Original author: Dan Morehead, founder of Pantera Capital
Compiled by: Odaily Planet Daily Azuma
A thousand times profit
Pantera's Bitcoin Fund recently reached a crazy milestone — a thousand times profit.
As BTC surged nearly 30% after Trump's victory, the fund's total return since inception was 131,165% after deducting fees and expenses.
I want to share with everyone our initial logic because this logic is still persuasive to me today.
Odaily Note: In an email dated July 5, 2013, Dan, in his capacity as CEO, called for Pantera to buy BTC at a market price of $65 and stated that he personally decided to buy 30,000 coins first, while others could decide whether the fund itself would buy.
The day we chose to launch the Pantera Bitcoin Fund was the lowest point of BTC in the past eleven years.
The first investment memo is still impressive to this day.
From 2013 to 2015, we bought 2% of the world's Bitcoin.
Even after eleven years, Bitcoin is still being "squeezed like a watermelon seed".
To be honest, I'm still daydreaming that for many years to come, we can still achieve very considerable returns through BTC.
Gold in 1000 BC
About a month later, I wrote down my core views on BTC.
Yesterday I discussed Bitcoin with an investor who somewhat dismissively said it was like buying gold... dead wrong! It's like buying gold in 1000 BC! 99% of financial wealth has yet to touch Bitcoin; when they start doing so, Bitcoin's value will either be zero or will grow by several orders of magnitude (tens, hundreds, thousands, tens of thousands...).
As an emerging industry, we have already achieved some accomplishments. It can now be said that "only" 95% of financial wealth has yet to fully invest in Bitcoin.
Starting from 5% in 2024 growing to a higher number, there are now some clear catalysts: improved regulatory attitudes in the U.S.; institutional giants like BlackRock and Fidelity are now providing low-cost, efficient entry channels for all investors with economic accounts. This convenience will ultimately enable tens of millions of investors to access this important new asset class.
We believe that the entire industry will greatly benefit once the first U.S. president explicitly supports blockchain. We believe that the success of blockchain aligns with the best interests of the nation, and we believe that everyone in Congress will eventually adopt a neutral or supportive stance towards blockchain. These things are happening, and the regulatory headwinds for blockchain are turning into tailwinds after 15 years.
Odaily Note: In an email dated August 21, 2013, Dan once again enthusiastically supported BTC and predicted a "melt-up" trend.
I still believe in what I wrote 11 years ago.
"I believe the probability of the world adopting a global currency/payment system is over 50%, in which free cryptography will replace banks, VISA, MasterCard, Western Union, PayPal, etc. Bitcoin can replace cash, electronic fiat currency, gold, bearer bonds, etc. It can do all of these things. This is the first global currency since gold and also the first borderless payment system in history."
This is still my exact feeling. We are still in the early stages. 95% of financial wealth has not been involved in blockchain; they are just starting this massive transformation. When they do, Bitcoin's price could be $740,000.
Odaily Note: In an email dated November 6, 2013, Dan revealed that the Pantera Bitcoin Fund bought $1 million worth of BTC in a single day.
BTC indeed experienced a "melt-up"; less than a month after this email was sent in November, the price of BTC broke through $1,000 — and now the price is nearly three orders of magnitude higher than that.
11 years of compound annual growth rate: 88%
I know that many investors think this way when considering buying Bitcoin: "Bitcoin has doubled this year, I might have missed the boat"... and then give up on investing.
No, this is the wrong mindset. On average, BTC almost doubles every year. In the eleven years since the Pantera Bitcoin Fund was established, our fund's annual compound growth rate has been 88%.
Magnitude growth
Over the years, BTC has completed multiple orders of magnitude growth, and further growth seems reasonable. If BTC reaches $740,000, then the market capitalization will reach $15 trillion, which is not an unimaginable number relative to the total market capitalization of financial assets at $50 trillion.
While the past may not necessarily predict the future, if the trend continues, Bitcoin will reach $740,000 by April 2028.
I think it might take longer, maybe a few more years, but I really believe that BTC has a great chance of achieving this goal.
That's my mindset. I wouldn't bet my life on this, and I'm not 100% sure that blockchain assets will continue to rise, but when you multiply the probability of an increase by the potential growth magnitude of the industry, the result shows that the appreciation potential of BTC is much higher than other investable assets.
In my nearly forty years of professional experience, this is the most expected transaction for value appreciation.
Holding on is not easy
While it may seem easy to buy BTC at a low price and hold on to it now, it was actually very difficult.
Since December 2013, BTC has experienced an 87% crash and faded from public view. More than three years later, the market is still declining. By 2016, nearly everyone had given up on BTC, and investors showed no interest.
That year I traveled around the world, doing 170 investor meetings, but ultimately raised only $1 million.
That year our management fee was $17,241, averaging $100 per meeting...
We could have bought that hotel!
I am naturally a team collaborator. I've always hoped that the Bitcoin community would ultimately win. Over the years, we have been trying in various ways to help the community.
So when Expedia announced in 2014 that they would accept BTC, all our travel expenses were paid through Expedia using BTC.
In 2015, our team spent 59 nights on the road — averaging 1.5 BTC per night — a total of 88 BTC.
At today's prices, that's $8.6831 million, and we could buy two hotels with that!
The amazing development of the industry
In 2013, when we were preparing to launch the Pantera Bitcoin Fund, I set up accounts at several exchanges and began wiring money for preliminary preparations. When I first walked into Wells Fargo on Market Street in San Francisco to wire money to Ljubljana, Slovenia, I didn't even know how to spell "Ljubljana", to the point where the bank manager came over and interrogated me for a long time, asking what I was doing.
PS: I now know that Slovenia is a beautiful country, just to the right of Venice and below Austria...
But at the time, I doubted whether I was crazy. I also sent money to another unknown small startup, which sounded equally unreliable.
At that time, the price of BTC was around $130. Over the next few days, I watched helplessly as the price of BTC fell from $130 to $100. Looking back, it’s interesting that the FUD (Fear, Uncertainty, Doubt) that skeptics spoke of during the recent bear markets was essentially no different from back then. When BTC dropped to $65, despite various issues, I decided to go all in — launching the Pantera Bitcoin Fund. Thirty years of trading intuition convinced me that this was the day to make a move!
I once sent the above email to a small community of Bitcoin enthusiasts, which at the time had about twenty people, all of whom had an interest in participating. Now this community has grown to hundreds of thousands, and those emails have been read 2.7 million times.
I logged into a startup called Coinbase, trying to buy 30,000 BTC, but the trading platform popped up a message saying the daily trading limit was only $50 — not like Wall Street jargon where bucks sometimes refer to millions, they literally meant $50... I nearly had a heart attack.
Because they were still a startup with no address or phone number. In a panic, I sent an email to their customer support email address — with a title unusually in all caps — "I want to buy two million dollars' worth of Bitcoin." Four days later, their only employee — a guy named Olaf — replied, "Okay, your limit is now $300."
This means that even after the cap is enlarged, I still need 6667 days to complete this transaction. Eleven years have passed, and I still have to buy another 2522 days...
Fortunately, I eventually got those BTC on Bitstamp. To this day, the industry has experienced explosive growth, and the daily trading volume in the cryptocurrency market is $130 billion. The distance this industry has traveled is truly astonishing.
The path of blockchain's "asset class"
Sometimes I feel like a gorilla in the forest, noticing a shiny object on the ground... picking it up... spinning it... wondering what it is...
Wow, it's Bitcoin!
I certainly don't understand the nuances between those incredible tech projects in the industry, but I feel like I've seen these scenes before.
I was the first asset-backed securities trader at Goldman Sachs, and now everyone views ABS as an asset class; I was there when they did GSCI, and now everyone views commodities as an asset class; I invested in emerging markets in the 90s, and now everyone views emerging markets as an asset class.
Blockchain will be like this too. I believe that in the near future, every investment company will have a blockchain team, and there will be a large and permanent allocation of blockchain assets.
Asymmetric trading
My global macro background was the initial reason that led me to enter the blockchain space. The asymmetry of this trade — working in the world's largest market — makes this opportunity much larger than the trades we usually chase around the world. I believe this is the most asymmetric trade I've ever seen.
A comparison at the second Pantera Blockchain Summit in March 2014 can explain this theme. Nathaniel Popper recorded this segment in his 2015 book "Digital Gold."
At dinner a few hours before the midnight poker game, Morehead joked that the value of all Bitcoin in the world at that time was roughly equal to the market capitalization of Urban Outfitters, a supplier of jeans and dorm decor with a market cap of about $5 billion. Morehead said, "That's crazy, right? I think when people look back centuries later like in (Planet of the Apes), Bitcoin's impact on the world will be greater than that of Urban Outfitters."
When I updated this data in November 2020, Bitcoin's market capitalization had reached a level comparable to L'Oréal. Of course, waterproof mascara is undoubtedly a remarkable invention, but I still believe there is asymmetry here.
Let's explore further... "At L'Oréal, our mission is... to democratize the best beauty products in skincare, makeup, haircare, and hair dye."
This sounds too good to be true, and Bitcoin's mission of "financial democratization" sounds incredibly similar — but I believe the ultimate scale of finance will clearly be larger than cosmetics.
Bitcoin's market capitalization has recently surpassed that of Meta (formerly Facebook). Sharing photos on the internet is certainly very cool, but I believe that enabling everyone on Earth with a smartphone to enjoy financial inclusion would be even more significant.
Now, what lies ahead for Bitcoin are only five surpassing objects (NVIDIA, Apple, Microsoft, Amazon, Google)...
