The post-election surge further pushed the fund up by 30%. The total return of the fund is now at 131,165% (net of fees and expenses).

I want to share the initial logic — because it still feels very compelling to me today.

The day we chose to launch the Pantera Bitcoin Fund was actually the lowest point in the past eleven years.

That first investment memo still reads very attractively today.

We purchased 2% of the world's Bitcoin between 2013 and 2015.

PS: If Pantera purchased 2% of the world's Bitcoin from 2013 to 2015, that would be about 280,000 Bitcoins. In comparison, as of November 24, 2024, MicroStrategy holds 386,700 Bitcoins.

Even after eleven years, Bitcoin is still being squeezed like a watermelon seed.

Frankly, I can't help but think we still have many years of very attractive returns ahead.

Gold from 1000 BC

My core point was written a month later:

"I discussed Bitcoin with an investor yesterday, and he somewhat dismissively replied, 'It's like buying gold.' No, no, it's like buying gold in 1000 BC. 99% of financial wealth has not yet ventured into Bitcoin. When they do, Bitcoin will either be worthless or [increasing in quantity]."

As an industry, we have made some progress. Now, only 'about' 95% of financial wealth is not fully deployed.

The catalyst for the increase from 5% in 2024 to a higher ratio just happened: regulatory clarity in the U.S. Large institutional management firms like BlackRock and Fidelity now provide incredibly cheap and efficient access to Bitcoin for anyone with a brokerage account. This new convenience will ultimately expose tens of millions of investors and individuals to this important new asset class.

We believe the entire industry will benefit immensely from the inauguration of the first U.S. president who supports blockchain. In our view, the success of blockchain aligns with the country's best interests, and we believe that everyone in Congress will eventually take a neutral or supportive stance towards blockchain — this trend has already started. The regulatory headwind for blockchain over the past 15 years is turning into a tailwind.

I still firmly believe what I wrote eleven years ago:

"I believe the chances of global adoption of a global currency/payment system are more than 50%, with Bitcoin replacing cash, electronic fiat currencies, gold, bearer bonds, large stone discs, etc. It can do all these things. It is the first global currency since gold. It is the first borderless payment system in history."

The price of Bitcoin at this time was $104.

I still think so. We are still in the early stages. 95% of financial wealth has yet to enter blockchain. They are just beginning this massive shift.

The market did indeed see a rapid rise. It reached $1,000 in less than a month — now it has risen three more orders of magnitude.

11-year compound annual growth rate of 88%

I can imagine some investors thinking, 'Bitcoin has doubled this year. Well, I guess I missed it.' And then they give up.

No, this mindset is wrong. Bitcoin's average performance almost doubles every year. Since we established this fund 11 years ago, its compound annual growth rate has been 88%.

Order of magnitude growth

Bitcoin has experienced three orders of magnitude growth. Another order of magnitude growth seems possible. If Bitcoin reaches $740,000/BTC, it would mean a market capitalization of $15 trillion. Compared to a total financial asset of $500 trillion, this number is not unimaginable.

While past performance is not necessarily indicative of future results, if this trend continues, Bitcoin could reach $740,000 in April 2028.

I think it may still take a few years, but I do believe it is possible.

This has always been my mindset: I will not bet my entire net worth on blockchain assets, nor am I 100.00% sure blockchain assets will grow, but when you multiply the probability of it going up by the magnitude it could increase or more — the result is much better than the expected return of other investable assets. The expected value of this trade is the most attractive I have seen in nearly forty years of investing.

Not easy

It seems obvious now, but it was very difficult at the time.

After the 87% crash that began in December 2013, Bitcoin gradually lost its appeal. More than three years later, the market still had not recovered. By 2016, almost everyone had lost faith in Bitcoin. Investors showed no interest.

That year, I traveled around the world, holding 170 investor meetings. The end result of all these efforts was — we only raised $1 million.

The management fee for this fund is $17,241. On average, each meeting can make a profit of $100.

We could have bought this hotel!!!

I am inherently a loyal team member. I have always wanted the Bitcoin team to win. For years, we have been working to help this community. So when Expedia announced it would accept Bitcoin in 2014, we paid for all travel expenses in Bitcoin.

In 2015, our team traveled for 59 nights, spending an average of 1.5 Bitcoins per night, totaling 88 Bitcoins.

That amounts to today's $8,683,136!?!

The astonishing growth of the blockchain industry

In 2013, when we were preparing to launch the Pantera Bitcoin Fund, I opened accounts at several exchanges and wired funds to be ready. When I first walked into Wells Fargo from my office on Market Street in San Francisco to wire money to Ljubljana, Slovenia, I didn't even know how to spell Ljubljana. Everything seemed so suspicious that the bank manager came over to interrogate me about what I was doing and asked for a long time.

But at that time, I doubted whether I was crazy. Another wire transfer to a small startup sounded equally suspicious.

At that time, the price of Bitcoin was about $130. In the following days, I watched the price of Bitcoin drop from $130 to below $100. In retrospect, this 'fear, uncertainty, and doubt' (FUD) remains the mantra of skeptics in today's Bitcoin bear market, which is interesting. Even with all these issues, when Bitcoin fell to $65, I decided to go all in and launch the Pantera Bitcoin Fund. Thirty years of trading intuition told me the opportunity was here.

I sent the above email to a small group of Bitcoin enthusiasts, probably about twenty people, and said, 'I just want to be involved.'

I logged into a startup called Coinbase trying to buy 30,000 Bitcoins. A pop-up window said the fund's daily limit was $50 — not 'half a million dollars' in Wall Street slang, but a real Ulysses S. Grant $50 bill. I almost had a heart attack.

Because it was a trendy startup, there was no address or phone number. I hurriedly sent an email — surprisingly, the subject was in all caps: 'I want to buy $2 million worth of Bitcoin!' Four days later, their only employee, a person named Olaf, replied, 'Okay, your limit is now $300.' Even with my trading limit expanded, it would take 6,667 days to complete the trade.

At this rate, I still have 2,522 days to trade!

Fortunately, I bought these Bitcoins on Bitstamp, and the industry continues to grow. Today, the cryptocurrency market has a daily trading volume of $130 billion. The speed of progress in this industry is astonishing.

Blockchain as an asset class

Sometimes I feel like a gorilla discovering a shiny object in the forest... picking it up... turning it over... wondering what it is...

Bitcoin!

I certainly don’t fully understand all the incredible technical projects in this space, but I feel like I've seen it before.

I was the first asset-backed securities (ABS) trader at Goldman Sachs. Today, everyone considers ABS an asset class. I was involved in the creation of the GSCI (Goldman Sachs Commodity Index). Today, everyone considers commodities an asset class. In the 90s, I invested in emerging markets. Today, emerging markets (EM) are viewed as an asset class.

Blockchain is no exception. I believe that in the near future, every investment firm will have a blockchain team and allocate substantial long-term investments to blockchain.

Asymmetric trade

My global macro background is the reason I initially entered the blockchain space. The asymmetric nature of this trade — working in the world's largest market — makes this opportunity far exceed the opportunities we previously chased on a global scale. I believe this is the most asymmetric trade I've ever seen.

The best illustration of this topic comes from a comparison made at the second Pantera Blockchain Summit in March 2014:

"At a dinner before a late-night poker game, Moorhead jokingly said that the total value of all Bitcoin in the world at that time was roughly equivalent to Urban Outfitters, a company selling distressed jeans and dorm decor — about $5 billion. 'That's crazy, right?' Moorhead said.

"I think centuries from now, when they dig up the remnants of our society like in (Planet of the Apes), Bitcoin's impact on the world may be greater than that of Urban Outfitters."

—Nathaniel Popper, 2015, (Digital Gold)

When I updated this statement in November 2020, the market value of Bitcoin was comparable to L'Oréal. Waterproof mascara is undoubtedly an amazing invention, but I still think Bitcoin is asymmetric.

Digging deeper...

"At L'Oréal, our mission is to democratize the finest and most accessible beauty products like skincare, makeup, haircare, and hair dye."

So good. The mission of Bitcoin sounds surprisingly similar: to democratize financial services.

I believe democratizing finance will ultimately become even more important.

Bitcoin has recently surpassed Meta (formerly Facebook). Photo sharing is indeed cool, but I think achieving financial inclusion for every person on Earth with a smartphone would be more meaningful.