Good afternoon, readers. Ben’s heading to Korea for Origin Summit, so watch your inboxes for some exciting coverage in the days to come. In the meantime, we’ve got a takeover from the Empire newsletter’s David Canellis.

It has been said that winning in crypto boils down to simply surviving — something Dan Morehead, the founder of crypto’s longest-running institutional fund, Pantera, knows everything about. Let’s mine his Empire podcast episode for survival tips.

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The right headspace

In today’s episode of the Empire podcast, Dan and Yano covered Pantera’s topline thesis, which has effectively remained unchanged since 2013: provide investors with access to crypto (and make them a healthy profit along the way).

All well and good for the well-connected and hypercapitalized operators at the whale-end of the industry. 

But there were still three major points raised by Dan that stood out to me as the most applicable to the plebs, for want of a better term.

1. The four-year cycle is still a thing

This has been a hot topic of debate over the past year or so. The more bullish you get, the more, perhaps, you might start to believe that bitcoin has outgrown its cyclical nature. Maybe halvings are now irrelevant since the arrival of ETFs, Saylor, and the mess of DATs stacking sats. Which means no more bear markets. Up-only forever.

Morehead said: “I very strongly believe in it [the four-year cycle]. We've done three halvings in our time in this business, and they do follow a very predictable pattern. When I was in college, there was a professor that wrote a famous book called A Random Walk Down Wall Street, where he argued the markets were efficient. And Warren Buffett had a line that the markets are often efficient, but the difference between ‘often’ and ‘always’ is worth $80 billion to him.”

Pantera has repeatedly modeled future bitcoin prices based on the four-year cycle and famously, in November 2022, predicted that bitcoin would hit $118,542 on August 11, 2025 — which it did, just one day earlier.

“So yes, I am a believer in the four-year cycle. But the important point is each cycle is only 35-40% as big as the previous one. So the next cycle will be more muted and then 20 years from now there'll be tiny wiggles,” Morehead said, adding that the current cycle could persist for a period of time; “six to 12 more months.”

2. DATs are bigger than you think (they're better than ETFs)

It’s worth noting that Pantera has a fund dedicated to DATs. So, Morehead is obviously a big believer in them as a growth engine for crypto.

You’d be forgiven for wondering if there’s really a difference between DATs and the crypto-related ETFs and ETPs that have cropped up over the past few years.

Morehead said: “I don’t think enough people spend enough time to think of how powerful they [DATs] are, that 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 ETFs have been wildly successful.”

He highlighted Strategy’s effectiveness at increasing the number of bitcoin per share. Outside of the bitcoin context and in the worst case scenario, DATs generally just end up being an ETF but with yield.

“So if you do a Solana DAT and it really just doesn’t go well and it trades at par [with its NAV], it’ll still have potentially something like a 7% yield from staking, which is better than an ETF, which never increases [SOL per share] — you’re just stuck with it. But if you’re able to increase the number of tokens per share, you’re adding a great deal of value.”

3. Blockchain could still do with more consumer apps 

Yano asked Morehead what the next five years could look like, beyond the continued growth in areas like stablecoins and tokenization.

“I guess if we could wave a magic wand and create something,” Morehead said, “it’d be great if we could then have more consumer oriented blockchain applications, you know?

“In the beginning, we had to do very basic things like storage [custody] and exchanges, and then, we’re doing some more sophisticated things with all the infrastructure. But it’d be nice over the next five years or so to have everyday use cases that really do take off.”

Polymarket is probably the closest we have to a killer consumer crypto app right now. “It’s funny, ‘cause there’s a broader societal trend where trading is intertwining with ‘consumer,’” Yano said. 

Are the trading apps also “consumer,” in that case? 

Morehead says yes. Meanwhile, Polymarket rival Kalshi — which doesn’t inherently interact with the blockchain ecosystem in the same way as Polymarket — has now surpassed Polymarket for volume.

Morehead didn’t specifically say where crypto’s consumer apps might one day thrive, but he didn’t really have to. Pantera’s largest position right now is in SOL — $1.3 billion vs. about a billion dollars of BTC. 

The firm’s ETH exposure is “pretty small,” per Morehead.

— David Canellis 

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