Original author: Dan Morehead, founder of Pantera Capital
Compiled by: Odaily Planet Daily Azuma
Thousandfold profit
Pantera's Bitcoin Fund recently achieved a crazy milestone - a thousandfold profit.
With BTC soaring nearly 30% after Trump's victory, the fund's total return since inception, after fees and expenses, is 131165%.
I want to share our initial logic, as this logic still holds persuasive power for me today.
Odaily Note: In an email dated July 5, 2013, Dan, as CEO, called for Pantera to buy BTC at a market price of $65, stating he had decided to personally buy 30,000 coins, and others could decide whether the fund itself would purchase.
The day we chose to launch the Pantera Bitcoin Fund was the lowest point for BTC in the past eleven years.
The first investment memo still reads impressively today.
From 2013 to 2015, we purchased 2% of the world's Bitcoin.
Even eleven years later, Bitcoin is still 'being squeezed up like a watermelon seed'.
To be honest, I still can't help but imagine that for many years to come, we can still achieve 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 disdainfully said it was like buying gold... completely wrong! It's like buying gold in 1000 BC! 99% of financial wealth has not yet touched Bitcoin, and when they start doing so, Bitcoin's value will either be zero or will grow by multiple orders of magnitude (ten, hundred, thousand, ten thousand...).
As an emerging industry, we have achieved some accomplishments today. It can now be said that 'only' 95% of financial wealth has not fully invested in Bitcoin.
From 5% in 2024 to higher numbers, there are now some clear catalysts: improved regulatory attitudes in the US; institutions 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 clearly supports blockchain. We believe that the success of blockchain is in the best interest of the country, and we trust that everyone in Congress will eventually adopt a neutral or supportive stance towards blockchain. These things are happening; the regulatory headwind for blockchain that has persisted for 15 years is now turning into a tailwind.
Odaily Note: In an email dated August 21, 2013, Dan again praised BTC and predicted that a 'melt-up' trend would occur.
I still believe in what I wrote eleven years ago.
"I believe the likelihood of the world adopting a global currency/payment system is over 50%, in which free cryptographic technologies will replace banks, VISA, Mastercard, Western Union, PayPal, etc. Bitcoin can replace cash, electronic fiat currencies, gold, bearer bonds, etc. It can do all these things. This is the first global currency since gold, and it is 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 yet been involved in blockchain; they are just beginning 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' trend; less than a month after this email was sent in November, BTC's price broke through $1,000 - and the current price is nearly three orders of magnitude higher than it was then.
Eleven-year compound growth rate: 88%
I know that many investors think when considering buying Bitcoin, 'Bitcoin has already doubled this year, I may have missed it'... and then give up investing.
No, this is the wrong mentality. On average, BTC almost doubles every year. In the eleven years since the establishment of the Pantera Bitcoin Fund, our fund's annual compound growth rate has been 88%.
Magnitude growth
Over the years, BTC has achieved multiple orders of magnitude growth, and further growth seems reasonable. If BTC reaches $740,000, its market value will reach $15 trillion, which is not an unimaginable number compared to the total market value of financial assets at $50 trillion.
While the past does not necessarily predict the future, if trends continue, Bitcoin will reach $740,000 in April 2028.
I think it might take longer, perhaps a few more years, but I do believe that BTC has a high probability of achieving this goal.
This is my mindset. I wouldn't bet my life on this, and I am not 100% certain that blockchain assets will continue to rise, but when you multiply the likelihood of an increase by the potential magnitude of industry growth, the result shows that BTC's appreciation potential is much higher than other investable assets.
In my nearly forty years of professional experience, this is the most value-added transaction I have ever encountered.
Sticking to it is not easy
While it seems easy to buy BTC at a low price and hold it now, it is actually very difficult.
Since December 2013, BTC experienced an 87% crash and faded from public view. More than three years later, the market was still in decline. By 2016, almost everyone had given up on BTC, and investors showed no interest.
That year I flew around the world, held 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 inherently a team collaborator. I have always hoped that the Bitcoin community would ultimately win. For many years, we have been trying to help the community in various ways.
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 - totaling 88 BTC.
At today's prices, that is $8.6831 million, and we could buy two hotels!
The industry's amazing development
In 2013, when we were preparing to launch the Pantera Bitcoin Fund, I set up accounts at several exchanges and began wiring money for initial preparations. When I first walked into a Wells Fargo on Market Street in San Francisco, ready to wire money to Ljubljana, Slovenia, I didn’t even know how to spell 'Ljubljana', to the point where the bank manager questioned me for a long time about 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 questioned whether I was crazy. I also sent a payment to another obscure small startup, which sounded equally unreliable.
At that time, the price of BTC was about $130. In the following days, I watched helplessly as the price of BTC fell from $130 to $100. Looking back now, it’s funny; the FUD (fear, uncertainty, doubt) that skeptics expressed during the recent bear markets is essentially no different from back then. When BTC dropped to $65, I decided to go all in - launching the Pantera Bitcoin Fund. Thirty years of trading instinct told me that this was the day to act!
I had sent the above email to a small community of Bitcoin enthusiasts, which at the time had about twenty people, all interested in participating. Now this community has hundreds of thousands, and those emails have been read 2.7 million times.
I logged onto 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 - and not like Wall Street jargon where bucks sometimes refer to millions; they meant $50... I nearly had a heart attack.
Since they were still a startup with no address or phone number. In a panic, I sent an email to their customer support email address - the subject was unusually all capital letters - “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 limit was raised, I still needed 6667 days to complete this transaction. Eleven years have passed, and I still need to buy for another 2522 days...
Fortunately, I eventually managed to buy those BTC on Bitstamp. To this day, the industry has achieved rapid growth, and the cryptocurrency market has a daily trading volume of $130 billion. The distance this industry has traveled is truly astonishing.
The 'asset class' path of blockchain
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 do not understand the nuances between those incredible tech projects in the industry, but I feel I have 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 sees emerging markets as an asset class.
Blockchain will be the same. I believe that in the near future, every investment firm will have a blockchain team, and there will be a sufficiently large and permanently existing blockchain asset allocation.
Asymmetric trading
My global macro background was the initial reason for my entry into the blockchain space. The asymmetry of this trading - working in the world's largest market - makes this opportunity much larger than the trades we typically pursue around the world. I believe this is the most asymmetric trade I have ever seen.
A comparison at the second Pantera Blockchain Summit in March 2014 explains this theme. Nathaniel Popper noted this in his 2015 book (Digital Gold).
At a dinner a few hours before a late-night poker game, Morehead joked that at the time, the total value of all Bitcoin in the world was roughly equal to the market value of Urban Outfitters, a supplier of jeans and dorm decor, valued at about $5 billion. Morehead said, "This is crazy, right? I think when people explore our current society like (Planet of the Apes) centuries later, the impact of Bitcoin on the world will be greater than that of Urban Outfitters."
When I updated this data in November 2020, Bitcoin's market value had reached a level comparable to L'Oreal. Of course, waterproof mascara is undoubtedly an amazing invention, but I still think there is asymmetry here.
Let’s explore further... "At L'Oreal, our mission is... to democratize the best beauty products in skincare, makeup, hair care, and hair color.
This sounds amazing, and the mission of Bitcoin 'financial democratization' sounds astonishingly similar - but I think the ultimate scale of finance will clearly be larger than that of cosmetics.
Bitcoin's market value has recently surpassed that of Meta (formerly Facebook). Sharing photos on the internet is indeed very cool, but I think the significance of enabling everyone with a smartphone on earth to enjoy financial inclusion would be even greater.
Now, there are only five superior objects left in front of Bitcoin (Nvidia, Apple, Microsoft, Amazon, Google)...
