, inflation is more like 12.9% versus 9.1%.
Using a real-time measurement for housing inflation, the Case-Shiller Index, in place of OER (owners' equivalent rent) – a very slow-moving index introduced in 1982 – measures the real inflation people are experiencing.
ALL of DeFi is only valued at $20 billion.
Traditional, centralized finance is worth $3 trillion.
I’ve spent my career looking for very asymmetric bets. That’s an epic one – buying DeFi at 150-to-1 odds. Great trade.
Thoughts on the markets:
Governments should stop obsessing about Bitcoin and look inward.
The biggest Ponzi scheme is the U.S. government and mortgage bond market – $33 trillion.
Bond investors may get destroyed when the Fed stops manipulating the market.
Hedge with
#bitcoin
Yeah, there’s a ton of hype. And, many hopes probably won’t come to pass. But the intersection is an incredible future. Happy to be living in this moment.
For every million new users, the price of
#bitcoin
rises $200.
If this relationship holds, bitcoin will hit $200,000 in 2022.
Sounds like a large caveat – but these relationships have held for a decade.
More in our April Investor Letter:
1/ I have spent 35 years trading global macro disruptions. This is like no other. This will certainly end the longest global expansion on record.
Bitcoin was born in a financial crisis. It will come of age in this one.
Here are my thoughts:
In DeFi, “a deal is a deal” – you can’t back out.
Celsius was forced to prioritize paying down its $400mm+ loans on Maker, Aave, and Compound to avoid liquidation.
There is no ability to “re-structure”/renege on smart contracts.
Why DeFi works great:
We think this is the beginning of the market re-rating Ethereum for EIP 1559 & Proof of Stake.
A deflationary asset - where each block, negative ethereum are issued.
This means ETH will be a more deflationary asset than bitcoin.
More in our May letter:
(1/5) Just 5% of the market cap of the top 15 blockchain protocols are in projects domiciled in the U.S. versus 78% for internet companies.
The state of crypto-asset regulation is the polar opposite of the rest of the internet. The impact is clear.
A brief explanation why👇
On average,
#bitcoin
has more than tripled annually for ten years.
There have been a couple bubbles, a couple bear markets, but when you look at it over a long period of time, it has remarkably stable growth.
Why current crypto prices are attractive:
Cryptocurrency is the most asymmetric trade in a generation. It is disrupting the biggest markets on earth including gold, bonds, global payments, and money.
....and something like 90% of institutional investors have no exposure, yet.
It just happened — Decentralized Finance now more valuable than centralized finance.
Bitcoin and Ethereum each worth more than any bank.
DeFi — power being devolved to the people.
More in our May investor letter:
The grip centralized finance companies have on world’s population is waning
Power being devolved to the people is evident in rise of Decentralized Finance
Ethereum, the largest platform for DeFi, is worth more than every bank except JPMorgan
May letter
We’ve had two huge shifts: DEMAND curve way up (
@PayPal
+ new institutional buyers) at same time as SUPPLY cut (
#BitcoinHalving
).
Econ 101:
SUPPLY and DEMAND will equilibrate at a higher price 🚀
Read our December letter:
Tomorrow I’ll be speaking at
@BlackRock
’s Institutional Digital Assets Summit. One of the topics they’d like to address is how much the industry has changed over the last decade.
The existence of that Summit **IS** the massive change.
Really excited about this.
It’s pretty freaky deaky to have two data sets go up five orders of magnitude and have their relationship be perfectly constant.
For every million new users, the price of
#bitcoin
rises $200.
Our April investor letter .
Our inflows data show that investing when
#bitcoin
is cheap is not easy.
Inflows skew pro-cyclical. As price rises sharply, investors FOMO in. As it reverts to fair value, few buy.
If you have the emotional & financial resources, go the other way.
More:
I think we’re done with the bear market -50% and we’re on to a new rally cycle.
The next 6-12 months are likely to see a massive rally as investors flee stock, bond, and real estate markets – for blockchain.
Just Published:
#Bitcoin
YoY return never went literally off-the-chart like in past peaks.
It’s currently trading at 281% YoY — which seems entirely plausible given the money printing that has occurred.
Even lumber is up 382% YoY.
Crypto doesn’t look overvalued.
More:
When
@PayPal
went live, volume started exploding. The increase in itBit volume implies that within two months of going live, PayPal is already buying more than 100% of the new supply of bitcoins.
#bitcoinshortage
Read:
A former and potentially future president of the United States will speak at Bitcoin 2024.
Let that sink in a minute.
That is just such a massive sea change.
Several parts of the U.S. government have been very antagonistic to blockchain – for way too long.
I’ve never
$5,000 /BTC sounded ludicrous as our first written price forecast when we launched Pantera Bitcoin Fund at $65/BTC.
$115,212 /BTC by August may sound ludicrous today, but the price of
#Bitcoin
is right on track.
More in our January investor letter:
#Bitcoin
has now hit seven of the milestones forecast in our April investor letter. The pace of this Halving rally is almost exactly in line with the previous two – based on the relative stock-to-flow ratios: 2012, 2016, and 2020.
It’s getting interesting.
#bitcoinshortage
The compound annual growth rate of
#bitcoin
has been 213% for more than ten years.
$200,000 a year from now would be exactly 213% higher than today.
It would be just normal trend growth.
More in our April Investor Letter:
There’re approximately 100 million people using
#Bitcoin
now. I can imagine a world when 10 times as many people use bitcoin. With 10 times as many people buying something with a fixed quantity, the price will go up (a lot).
Read our December letter:
#Bitcoin
historically bottoms 459 days prior to each halving.
This cycle, the market did in fact trough 514 days before the 2020 halving.
IF history were to repeat itself,
#bitcoin
would peak in August at $115,212.
More in our January investor letter:
Disruptive technologies like Apple, Amazon & Bitcoin look crazy when you graph them in standard format.
However, when you graph them exponentially their steady growth becomes apparent.
BTC been remarkably steady - CAGR of 230% over 10 years.
May letter:
Blockchain is the first half-a-trillion-dollar market nobody* owns.
Goldman Sachs to Open a Bitcoin Trading Operation. Within just a few months all of Wall Street will be trading
#bitcoin
.
* nobody == institutional investors
I’m not certain that
#bitcoin
will go up. I believe IF it goes up, it will go up a lot.
And, of course, it can only go down 1x.
That’s incredible asymmetry.
In my opinion it’s the best expected value trade of my career.
More in our Feb investor letter:
I can imagine an investor thinking: “Bitcoin is up 162% this year. Well, I missed it.” and giving up.
No. That’s the wrong mindset. It’s up almost that much EVERY year (on average). The 13-year trend growth rate is 117%.
Bitcoin, as a proxy for our industry, is still very
#bitcoin
tends to rip after retaking its all-time high.
The average of the past three instances – 8.8x over a 166-day period.
On to the next price era.
One of my favorite Wall St arguments against Bitcoin:
“No Good Reason To Own BTC Unless You See Prices Going Up”
Why else would one own an asset - unless believed price would go up?
Staying long blockchain until negative stuff stops being written.
More
Ethereum has a massive ecosystem of decentralized finance use cases with rapidly growing adoption.
Combine this with EIP 1559 & PoS and we think Ethereum will keep gaining market share relative to Bitcoin.
More in our May investor letter:
#Bitcoin
Price Cycles
After a 1067-day bull market, a downdraft which is spot on previous bear markets in depth, retracement.
My old friends in the hedge fund space would love the Fibonacci 0.618 bounce.
If I were a betting man, I'd say we've seen the lows of this cycle.
When in doubt, zoom out.
#cryptocurrencies
are still out-performing other asset classes by an order of magnitude (or two) throughout this period of unprecedented fiscal and monetary expansion.
Thoughts on the markets:
3.5bn people have a smartphone - the only requirement to use bitcoin. In the long run – it’s not obvious why most of those won’t use bitcoin.
I **know** there're a billion reasons it’s not exact, but there are 3.5bn reasons it is a good construct.
Read:
Pantera recently made the largest investment in its history in
#TON
.
TON is a Layer 1 network originally designed by Telegram and continued by the open source community. We believe TON has the capacity to introduce crypto to the masses because it is used extensively within the
For most of 2022 and 2023, all kinds of rare, crazy bad things were happening—once-in-a-generation-type things.
A very important theme now is the absence of bad things.
My full thoughts here:
I'll summarize below.
The swings in global macro markets
My sense is that — after having a 54% drawdown from April to July resulting from China's 3rd ban, ESG FUD, Tax Day, Coinbase IPO top signal, Elon's 180 — we are now in a new bull cycle.
On to the next price era.
Read our new October Investor Letter:
#Bitcoin
hit the eighth milestone forecast in our April investor letter.
The pace of this halving rally is almost exactly in line with the previous two – based on the relative stock-to-flow ratios: 2012, 2016, and 2020.
#bitcoinshortage
#bitcoin
has only been this "cheap" relative to its log trend 10% of the past 11 years.
It's a better time to buy when the market is well below trend.
Our January Investor Letter:
Bitcoin now three weeks ahead of our April forecast schedule -- to hit $115k this summer.
#bitcoin
surpassed $1 trillion market cap 🚀
More in our current investor letter:
The recovery is happening exactly as forecast.
The
#bitcoin
network has recovered 68% of the drop in hashrate that our difficulty model attributed to China's ban—likely in places with cleaner energy.
The transition to renewables is underway.
Sep Letter:
3.5 billion people have a smartphone.
If price continues to rise $200 per million users,
#bitcoin
would become fairly valued at $700,000.
At that level bitcoin would be worth $15 trillion – or 15% of global M2. That seems totally doable.
April letter:
Never in history has the Fed allowed house price inflation to go so high above mortgage rates.
The previous two bubbles – which were half as big – ended badly.
I discuss the macro environment:
As investors, we tend to get caught up in the all-time highs. Equally important are the yearly lows.
#bitcoin
has shown consistent positive growth – there’s only one year with a lower low than the previous year’s.
Thoughts on the crypto markets:
New all-time high.
The last time
#bitcoin
retook its ATH, it went 3.2x above that. The average increase of the past three instances – 8.8x over a 166-day period.
We've entered the next price era.
At $46,500, bitcoin is just back to its 10-year exponential trend price ($46,537 today).
#bitcoin
price still probably has a huge move ahead of it.
In previous bull cycles, bitcoin price peaked at 1,580% and 669% above “fair value” (2013 and 2017).
More:
The Fed has really created a self-inflicted disaster here. It’s the two worst policy mistakes I’ve seen in thirty-five years of investing.
1. Overnight rates kept way too low, way too long
2. Massive manipulation of the bond market
Let’s unpack these further 🧵
The
#bitcoin
network is as secure as it's ever been.
The void in mining capacity from the China ban has been filled and the transition to renewables is well underway.
More in our December investor letter:
#Bitcoin
hit the ninth milestone forecast in our April investor letter – $38,000.
The pace of this halving rally is now ahead of the previous two – based on the relative stock-to-flow ratios: 2012, 2016, and 2020.
#bitcoinshortage
The Fed's decision to print ~$50,000 per American family during the pandemic has:
• destroyed consumer purchasing power
• fostered a massive surge in income inequality
• saddled our children with more debt than it took to win WWII
and more.
Read:
Unlike in centralized systems, you can’t pay to front-run retail investors in
#DeFi
.
DEXs like
@1inchExchange
,
@InjectiveLabs
,
@BreederDodo
,
@Uniswap
are just code – they don’t work for anybody.
The future is decentralized.
More in our investor letter
The price of bitcoin has a pronounced four-year cyclicality.
The rhythm is amazingly steady. The rallies are within 23 days of the 1,076-day average bull market (2.95 years). Same tightness on the downside – bear markets end within 24 days of the 382-day average (1.05 years).
Investing perspectives:
#bitcoin
has averaged more than tripling annually for ten years.
#bitcoin
has only printed one calendar year with a lower low.
Anyone that has held
#bitcoin
for 3.25 years has made money.
More thoughts on the markets here:
Happened exactly as forecast.
The void in mining capacity from the Chinese ban has been filled – most likely in places utilizing cleaner energy.
#bitcoin
’s transition to renewables is well underway.
More in our October investor letter:
"No one has missed the train. Most people will wish they bought
#Bitcoin
under half a million dollars."
- Wences Casares
@SALTConference
We're still in the early innings of a multi-decade transformation that'll positively impact billions of people.
More:
Bitcoin’s monetary policy is mathematical by design – it cannot be “Quantitatively Eased” by any central authority.
One might amend the old line – replacing “land” with “bitcoin”:
“Buy land; they’re not making it anymore.”
- Mark Twain
More:
If you told me 3 years ago the US was going to print a trillion dollars in one month, I would have said 1,000 to 1 against. It just happened. In all that, I think it's going to melt up.
Great conversation on
#bitcoin
with
@novogratz
and
@petermccormack
Inflows data show that investing when
#bitcoin
is cheap is not easy.
Inflows skew pro-cyclical (chart). As price rises sharply, investors FOMO in. As it reverts to fair value, few buy.
If you have the emotional & financial resources, go the other way.
1/ The next halving is projected to occur in April 2024. The mining reward will decrease from 6.25 BTC per block to 3.125 BTC per block.
Efficient Markets Theory would hold that if we **all** know it’s going to happen, then it has to be priced in.
It’s been over a year since Terra/LUNA, Three Arrows Capital, et al.
Bitcoin’s year-over-year return bottomed at -76% amidst the FTX debacle last November.
It recently flipped positive and is now at 31%.
We believe it’s been enough time, that we can rally now.
1/ Unfortunately, crypto has been trading as a long-duration tech stock so far this year.
I think we can decouple from the other risk assets and we'll see a world, 1-2 years from now, where a lot of other risk assets are lower than they are today and crypto, much higher.
Why?
Apple products rely on aluminum smelting which consumes 3% of world electricity.
Facebook doesn't even have 1/3 of ESG—one guy has >50% voting share.
So unless you've divested from gold and tech on ESG grounds, ruling out
#bitcoin
would be inconsistent.
For every million new users, the price of
#bitcoin
rises $200.
It happened every time except for February 2016, when the price was slow to hit.
If this relationship holds, bitcoin will hit $200,000 in 2022.
More in our April Investor Letter:
"It's a Ponzi scheme"
I’ve heard that line for 8 years.
Regulators are talking about bubbles and manipulation constantly.
The markets have it right – there is a massive Ponzi scheme going on. Let’s investigate.
hint: it's not
#Bitcoin
Just published:
Pantera's core post-pandemic macro theme:
The unlimited printing of money will push up the price of things whose quantity cannot be eased.
And, it is.
Here's an update of returns on
#crypto
and traditional assets since the massive money printing began:
The grip centralized finance companies have on the world’s population is waning.
#Bitcoin
+
#Ethereum
are worth more than all these banks combined.
Read our latest Investor Letter:
The # of people using
#bitcoin
has grown by an order of magnitude every couple of years. So has the price.
I imagine a world when 10x as many people use it. With 10x as many people buying something with a fixed quantity, price will go up (a lot).
Read:
Wild when two data sets go up five orders of magnitude and their relationship remains perfectly constant.
If this holds, bitcoin will hit $200,000 in 2022.
And, when everybody with a smartphone has bitcoin - $700,000.
More in our April investor letter:
The grip centralized finance companies have on world’s population is waning
Power being devolved to the people is evident in rise of Decentralized Finance
Ethereum, the largest platform for DeFi, is worth more than every bank except JPMorgan
May letter
It’s best to buy when the market is well below trend. Now is one of those times.
#Bitcoin
is currently trading 31% cheap relative to its 11-year trend.
More perspectives in our November investor letter:
While we’ve had two >80% bear markets already, I believe those are a thing of our primordial past. Future ones will be shallower.
As the market becomes broader, more valuable, and more institutional, the amplitude of price swings will moderate.
MORE:
#bitcoin
at $61,000 is 2x from where we mark the start of this new bull market in July.
For perspective, the median bull cycle went up 15x over 300 days.
More thoughts on the state of the market here:
As one of the largest investors in
@Bakkt
and an early supporter of blockchain, we’re very excited for today’s physical
#bitcoin
futures launch. This is a huge leap into the future of finance.
NOW AVAILABLE: Our September
#Blockchain
Letter