Phase II of The Bull Market | Dan Morehead

Transcript

This is, you know, it's the trade of a generation. Bitcoin and cryptocurrencies have produced returns that are just, you know, you can't get anywhere else. No other asset performs like that. And so, I think that is kind of forcing people to make a decision and forcing people to get invested. This episode is brought to you by Block Damon. You'll hear more about them later in today's episode. Nothing said on Empire is a recommendation to buy or sell any investments or products. This podcast is forformational purposes only and the views expressed by anyone on the show are solely their opinions, not financial advice or necessarily the views of Blockworks. Our hosts, guests, and the Blockworks team may hold positions in the companies, funds or projects

discussed. All right, everyone. Welcome back to Empire. Very excited about this one. Uh, we have Dan Morehead, who is the founder of Panta. Panta is a fund that's been around since 2003. Correct me if I'm wrong. got into Bitcoin in 2013. I can share some ridiculous stats about the fund in a little bit, but Dan, welcome to the show, man. >> Thank you. Thanks for having me. >> I uh was researching this. I have a picture for you. I found your Princeton rowing pictures. >> Awesome. >> That is it. So, I was curious uh you know, one thing. So, we have uh actually Mike Novagrats is coming on the podcast next week and so I was doing some research on Mike and found the Princeton connection and Joe and actually I want to start with Princeton. There is a class from Princeton I think are you

1986 >> 87 >> 87 1986 1987 it's you Pete Briger Novogratz Joe Luben uh Gavin Andre I think was the year after you maybe >> no he's our same year >> he's your year what made actually board member of block works uh Tad Smith I think was 86 or 87 um what made that class so special and were you guys all friends with each other like what what was the what what was going on with Princeton class of 86 and 87 >> yeah So, uh, Pete Burgerer, Mike Norats, Joloon and I were friends in college and then, uh, out of college, I was a trader at Goldman Sachs. Pete and I worked together and then a couple years later, Mike joined Goldman Sachs.

>> You guys are all just buddies on the same hall or something. >> Yeah. So, we were just, uh, we, you know, we knew each other through sports in college and then, um, we were on the same trading floor uh, in ' 80s. Um, and then I moved to Tokyo in 1990 and I was driving down the street with my wife who's also from uh Princeton. Uh, and we saw a guy sitting on moving in wearing a Princeton sweatshirt and we turn around it was Mike Noatz who's moving in next door to us in Tokyo. Uh, so we've just kind of had very parallel lives. Um, Fortress also was our largest day one investor in 2004 when we launched the first fund and then the first investors and they were part of the GP for a while in the blockchain era of Panta.

>> Nice. Nice. Who um I've heard many different stories that you you told Mike to buy his first Bitcoin or he told you or then someone got Luben involved for their first ETH. Like what what was the original story there? >> Yeah. So, I I uh saw Pete Burgerer um and he said, "Hey, you know, want to come in and talk about Bitcoin and my uh brother John had introduced me to Bitcoin in 2011 back when Gavin Andre had a thing called the Bitcoin faucet and they were giving away free bitcoins. Like it was so unknown and un, you know, like so few people knew about it that all you had to do is just log into Bitcoin faucet and get free bitcoins."

>> Uh and I have a libertarian streak. So, when I read about I was like, "Oh, this is great. I hope it happens." But I didn't actually do anything. Uh, and then I went in for a coffee with Pete and Mike and a couple of their colleagues and the coffee lasted like 5 hours because it was just so mind-blowing. I was like, "This is the coolest thing ever." Uh, and they offered me space in their office to, you know, start working on it. And they finally kicked me out about 8 years later. Like we stayed in Fortress's office for for ages. Uh, and literally since that day, that was like March 12th, 2013, I haven't thought about any other investing. It's just so captivating.

>> That was March of 2013. Yeah. So, I found an email from July of 2013 that you wrote and I'll just read it for folks. It says, "The the forecasted Bitcoin wash out happened very quickly. Bitcoins are now trading at $65, exactly half the price they were trading at our first meeting. I think we should buy aggressively now. I'm going to buy 30,000 Bitcoin this weekend with personal money. The fund can have this purchase or not, as others wish. I just want to get involved." Damn, crazy. Tell me about that time period. >> Yeah. And literally everybody thought I was crazy. Nobody I I sent that and nobody jumped.

>> Were you already a little crazy though? Were people like, "Oh, that's Dan being Dan." Or >> No, no. You know, I've had a normal career, hedge funds, Tiger Management, all that stuff. Very, you know, kind of uh stable and uh predictable. Um and so, you know, just kind of going all in on some little sci-fi tech project was not something people were um uh ready for, you know, thought was normal. I sent that note, crickets chirping. nobody wanted to invest. And so, um, I just started buying, uh, bitcoins. The market was so illquid back then. It was tiny, uh, very, very small. And I, uh, originally were going to do this whole thing as a fortress branded product. Uh, and their board voted it down at the kind of the last minute. So, we didn't

have >> Oh, this was going to be a Fortress branded Bitcoin fund. >> Yeah. So, interesting. All the stuff we're doing now was originally conceptually going to be a branded thing. So, uh, so at the last minute, we had to make sure we had our own account set up and our own funds and all that in our own name because we' done a lot of work to be ready. Uh, and so at the at the last second, I sent um money to two different exchanges. >> Uh, and tried to start buying bitcoins then. And the funny thing is I sent it to um uh a funky little exchange in Ljubljana, Slovenia, Bitstamp, and then uh to a tiny startup that had one employee called Coinbase. And uh when I went in to to to do the purchase, a popup came up and said, "Your limit's

50 bucks." And not like on Wall Street sometimes people use the word bucks to mean millions. One Ulissiz Sgrant. And I was like, "Oh man." So I sent an email. They didn't have a phone number or a um uh an address or any way to contact me. So I sent an email to him and said, "I just sent you $2 million. You got to increase my limit." And four days later, their one employee, a guy named Olaf, wrote back and said, "Okay, it's $300. >> I'd still be trading." Like, it would take like seven years at $300 a day. >> Yeah, that's crazy. Yeah. You know, I think people forget, especially people who maybe got into the industry in like 20 like 2020 with DeFi summers when it really things like this big onchain migration happened. I think people

forget that for several years, you just had to build the infrastructure, right? The custodians, >> the the the exchanges. So, >> Oh, yeah. There was a really no >> support in this hole. >> Yeah, there was a crazy time where I had 2% of the world's bitcoins in my head. You know, there was no custodians that, you know, Coinbase didn't exist. Um, Mount Gaus was the biggest custodian of of bitcoins at the time. And so I had to keep a lot of bitcoins in as a password in my head. That was >> You you guys owned 2% of the bitcoin. >> Yeah. >> And I I you've probably you've been trimming since then.

>> Yeah. So we've been uh selling that to buy other things. Uh our investors have taken profits. So, we still have about a billion dollars of Bitcoin. >> Nice. Um, maybe actually before getting too deep into Panta and the fund and investments and you guys have been extremely active in DATs. Um, I actually want to just talk macro. So, uh, you spoke at permissionless 2024. I think about a year ago you spoke at P permissionless and it was you, Yan Vanek, my co-founder Mike and Dan Tapiro and uh, you guys were talking about macro and the Fed and you said, "Look, I I actually still have a very out of consensus view on the Fed." You said back in uh December 2021 rates were at zero. You said rates were going to five.

They're going to stay there for a long time. I'd love to get your I mean we're recording this on Friday. Kind of an interesting week right after they started cutting. Um love to get your just broader view of the of macro and the the context of that question is tied in with like you were buying you're loading up the dump truck in Bitcoin in 2013. Like what's the situation for Bitcoin look like today 2025 as compared to back then as well? >> Sure. Yeah. So on the Fed, I I I vividly remember in December of 2021, Fed funds were zero, the 10ear note was 1.3, and inflation was eight. I'm like, that is so wrong. And so, uh, the only trade I've done other than crypto since 2013 was a big bond short right then. I

thought both would go, Fed funds and the tenure would go to 5%. Um, and I said then they would stay there for a long time. I think they should still be there. Like I think it's crazy to cut. Inflation's 3%. Uh unemployment, you know, is record lows. >> It's, you know, they Fed's supposed to have price stability. 3%, you know, having your currency debase 3% a year. Over your lifetime, that's 90%. Right. Like it's it's devastating. So I think the Fed shouldn't be cutting. I think they should be, you know, raising rates if anything. So >> you would be you would be raising rates right now.

>> Yeah. Inflation is very persistent. Um and uh you know it's having real impacts, right? The housing inflation is is is really an impact to the younger generation. >> Yeah. >> So um you know so there's really important dynamics with inflation. Uh and so I think they should keep rates high. >> Yeah. >> Um I want I want to make this mostly about Bitcoin, but just you mentioned housing. So I I've heard you say one of the biggest mistakes, policy mistakes ever was the Fed injecting trillions into the mortgage bond market. How do we get out of that situation?

>> Yeah, honestly, I think it's a massive policy mistake that they bought 9 trillion of mortgages. They forced the um mortgage rate down to 2.5%. So, they're basically daring you not to buy a house and >> you know, a lot of people did. And so, uh the Fed did more than 200% of all mortgage lending in those two years of the uh 2020 and 2021. Absolutely crazy. So that excuse me that built up their balance sheet. I guess I haven't looked at the balance sheet in a while but I think they're just letting it roll off very very slowly. But there again they should they should reverse that mistake and get you know let the free market do lending right. Why why is the Fed the one in there manipulating uh mortgage

bond market? Uh and again it really does have a very big social impact. Over those two years the Fed uh was manipulating the mortgage market. housing prices across the entire country went up 40%. >> And so that's just so tough for for young people or for the you know 35% of Americans that don't yet own a home. You know, it really prices them out. And and that's actually one of the reasons I think that um crypto is so popular, right? Is young generation realizes that it's a great way to invest, great way to hedge against these these policy errors. Uh, and then back on inflation, the US is running a $2 trillion deficit in the best of times, right? When something bad's going to happen, it's going to be pretty tricky. And so that's

another reason the Fed should be tight because fiscal policy is extremely loose. >> Yeah. Do you have a sense of how we get out of this out of the we're spending more on interest than our military right now? >> Hash buyitcoin. Like it really I don't that's why I'm so bullish on crypto. like it seems like everyone's kind of agreed that you know we're going to have massive deficits literally forever and as you say you know we're now spending so much on interest that it's kind of a self-reinforcing spiral you know that the the higher rates go the more you have to borrow and and so I actually don't see how we get out of this and I do think it's a you know it's a big issue for our country and I think you really have to hedge by being in hard assets like cryptocurrency.

>> Yeah. how far along on the spectrum of like um uh Bitcoin we're going to we're going to Bitcoin will be the new global reserve currency like maybe you know there's one side of the spectrum is like I like bitcoin is an asset but like you know the dollar and like you know bit like the dollar's fine dollar will always be fine it's the US whatever all the way on the other side of the spectrum is like we should bit you know the the bitcoin should be the global reserve currency how far along on that spectrum were you >> yeah so you got to remember uh the reserve currencies changed every 80 or 100 years you know like it used to be the Portuguese escudo and the British pound and you know so no one's ever really lasted for more than let's call 100 110 years.

>> Yeah. So you know it's not coming up on our time. >> Yeah. Exactly. It's not inconceivable that the dollar will be supplanted. Um I think it'll take a decade or two, you know, so I don't think it's going to happen overnight, but you're starting to see it. >> The US uh having a strategic Bitcoin reserve. Uh Wyoming has a strategic reserve as well. Uh and then you're hearing other countries start to do it. uh the uh UAE and and other countries in the Gulf are are starting to do that. And I think the big one will be countries that are and those like the Gulf, they're all pegged to the US dollar. They're all very tightly aligned with the United States. But the countries that are uh antagonistic to the United States, like China or Russia, I think it's it's inevitable that

they'll ultimately put a good chunk of their reserves into Bitcoin because if you think about it, >> China has I think a trillion dollars of US treasuries. you know, Scott Basking can just cancel that, right? Like, I mean, it was really pretty crazy to have your entire country's life savings in an asset that your potential adversary could literally just cancel. So, I think within a decade, I'm not going to say it's going to happen overnight. Countries like that will have started to save in Bitcoin and other cryptocurrencies. >> Yeah, I I think it'll be far faster than the de I mean, look at look at the gold the gold run that's happening right now.

Like, you could probably argue that's a central bank driven gold run. Yeah. Right. And so as that shifts more digital um what do you think maybe the last thing on macro and then we can start to get into crypto and DATs and stuff like that. But what what do you think just like I mean we started we just started cutting cutting. You said we should maybe be hiking um or at least staying flat. What do you think the next like 12 to 18 months look like just on the macro side of things? Yeah, you know, I think um I do think that the uh risk to uh bonds and currencies is pretty high because inflation is very high. Fiscal policy is very loose. Um the dollar uh was very strong. It's starting to weaken. Um and and again

there I think uh things like tariff wars really undermine the confidence in the dollar and and as a reserve currency it needs to be predictable, stable, you know, all that stuff. Uh and so the more you know kind of weird things like tariff wars that happen, the more people are going to want to look for alternatives like gold you mentioned and um Bitcoin and other you know hard assets like that. >> Yeah. Do you um do you think Bitcoin is still primarily driven by havingss and um liquidity cycles or is it kind of starting to decouple from traditional risk assets?

>> Oh, those are actually two different questions. So, I think uh the having is very important. >> Yeah, I guess there's a four there's almost like a four-year cycle question and a having question and then there's a traditional risk asset. So, maybe maybe actually um let's start with the traditional risk assets because it's la the last decade or so it's kind of been mirrored a little bit to the risk assets. It's just a little further out on the risk spectrum. What do you think is that? Does that continue? Does it decouple? >> So, >> is it all one trade basically as people? >> No, actually I don't think it is. The way the way I think about it is over the 13 years we've been managing money in the Bitcoin space, Bitcoin as a proxy for uh the cryptocurrency industries had a 0.17 correlation with the S&P 500.

>> So, that's very low actually. And um there was a time in 2022 that it was very highly correlated. Got to 76 at one point. And I think that was I would say a kind of once in a generation anomaly. Uh there was a lot of excess leverage in the system. There's a bunch of hedge funds and you know Celsius, BlockFi, all these things that FTX there uh were unwinding at the time. And then it was a little bit of a you know kind of a go- go tech type trade where you know ARC was long Bitcoin and Tesla and all these things at the same time. So that did make it correlated for a short period of time, but that's essentially gone away and now Bitcoin's back to being very low correlation with risk assets. The hugely important point is I think we're in a

multi-deade secular bull market in crypto which has little cyclical wiggles, right? Like if if you know if the if you told me the S&P was going to go down 30% tomorrow, yeah, Bitcoin is probably not going up tomorrow, you know? So I I do agree in the short short run they are connected but um in in very large pieces of time they aren't connected and and the important reason is the reason a bunch of risk assets are highly correlated is not because they intrinsically have anything to do with each other is because everybody owns the same thing. Right? Um when I was when I started out as a bond trader in the 80s I I had no idea what was going on in the rest of the world. I couldn't care less about equities, anything else because bonds were kind of their separate thing.

But modern portfolio theory has been so successful, everyone kind of has the same portfolio now. And so that's what makes things highly correlated. The interesting bit is the majority of institutional investors have a waiting to cryptocurrencies and blockchain venture of 0.0. So that's why it isn't correlated because most institutional investors, big investors don't have any of it. Across 30 plus networks and 180 endpoints, Block Damon Earnstack unites staking and DeFi into a single institutional toolkit for crypto rewards with multi-layered security, full asset control, and 247 support. Block Damon Earnstack is built for scale and

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navigator app, measuring local noise pollution, or running an AI agent in your browser. Further down the road, you can get a unique customizable NFT designed by the agency behind the recent Call of Duty rebranding, an NFT that will evolve as you make real world impact. Follow Peak OnX to find out more. As always, investments in blockchain technology involve risk terms and conditions apply. What about the second part of the question? What about the four fouryear cycle supply shocks? I mean, you guys have had uh people should go down a little rabbit hole of your guys. You guys have been writing these great letters publicly for for many many many years. And uh you you actually you guys don't really gloat about this, but you

actually tend to have some of the most accurate price predictions I found, which is why I keep reading your guys' letters. Um, and a lot of them are actually I've noticed still around just like fouryear cycle and the happening and kind of these some some like what I quotes around this like old metrics that Bitcoiners point to, but you guys still you guys are still pointing to them and I I think a lot of your predictions have held true. What do you think about this four-year cycle idea? >> Yeah. No, so I I I very strongly believe in it. We've done three h havingings in our time in this business and um they they they do follow a very predictable pattern and >> um >> when I when I was in college there was a professor that wrote a famous book called the random walk down wall street

where he argued that the markets were efficient you know and uh Warren Buffett had a line that the markets are often efficient but the difference between often and always is worth 80 billion to him and that's the way I think of it is >> yeah we all know the having's going to happen on a certain date, but when it actually happens, there's literally half as many bitcoins being dumped on the market every day by miners. And if you have constant demand and half as much supply, it will push the price up. Uh, and so what we did on the first havinging is we we took a look at the stock of bit coins that were existing and how much the having was reducing the issuance and at the time is actually 15%. like it was a the having was actually a really big impact relative to

the small stock of bitcoins because there's about 12 million outstanding back then and so each having is obviously half as big as the last one in terms of h how much is cutting and then there's more bitcoins outstanding so it gets smaller and smaller by about 3540 it's the impact's about 35 or 40% uh of the previous having so in um when bitcoin is around 17,000 a couple of years ago three years ago we made a recalculation of all the having statistics and predicted that Bitcoin would hit I think it was $118,542 on August 11th, 2025 and it did. It was one day early, but yeah, I love that.

>> No, no, it hit exactly that. >> I So I believe it, right? I really think that cycle is >> uh is if people didn't follow that. So, you guys made a call, I think it was November of 2022, that on August 11th, Bitcoin would hit 117. The number was 117,482. Yeah. And you were one day off. >> Yeah. >> Yeah. Yeah. >> It did it on August 10th. >> Yeah. So, yes, I am a believer in the 4 cycle. Uh, and but the important point is each cycle is only 35 40% as big as the previous one, right? So, that the next cycle will be more muted and then, you know, hey, you know, 20 years from now, there'll be tiny wiggles.

>> Yeah. What is your thought on so I mean let's keep keep going with that with that conversation a little bit. So the cycles would say so December 2017 was a top November 2021 was a top people are saying you know we've got you know DATs and maybe DATs feel a little ICO right now like uh very a little bit of froth in the market um a lot of tailwinds driven by positive regulations maybe it's feeling a little bit frothy um hey is this is this the end of the four-year cycle here? Yeah. So, um when we were talking to uh one of our investors, he he complimented us on exactly predicting that price point, but he said, "But doesn't that mean it's going to start going down today?" Uh and so, yes, um the past cycles would say that that

should be the peak and that we're going to now, you know, go into a roughly two-year uh bare market. And these are the most dangerous words in investing to say this time's different. But I actually do think there's such a massive change particularly on the regulatory side in the United States that we could see the cycle persist you know for a period of time 6 12 more months. Um and so I do think there's such an amazing change in the regulatory uh situation in the US that we could have this cycle keep going.

>> Yeah. Do you have thoughts on what the next bare market would look like? And I think that so there there's a lot of founders who listen to this. I think a lot of people who who hold crypto tokens, but a lot of founders too who think about like when do you take risk off your business? When do you put a hiring freeze in place? When does it how do you how do you kind of think about managing a business through this? So, how do you think about um uh just like how how intense the next bare market could look like? >> Yeah. So, it has uh been very consistent that there's been two years of bull market and two years of bare market. And so our advice to founders is typically try and have two years worth of of uh burn rate on on the in the books you

know because we will go through another bare market and you have to survive those. Um but as more and more people invest in the space these girrations will be more muted. Um the early rallies like our the 2013 rally was 10x in 6 months or probably even three or four months. It was it was amazing and then it went down. The the the sad thing is it's gone down 85% three times in a row. >> Yeah. >> The three bare markets that we've lived through has been 85%. My prediction is it won't be that bad the next time. Um but I did say that the last time and it was >> but it wasn't 85% in 22, was it?

>> Yeah. So, uh the funny thing is >> the total crypto market cap or >> at least Bitcoin I think Bitcoin went down 85% from uh April >> 670 to like 15. Yeah. Yeah. And and the the funny thing about our market is we get all hyped and we start drinking the Kool-Aid and we're believing our our own spin. Uh the former chairman of the CFTC, uh Christian Carlo, reminded me that the previous peak in 2017 was the day futures were listed on the Course. Cuz we're all like, it's going to the moon. It's going to the moon.

>> And then the day futures were listed, it started going down and went down 85%. Yeah. Do you remember what happened the peak of 2021? >> I mean, no. >> Coinbase IPO. >> Coinbase IPO. Yeah. Yeah. 400 going to the moon and literally that was the peak and it started going down the next day and went down 85%. >> So, give me your kind of indicators. What's the what's the Coinbase IPOing of this cycle? >> Yeah. So, that's a good question and the Coinbase one um really made sense to me because that didn't bring any new money into the market. So it didn't change how many people were buying bitcoins. It it just the company went from being privately owned to publicly owned. Um right now what is happening is it's

bringing money into the crypto space. All these IPOs, these DATs, they are really drawing capital in and so that is a permanent you know push up in the price of crypto. Um I as I said I I'm still bullish for the next say 6 to 12 months. Uh and so we're trying to be, you know, um kind of intellectually honest with ourselves and think about what that catalyst will be or what the sign is that we've reached a peak. But I actually don't don't see it. And you you mentioned, you know, DATs might be like ICOs.

>> I think we're still pretty early in the the DAT u kind of concept. Um and so it it does feel like we still have quite a ways to go. >> Yeah. Yeah. But but by the way, I actually don't think DATs are like ICOs. I think it's um the struct I mean the structure is not anything like an it's a it's that the they are the thing that has grabbed the attention. Yeah. This cycle. Um and that that would be the comparison there. Um as a as someone who who's basically bet their career on crypto, how do you think about let's say you start to see these signs? It's like July of 2026. You're seeing the signs.

How do you think about actually trimming positions? I mean even in like your PA, right? It's like you don't you don't ever want to sell your Bitcoin, but you might think the market's frothy. So how do you balance those two conflicting ideas? >> Yeah. So we um are trying to always catch these cycles and and return capital to our LPs at the right time. Um in our venture style funds we have the you know the choice of when to sell things and when to return capital. So that is something we're actively uh thinking is you know at what point in the next you know 6 to 12 months will we take a lot of risk off the table and send it back to our LPs. So our our current view is to try and do that, you know, over the, you know, the peak of

this cycle. >> Yeah, it's a good goal. >> It's a good goal. It's hard easier to say than do. >> Yeah, good goal. Um, I mean, we'll see. It should be a good I was I was looking at Bitcoin seasonality and average monthly performance. Um, October historically is the third best month of the year. Now, sample size is relatively, this is 2010, actually 2010 to 2024. October is the third best month of the year. November is the single best month of the year. >> Yeah. So, you're right that it often peaks in November or early December. Yeah. You know, it really has done that quite quite a number of times.

>> Yeah. Um you guys had a piece the other day on um kind of phase two of the bull cycle. Uh and you know, you kind of talk about this uh known idea which is Bitcoin tends to lead the cycles. Then then we kind of start to rotate maybe rotate into the majors. We saw the rotation to ETH. Now we're having a big rotation to soul obviously which I want to get into soul and the DAT in a second but um how do you think the maybe phase two of this bull market looks like? >> Yeah. So that is our view that historically bitcoins led for the first half of a of a rally and then the other uh currencies catch up. Um and and you're right you know Bitcoin's dominance did peak you know six eight weeks ago. Um and Ethereum had a a huge

run. Now Salana's having a run. Um I would say I I am surprised that kind of a broader mix of altcoins hasn't uh performed as well. Um theoretically the change in the SEC should be positive for >> uh things that are not Bitcoin, right? Because you know Bitcoin kind of had a safe haven in the previous administration whereas uh even things like XRP were being you know um criticized by the SEC. So, um I I would say that I I would think that other uh currencies would would start to perform well, but they really haven't. You know, it's really just been the big three currencies.

>> Yeah. I thought, um actually Jeff Dorman from ARCO here here's how he categorized. He said, "What's what's done well this year? Tokens with ETFs or DATs, Bitcoin, ETH, Soul, uh crypto stocks, right? Circle, Galaxy, Coinbase, uh US government coins, XRP, Link, maybe people with ties to the administration. Uh and then uh companies that are making a ton of money and passing it back to the token holders, right? Things like Hyperlquid, um Pump, Syrup, uh Sky, things like that. Yeah. So, >> well, yeah. And >> that's basically it. And then there's major dis so there's dispersion for the first time really ever.

>> Yeah. Yeah. So, you did point out a hugely important theme is things that have a publicly traded access vehicle, either an ETF or a DAT. Those are the thing or a publicly listed company like uh Figure or Circle. Those are the things that are doing well. So, it's the public markets access that's driving this. >> Yeah, let's talk public markets. Um, two two maybe big buckets of conversation here. One is DATs, one is just crypto IPOs. Love to get your take on just broadly I mean the crypto IPOs it seems like anything that can get public is going to catch a bid right now. What what do you make of this? Yeah. So I I I the way I think about it is essentially there was uh there was, you know, six or eight years worth of uh companies going public stuck in the pipe and now they're

just bursting out, right? Circle tried to go public a few years ago. Uh finally got to go public um this year. Figure um you know other companies like Bitco are are thought to be coming public soon. Um there's just what I would say is there's a huge pent-up demand from the public markets to invest in uh publicly listed assets in this dynamic space. This is you know it's the trade of a generation. Bitcoin and cryptocurrencies have produced returns that are just you know you can't get anywhere else. No other asset performs like that. And so now you have um the ability to buy things like that in the public markets. Uh and I think it's really important that there are crypto companies in the S&P 500. So

>> index investors, of which there are trillions, have to have a position in crypto, right? Like if you uh are benchmarking yourself against the S&P 500, you have to have an opinion now on crypto-oriented companies. And I think that is kind of forcing people to make a decision and forcing people to get invested. >> Yeah. Who who else do you think? Okay, so you guys have had you have four four companies that have gone public. I'm trying to do the math here. You have circle, you have figure, >> figure, amber, >> amber. >> Yeah. >> Is there maybe there's a fourth one? I forget. But but at least those three.

Who Who else do you think? What are what are kind of IPO potentials that you're looking at? >> Oh, and one fun one that you know we did uh help Galaxy get all their earliest positions in crypto. So, uh that's a 12-year relationship that went public this year as well. So, >> um there's stocks going on a on a little run here. >> Yeah. Um sorry, I forgotten the question. Who who else do you think gets out? Because there's this kind of big bucket, right, of like the people who are next. Like I think a lot of people are looking at Bitco like like you mentioned. Um but there's this bucket of like maybe it's this year, maybe it's next year. It's kind of the the Asian exchanges, some of the European exchanges. Um obviously Kraken is a big one. Um there's maybe the the fire blocks and anchorages of

the world. Who do you how do you think about the like who kind of who should go who should go public basically? >> Oh um >> who could and who should? Yeah, I mean I I think it's great for our industry. Obviously, there's excess demand for um publicly listed crypto companies. So, uh I would love to see all those names that you just mentioned go public. I think it'd be great. Uh you know, Ripple Labs would be another one that could go public. Um it's it's hard to forecast who who is going to do that but I think you know most of those names will have gone public within the next 12 months across 30 plus networks and 180 endpoints. Block Damon earnstack unites staking and defy into a single

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>> What about on the um on the DAT side? I think you guys might manage more DAT capital than anyone in the world. >> We manage a billion dollars of DAT. So >> manage a billion dollars of DATs right now. That's in because you guys launched the DAT fund in July. This I think sometime this summer you guys launched your DAT only fund and then you guys just got into the market with I think two DATs, not just one. You did he the Helas the Salon and Data and then another one that um Marco's running. I forget the name. Uh >> yeah, we're unaffiliated with that one. >> Unaffiliated with that one. Okay, my bad. So So Helas um is that a billion across uh >> No, it's a we manage a billion in um other DATs and then our HSDT Helas DAT is um it's about two billion

in in value right now. >> Oh wow. Okay. So that's a Okay. Why? Give me your give me your just like I don't know thesis for these dats. It sounds like you are still ve very excited about them. Uh give me your thesis for it. >> Yeah, so it's all about access, right? Um we provided the first access for investors to invest in Bitcoin in 2013 when it was really hard to get access to it and to store it. Uh and so I think of DATs as essentially the next evolution in that uh providing access. Um, for us, we've historically had a $1 million minimum for our funds and, uh, most of our investors have to meet the SEC's qualified purchaser uh, threshold, which

is very hard. So, a DAT is a way to actually offer access to anybody, anybody with a brokerage account. And the median trade in our DAT has been $1,000, right? So, it's literally a thousand times smaller than our typical investor. Um, and it is allowing people to get into the the markets. Um, and DATs really do have a fundamental advantage. They can increase the number of tokens per share. Uh, Strategy's done a great job at that.

Last year they increased the number of bitcoins per share by 76%. I think they've done it about 30% this year. So the way I think about it is a DAT in its worst case is just an ends up being an ETF, right? Like so if with yield, right? So if you do uh a Salana DAT and it really just doesn't go well and it trades at par, it'll still have, you know, potentially something like 7% yield from staking, which is better than an ETF which never increases. You just, you know, you're stuck with it. Uh but if you're able to increase the number of tokens per share, you're adding it, you know, a great deal of value.

>> Yeah, we had uh we had Kyle Smani on the show the other day and um we were talking about how that I mean it sounds like one of their plans at um what's the name of it for forward industries is going to um basically plow uh plow capital back into the onchain ecosystem. I'm curious and I think their plan is you basically specifically you want to almost arbitrage rates in onchain and off-chain world. So you want to basically go to the bank, maybe try to borrow it, you know, six, seven% or something, move it onto Salana, maybe you can get yield of 14% and then you're clipping 7% right there. How do you think about I don't know if you've thought about that arbitrage or you've thought about just like moving capital onchain. Well, uh, to our way of thinking, the value we can add is being

able to access Salana tokens below the spot market via, >> uh, you know, big holders that own locked up blocks and and things like that. And we actually did that very well in the early days of our Bitcoin fund. We, um, our Bitcoin funds actually outperformed the price of Bitcoin because we were able to buy things at a discount. Like back in the day, Expedia and companies like that had nowhere they could sell. there's no exchanges. So, we were buying big blocks at a discount. We hope to do the same with uh HSDT by buying tokens, you know, below the spot market. Um, and if we're able to, you know, time our our transactions well, we can add value that way. Then that brings in more capital and it is a kind of a virtuous spiral.

>> Will you guys So, you just This was your first the Helios one is the first one you guys launched. Yes. >> Will you launch more? >> Open to it. But I mean we're totally focused on on this uh for now it'll you know take months to do this execute it really well. Uh and you know if you know four or five months from now we think we can add value in another uh ecosystem we will but it's it's far from certain that we would do another one. >> Yeah. Is there a uh you're scrolling down coin market cap. Is there a place where you'd get to where you're like these these probably shouldn't have debts?

>> It's a good question. um you know if there's uh investor demand for it you know we we would uh offer that uh but you're right you know after a certain number of you know rows you get down to things that there probably isn't enough interest to to warrant doing a debt >> yeah interesting um on the access point have you guys ever thought about tokenizing tokenizing your funds >> we have uh had people pitch that to us I've been very reticent to do that um you know our offerings are are securities and so if we start tokenizing a security

>> uh that's the S in SEC and you know it's uh not as bullish as I am on blockchain not everything has to be tokenized right away right and so >> uh I don't really see you know much advantage to having a tokenized fund um and that's You know, DAS are great because they're so simple and, you know, straightforward, but tokenizing a very complicated thing like one of our funds, it'll happen someday, but uh probably not very soon. And if you look at all the big >> uh public alts managers like, you know, KKR and Apollo, they've all tokenized one fund as far as I know. You know, they all do one to be cool. Yeah.

>> But it's not like, oh, their clients are doing >> it's also not not their most soughtafter funds. I've noticed. >> Yeah. As far and again, I don't follow too closely. So maybe I'm wrong, but my perception is they they all did one fund and then there isn't this huge clamor to put all their funds on the blockchain. And again, >> couple decades from now, probably everything will be on the blockchain like that, but right now it's just not an urgent need. >> Yeah, I would love to uh hear your thesis for Salana, Dan. >> Yeah. So um I guess the way to to think about it is on almost every metric it leads all the other currencies in terms of daily active users revenues uh you know so it is actually very practical people are using it for for a ton of commerce um

you know massive throughput whereas the two uh older chains you know do only a few transactions per second then require L2s and other you know hoops to jump through Um and then over the last year or so we've uh been increasing our conviction and it's now our largest position. >> Salana is now your largest position more than Bitcoin. >> Yeah. So we have uh 1.3 billion of Salana um because we think it is uh you know very attractive and one of the reasons >> what what is that compared to your Bitcoin versus ETH? I'm curious. So Bitcoin's like a billion. So we have similar amounts of Salana and Bitcoin and then our ETH exposure right now is

pretty small. Um we're, you know, we're very convicted uh on Salana. Uh and frankly, hey, it's 5% of the price of of the market cap of Bitcoin, right? So it seems like it could outperform over time. >> Is that a um is that driven by what you think the institutional allocators will see with it? Is that driven by where you think founders will build? where what how do you make a thesis like that? >> Yeah, so it's it's all of those things. um you know uh the number of founders I think this is a a true stat that you know Salana is picking up more developers uh you know it's starting from a smaller base but every year they're picking up more developers than Ethereum you know so they're growing uh at a very rapid rate relative to

Ethereum um and then you know people are starting to get exposure to Bitcoin through ETFs and strategy and other things but most people haven't addressed Salana yet and so that's why we think, you know, offering access and and trying to at least highlight the case for Salana is going to bring more people in and over time could outperform Bitcoin. >> Yeah. Um, what do you think when you you probably speak with more real allocators than than most people in crypto? What is the conversation like on the ground when you're having these conversations? Yeah.

So the the good thing is um in the early days, you know, you get why are there 21 million bitcoins? You know, just super basic questions where people had kind of >> how do you know there's really 21 million? >> Yeah. Exactly. Yeah. And you know, what about the Silk Road guy or whatever, you know, like so you'd get these really really kind of negative and and basic questions. the the the huge difference now I meet investors that know an incredible amount you know drilling down on deepin and like how does this thing you know like super detailed and that that would be the big change is now >> uh you know most institutional investors have a blockchain group and you know experts and they really are you know

very knowledgeable about the space uh and so that just makes a lot easier you know you're not starting at the absolute 101 basics. >> Yeah. Why um why are so many people still stuck on zero though? >> Yeah. >> Like what what is the now that it's like you know we're not we're not in Gensler's SEC anymore. The regulatory regulatory stuff is done. We've got publicly traded crypto companies. We've got the DATs. Like why why are people why do people still have zero crypto exposure? >> Yeah. So I I I think we had a huge setback in the 2022 period where there were big public pension plans announcing they were going to invest in crypto. Uh sovereign wealth funds were uh investing in crypto and unfortunately quite a few

of them invested in things that went to zero very quickly, you know. So there's some very high-profile investments in FTX or Blockworks or whatever and then like immediately zero and high-profile, you know. So uh and then uh Teral Luna blew up. uh not blew up as a criminal enterprise. Uh FDX was a criminal enterprise. So such bad stuff, you know, Celsius and you know, all three arrows, all these things, terrible. And then the SEC was suing Coinbase and Ripple Labs, right? Like that's scary. Like as an investor. So there was this period in 2021, 2022 where I thought, "Oh, it's really going to happen. Everyone's going to, you know, come in in on the institutional side." And then honestly you couldn't have come up with more bad stuff you know for like six months just

all kinds of crazy bad things happened. I do think that the um the election both in the White House and Congress. Congress is very important as well changing to being pro crypto uh is going to unlock kind of that's the last thing that was kind of holding people back and so I think over the next you know couple of years most institutions will get off zero. The point being, even the most kind of bullish endowments out there, they maybe have 2% in in crypto. I think it's going to be like 8% in the end, right? So getting off zero obviously super important, but >> then we're going to have to get from one to two and then from two to four and then from four to eight, you know? So, um that's that is why I'm so bullish that we still have, you know, so much

room to go. >> What will be the access point for these folks, do you think? Is it a Bitcoin ETF? Is it a DAT? Is it a I mean funds obviously I think were the first access point. Is it buying Coinbased stock? What's the access point? >> Yeah. So I do think it is a bit all of the above that um >> you know in the early days it was very hard to even just buy Bitcoin like you know uh and so you know they would go through funds like ours. Uh but now you like you said you've got a bunch of great firms uh in the space that manage money like uh our peers. uh you have publicly listed companies like Coinbase and Circle and Figure, those kinds of companies. Then you have the publicly listed uh digital asset treasury companies which provide

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involve risk, terms, and conditions apply. Maybe getting into Panta a little bit. There's Panta the the firm and Panta the the funds. Um let's talk about Panta the firm. Like how I'd love to just learn about the I mean I know you guys are >> uh like the the longest running crypto fund I think it is. Um >> but what is the like how do you think about what separates Panta versus other people? Like how big are you guys? How many people work there? What what's the I I'd just be curious to hear how you think about Panta as the firm. >> Sure. So uh it was founded in 2003 when I left Tiger Management. Um we managed macro hedge funds for the first decade and in 2013 we launched our first crypto fund and also our first venture fund uh was in 2013 uh and Ripple Labs was our

first investment uh when they were trading at $17 million. >> Not too shabby. So, um, so we've been essentially just trying to offer access to whatever era that's happening. And so we've done four venture style funds. We're raising our fifth one now, but we've done probably 10 or 12 other types of funds. Uh, we have a fund that invests in uh, private tokens. So, you know, used to be called ICOs, but uh, pre-public tokens. Um, we've offered access vehicles for uh, Salana Ton um Worldcoin uh, DAT funds, you know, just trying to help

people get exposure to the space. We manage six billion. Um, we have 85 really talented people. Um, and the kind of I would say one of the differences is we've been very focused on returning investor money. You know, buying things low, selling them high, and sending the money back. We've made um 6 billion for investors in direct profits. And then we've distributed 105,000 bitcoins to our LPs. So, um, you know, all told, you know, it's it's 10 billion or so of profits that we've helped people make. Um, >> not too shabby.

>> Yeah. Not not too shabby. So, we're really trying to help people get exposure and and and um invest in the space. And one of my favorite stats is in the normal venture world, 65% of things go broke, right? you you invest in, you know, a bunch of things. Uh 65% go broke, one or two do okay, and then, you know, one helps you return, you know, 1.7x your money or 2x your money. >> Blockchain is such a compelling space that over all these years, we've made money on 86% of our venture investments, which is just >> that's nuts. Crazy.

>> 80 86% of your deals, you've made money. >> 86% of the money we've put in has >> been profitable. Do you know how many of these startups have become unicorns? >> Yeah, 25. >> 25. You've invested in 25. That's crazy. >> Again, it's crazy. And I I I'll say, you know, we have 85 super talented people and we work really hard. >> So, some of it certainly is, you know, uh our own skill, but >> it's a rising tsunami is floating a lot of boats, right? Like we are in just the best business uh I've seen in my 40-year career. It's just there's so much opportunity. And I've even seen, you know, we've invested in a couple companies that just, you know, just didn't work. You know, we were all super excited when we started and it just didn't work. Even those get aqua hired,

you know, because people, you know, want talented uh blockchain uh engineers and and other specialties. So, >> it really has been a fantastic space to invest in. Yeah. >> And and like you said, the 25 unicorns is just >> Yeah. That's nuts. That's nuts. Do you think this generational I mean for me I I few years younger than you but like it does feel like the greatest wealth generation opportunity of my of my life. Um but I'm curious if that still if you were listening to this and you're you're you haven't been in the industry for the last decade and you're just getting in. Does it feel like that opportunity is still there?

>> Oh yeah. So um I was on uh CNBC once and they said, "Hey, you know, Bitcoin's a bubble." And I was like, "How can you have a bubble nobody owns?" Right? The median investor installed investor is 0.0, zero, right? So, it's not over. And and that is >> why I'm just I I still have the same conviction I had in 2013. >> And in that I actually said that the reason you should invest is 99% of the world hadn't addressed Bitcoin in 2013. It's still, you know, uh it's I I guess technically it's 67% of institutional investors have zero exposure to crypto.

So, it's still very very early days. And and remember, you know, the internet's uh 52 years old and there's still cool internet stuff coming all the time, right? And so blockchain is so important to remember it's it's super early in in that. And yeah, so anytime I meet any young person, I say get into crypto, you know, and even professionally, you know, you know, invest in it definitely, but >> you know, spend three or four years. Maybe I'm wrong. Maybe, you know, crypto is not that important and you got to go get a real job. But like if you um if you do invest your career in this space, you're going to be ahead of you know, all the kind of institutional investors that have no exposure yet.

>> Yeah. Do you see uh do you see Panta uh reaching outside of crypto ever investing in robotics or AI or launching an AI fund or anything like that? >> You know, forever is a long time, so it's hard hard to say no. But I don't think in the next like 10 years or something cuz still just all in. >> Yeah. All in. There's so much opportunity. Like >> um >> before we went on air, I was talking about all the different things we're doing. You know, we got fund five we're raising. We're doing a dad. We've got a billion in other dads. you know, just I come in every day with my head exploding of all the cool stuff we could do. And so, you know, getting into robotics or something like that would be, >> you know, it's just the there's it's a

>> way lower Yeah. >> return. And again, 86% of the things we invest in work, right? So, like why would we invest in something else? >> You're doing all right. What do you spend your time doing right now, Dan? >> Yeah. So, um I really do just try and help. We have a fantastic team and you know they do most of the real work but I try and help with the strategic type stuff and and make sure um you know that we're you know executing and especially you know on this >> HSDG that it's you know there's a lot of stuff to do filings and you know um you we're trading you know hundreds of millions of dollars of currencies every day. uh the stock itself has traded a half a billion shares, you know, so there's just a lot of uh things we need

to do well and so I'm I'm really just trying to coordinate. Fantastic. >> Do you still help co are you still in the minutia of some of that stuff or? >> Yeah. Yeah. So you know we have fantastic partners like the the DAT business is uh run by Cosmo Jang and um so he's doing you know managing the team and doing uh you know the details but there are a lot of important bits of you know trying to make sure all these things get done correctly and you know helping our investors get invested in things um you know so there there's just a lot going on. >> Yeah, shout out Cosmo. Cosmo is great.

>> Yeah, Cosmo is great. >> Cosmo is great. We love Cosmo. um what do you uh so you guys have all right so you've invested in 25 unicorns I'd love to I don't know if we were talking about one of the founders in your portfolio uh who you know has recently had a big success and you're sharing some funny stories about how he manages the board I'm curious um a I don't know if you're open to sharing that publicly um but b I'm curious like what you've seen is what makes this the standout founder so stand out >> yeah so um we were just talking about Mike Kagny the founder of uh figure he is just so focused on execution. So the thing I would say about him that's that's so amazing is he both can visualize the future and then actually make it happen.

And in the venture business, you meet a lot of dreamers who can visualize the future and have a lot of thoughts about, you know, where it should go. Uh but I I I've been blown away at how focused Mike is on actually executing it. And he uh he gets a ton out of his board. um he'll ask you know he'll send a request like do you know who would be a good chief marketing officer or something like that and then you know if I haven't replied like instantly he's you know pinging me again he's like you know just really just hassling and he gets results so then we you know we get him stuff and and the company keeps moving forward and so uh I I'm really bullish on his prospects and I've actually known him for about 25 years since he was a macro

hedge fund manager in San Francisco when I was uh first doing Panta uh and then obviously you did so in between. And so he's he's a a fantastic founder and it really is, you know, that ability to see the future and execute it and motivate a team, you know, to all follow your vision. Um and you know, so those those are the founders that, you know, really work. >> Yeah. Do you have um going to try to think of the a polite way to ask this question, but a lot of the founders I think who are doing well right now, they're actually um I really I don't know a more polite way to ask this, but they're on the older side, right? like K, you know, Kagny or like uh we're talking about Bitco Belly or Jeremy uh who just, you know, went public with

Circle like these are experienced founders. I think a lot of times people think about crypto is this like young generation with, you know, a bunch of these 20-year-olds running around running these companies, but actually the more experienced founders have, I think, actually had a lot of the success in the industry. How do you think about what type of founder to back and who's going to do well in this next cohort of crypto founders? >> Yeah, that's great. We should actually study our 25 unicorns and see like what's the median age and all that stuff. But you are right the the people we just talked about, you know, have done something before and been successful. Uh but then there are other founders like were um the lead in alchemy and uh Joe and Nquil in their >> 20s probably or late 20s now.

>> Um yeah, so there are some founders that are very young. Uh one of the things to keep in mind is you know we've been doing this for 12 years. So even >> even the young guys are not >> Yeah. Even if we bet even if we bet on a young guy, he's not as young anymore. >> Yeah, that's fair. That's fair. Are there any um the the kind of bets of the last couple of years have been I mean, you know, 2017 to 2020, you had to build up the capital markets, I'd call it, prime brokers and custodians and exchanges. Um obviously stable coins, tokenization, things like that. What do you think the next five years could look like? Like where where would you guys place your bets?

Yeah, I guess if if we could kind of wave a magic wand and and kind of create something it it'd be great if we could then have more consumer oriented blockchain applications, you know. Um cuz like you said in the beginning we had to do very basic things like uh storage and exchanges and then you know we're doing some kind of more sophisticated things with with all the uh infrastructure but it'd be you know it'd be nice over the next five years or so to have you know kind of everyday use cases that really do take off. >> Yeah, you could argue things like Poly Market are are a like is a I think Poly Market is a consumer. It's funny because like uh you know consumer it's like a there's a broader societal trend where

trading is kind of intertwining with consumer. Yeah. So it's like are the trading apps also consumer? >> Yeah. >> So >> is there anything that you're thinking about right now that uh kind of the maybe an overused Peter Thieian question is like what feels obvious to you that maybe others are missing? Well, you know, I would actually say uh and I know this sounds self- serving, but dats are the thing that there's a lot of people that kind of, you know, raise an eyebrow and say, "Oh, DATs are kind of sketchy or they're a bubble or whatever." And I don't think enough people spend enough time to think of how powerful they are that, you know, they are bringing more capital into the industry. And if you can keep adding tokens per share, they're going to add a ton of value. And so they are in my

opinion superior to ETFs and and ETFs have been wildly successful and and so I would think that the the DAT thing is probably going to be bigger than consensus and and you know when I do uh talk to people about it there's always a kind of a healthy skepticism and and I will admit when I first heard about Micro Strategy I was like I don't know if that's a great idea right and um I put in our most recent investor letter a little anecdote about uh Mark Casey of Capital Group. They just did a a cool article about him in the Wall Street Journal and he's a friend and neighbor of mine and he owned 10% of Micro Strategy back when it wasn't, you know, very well

understood. And I was like, what are you doing? Like it just seemed super crazy. And his answer resonates, it still resonates. He's like, "I'm a 40act mutual fund and I'm very bullish on Bitcoin and this is literally the only way I can express that." He invested less than a billion dollars and it's six billion now, right? So, it's a great trade and and I think that's the >> the thing that's I'm passionate about and it's obvious to me, but I think most people still have the same skepticism I had back then. I was like, "Oh, this, you know, I don't know if I really believe in it." But the more work I've done uh on the space, the more I believe it really is an important driver and it will add a ton of value. Uh so that is the one thing I think when people look

back a couple years from now, they're going to go, "Wow, you know, that was Yeah, >> that was a huge uh trade." >> And you think the uh the DATs and the ETFs will coexist? >> Yeah, they'll coexist. You know, everyone has uh their own kind of way they like to do their investing. Uh but my construct is that you know DATs have the ability to do things ETFs don't. You know ETFs are always just going to be one for one. They're never going to grow the number of of uh tokens per share. Uh most of them don't do yield or staking. Um so seems like DATs are one of those things that like are at least as good or better than ETFs in every dimension.

>> Dan, thank you for the time, man. >> Thanks. It's been a blast. >> Yeah. [Music]