THE CASE FOR DIGITAL ASSET TREASURY COMPANIES[1]

By Cosmo Jiang, General Partner

 

A new frontier for public market crypto exposure is emerging – Digital Asset Treasury companies (“DATs”).  These are companies emulating the MSTR (Strategy, formerly known as MicroStrategy) playbook of providing exposure to digital assets via permanent capital vehicles listed on public equities exchanges. After examining the nuances of the strategy, we have built conviction in this investment thesis and have leaned in with concentrated bets.

 

As investors, we seek to constantly test our pre-existing biases.  In light of the continued persistence of the MSTR premium and the buy-in from fundamentally-oriented funds, including Capital Group and Norges, we looked for asymmetric opportunities to capitalize on the DAT trend.  While the magnitude of the premium may not persist forever, there is a fundamental case to invest in Digital Asset Treasury companies and to justify why they may trade at a premium to its underlying net asset value (NAV).

 

The fundamental bull case is that it is possible to own more BTC-per-share (“BPS”) over time through MSTR than just buying a single BTC.  Let’s walk through the simple math:

 

If you buy MSTR at two times NAV, you are buying 0.5 BTC instead of buying 1.0 BTC via spot. However, if MSTR can raise capital and grow BPS 50% per year (last year it grew 74%), by the end of year two you would have 1.1 BTC – more than if you had simply bought spot.

 

To believe MSTR can sustainably grow BPS, you have to believe three things:

 

1. Stocks sometimes do not trade at fair value and markets can be irrational, leading to overvaluation versus NAV. Any investor who has been in the market long enough knows that markets are, indeed, not always rational.

 

2. MSTR stock will have high volatility that creates the conditions for MSTR to sell convertible bonds, or harvest that volatility by selling call options against itself, for large premiums.

 

3. Management is financially savvy enough to take advantage of those conditions.

 

Zooming out, one of the more underappreciated dynamics driving the success of DATs is the way they’ve bridged traditional investor behavior with digital asset exposure – essentially by turning crypto into equities.  The strong demand for products like MSTR, the ETFs, and the new wave of DATs suggest a large pool of capital had been sidelined by the onboarding complexities of crypto-native products (e.g., setting up wallets or crypto exchange accounts).  It’s encouraging to see more capital now entering the space, even if via the “old” system.

 

From a structural supply perspective, DATs also present an interesting contrast to ETFs: purchases into these vehicles effectively lock supply away, with a low likelihood of being sold because these are effectively one-way closed-end funds.  In contrast, coins held by ETFs can dissipate as easily as they accumulate.  This phenomenon could have better price implications for the underlying assets, both as the DATs buy more coins for their treasury and also as they do not feed into selloffs.

 

Pantera has positions in a number of DAT companies. The most well-known one is Twenty One Capital (NASDAQ: CEP), led by Jack Mallers, a longtime Bitcoin evangelist.  The company is seeking to emulate the MSTR playbook and is backed by three major industry players: Tether, Softbank, and Cantor Fitzgerald.  Twenty One has just enough scale to leverage the full menu of capital market instruments while also having a smaller market cap so that it might nimbly grow BPS faster than MSTR and justify trading at a higher premium. As a firm, Pantera was the largest investor in their PIPE.

 

We led the investment that jumpstarted DeFi Development Corp (NASDAQ: DFDV, formerly known as Janover), which kicked off the DAT trend in the US.  DFDV, led by CEO Joseph Onorati and CIO Parker White, is taking the MSTR playbook but applying it to Solana. Solana is an interesting alternative to BTC for a few reasons: (a) arguably higher upside than BTC because it is earlier in its maturity, (b) higher volatility than BTC, which means harvesting that volatility is more accretive, (c) has a staking yield component that augments SOL-per-share growth, and (d) more untapped demand because there are fewer substitutes available today (e.g., no publicly-traded miners, no spot ETF).

 

Our most recent investment in the space is in Sharplink Gaming (SBET), the first Ethereum digital asset treasury company in the US. SBET is backed by Consensys, the leading Ethereum software company and a team that Pantera has worked with for over a decade.

 

Pantera’s backing of DFDV, CEP, SBET, among others, and their successful market reception, helped kickstart the stream of others that have now followed, many of which we continue to actively evaluate.

 

 

THE “KILLER APP” OF CRYPTO IS THE DOLLAR

By Erik Lowe, Head of Content

 

In our January blockchain letter, we discussed how crypto may be “the ironic answer to de-dollarization”.  With the GENIUS Act advancing through the Senate with bipartisan support and the new Administration’s continued emphasis on dollar-backed stablecoins, we believe blockchain is becoming increasingly recognized as a strategic tool for extending dollar dominance.

 

“As President Trump has directed, we are going to keep the U.S. the dominant
reserve currency in the world, and we will use stablecoins to do that.”

 

– Scott Bessent, Treasury Secretary, White House Crypto Summit, March 7, 2025

 

By establishing a comprehensive regulatory framework for stablecoins, the GENIUS Act should offer clarity and confidence to market participants that have been absent during the discovery phase for stablecoins, bringing further legitimacy to one of crypto’s “killer apps”.

 

Driving Dollar Demand

 

The most practical use of crypto today has been putting dollars on the blockchain.  98% of the $250 billion stablecoin market is backed by fiat currencies rather than crypto or an algorithmic stabilization mechanism.

 

 

As the world’s reserve currency, it’s no surprise that 98% of fiat-backed stablecoins are backed by USD.

 

 

Blockchains are supercharging the dollar – putting it at the fingertips of five billion smartphone users worldwide and enabling fast, low-cost, programmable value transfer.  In emerging markets, people can save in dollar-backed stablecoins, mitigating the risks of local currency debasement.  In addition, they offer a far more affordable rail for migrants to send money home – legacy remittance companies may charge the equivalent of one month’s wages to do the same.

 

Simultaneously, stablecoins are becoming a global distribution channel for US debt.

 

They’re helping drive demand for Treasuries during a period when confidence in US fiscal health is weakening, against the backdrop of broader geopolitical tensions and macroeconomic uncertainty.  Appetite from traditional buyers of US Treasuries has been declining – evident in last week’s 20-year auction, where weak demand caused yields to spike as bond prices fell.

 

While still a small drop in the bucket relative to total Treasury holdings, stablecoins like Tether’s USDT and Circle’s USDC – backed collectively by $177 billion in Treasury-related instruments – are emerging as a new source of demand.  Together, they would rank as the seventeenth-largest holder of Treasuries globally.

 

 

We believe they will continue to move up the list.

 

“This is a multi-decade prediction, but banks are like landlines, we don’t need them. 
Stablecoins will ultimately replace the depository-taking function that we’re all used to with banks.”

 

– Dan Morehead, TOKEN2049 Dubai, Keynote Presentation, May 1, 2025

 

Deep Alignment

 

The advancement of the GENIUS Act reinforces what the market is beginning to make clear: stablecoins are one of crypto’s most powerful use cases – and a strategic asset in advancing US interests, from maintaining dollar dominance to supporting Treasury markets.

 

By encouraging responsible issuance and ensuring backing by US Treasuries, the Act deepens the alignment between crypto and the dollar.

 

 

Read more about the GENIUS Act in Pantera Managing Partner Paul Veradittakit’s recent blog post.

 

 

MILKEN INSTITUTE GLOBAL CONFERENCE :: PANEL HIGHLIGHTS

Highlights by Erik Lowe, Head of Content

 

Pantera Founder and Managing Partner Dan Morehead spoke at the Milken Institute Global Conference earlier this month on the impact of digital assets on the future of investing.  Below are highlights from the conversation.

 

You can watch the full recording here.

 

Inflection Points for Institutional Adoption

 

Dan: “When we launched our first funds 12 years ago, we had some institutions.  So institutions have been in the space for the whole time.  But what’s the inflection that hockey sticks it?  I think we just had it.  I think the US election is the last remaining issue that our industry had. When we were evangelizing for blockchain eight or 10 years ago, there was a very long list of reasons to say no.  There was no custodian, there was no this, there was no that.  Now we have great firms like Franklin Templeton in the business, Fidelity, BlackRock.   All of the reasons to say no have been taken off the table.  With the notable exception, until recently, US regulatory clarity was missing and that really held a lot of institutions back.

 

“It was a weird experience when you have the United States Securities and Exchange Commission suing Coinbase and Ripple Labs, great companies based in America, that really try and do everything as squeaky as possible.  That gave institutions an excuse to hold off. And so I think the election was really big.  The current president is very pro-crypto. We all know that.  The really big change though, and people say, ‘Hey, well in four years maybe there’ll be a different president and maybe things will have changed one way or the other.’  I think we had a permanent change in Congress.  There used to be a lot of people in Congress that were anti-crypto.  For the life of me, I don’t understand.  It’s one of the best things that’s ever happened to humanity.  It’s going to help four billion people transfer money and save money, essentially free.  It’s amazing compared to all the existing issues like remittance and credit card companies.

 

“But what happened was the industry got organized and competed in 58 congressional elections and in 54 of those, the anti-crypto person got kicked out of Congress.  And so you’re not going to hear a negative word out of Congress again, because one of the things we’ve been really early on and the current president realized, the majority of Americans are under 40 and they love blockchain and they vote.  And so being anti-crypto is just a non-starter for Congress.  So I think that’s changed, that that will give institutions the ability to really get into this space.”

 

Blockchain Venture Versus Traditional Venture

 

Dan: “There is one unique feature of blockchain that’s super important.  It’s the first time in history you can own a piece of the protocol….

 

“Bitcoin is the first protocol you can own a piece of.  There are 21 million shares of bitcoin.  And so the line from earlier, ‘I love blockchain tech, but I don’t like Bitcoin.’  Well, you can’t operate blockchain tech without the token.  So, if you think blockchain technology is important, you have to – and you **can** – that’s the important point for investors in the room – buy shares in the protocol.

 

“And so that adds just a whole new dimension compared to the internet or any other venture capital investing.  And those [protocols] typically go live within a year or two and get liquid much, much faster than a private company would.  

 

“On the venture side, we are raising our fifth venture fund right now. The first three only had venture equity.  All of them paid back all the investor capital within about four years.  That’s just so different than the normal venture world.  Blockchain is such a dynamic space. There’s an enormous rising tide.

 

“It’s allowing exits to happen, an amazing status.  We’ve invested in 22 unicorns.  You can’t do that in a normal space.  And so for those of you that don’t have any exposure to blockchain, it’s so important to get in there because the returns and distributions happen faster – which is a huge issue for many of you out there. We’ve created five billion in profits for our LPs and distributed 100,000 bitcoins to them. 

 

“The other important thing is that it has historically very low correlation with risk assets.  Bitcoin has a 13-year correlation with the S&P 500 of 0.1.  So if you can find an asset that has a 13-year compound annual growth rate of 90%, that has 0.1 correlation, you got to put a little bit in the portfolio.”

 

 

TOKEN2049 KEYNOTE :: A MULTI-DECADE TRANSFORMATION

Highlights by Erik Lowe, Head of Content

 

Dan was invited to speak at TOKEN2049 in Dubai to share his views on the global macro landscape, crypto in relation to tariffs, his long-term vision for blockchain, and where the industry is heading.

 

Watch the full video recording here.

 

 

Below are highlights from Dan’s keynote address:

 

The End of Paper Money

 

“I think the experiment in paper money is coming to a close. People are going back to hard money again. People want to invest in things that you cannot quantitatively ease, that you can’t just print more of anytime.”

 

“Banks Are Like Landlines”

 

“This is a multi-decade prediction, but banks are like landlines. We don’t need them. Stablecoins will ultimately replace the depository-taking function that we’re all used to with banks.”

 

Long-Term Vision for Blockchain

 

“It’s so important, when everyone’s freaking out about short-term things, to be thinking about it, that anything of value can be expressed on the blockchain. Unbelievable. Provably owned. You can transfer to literally anyone with a smartphone pretty much free, pretty much real-time.

 

“Super important is governance is now back to the people. We’re choosing how we want things to run. We’re choosing how networks work. We’re choosing how we do things, not some bureaucrat somewhere. And I think the biggest positive impact of blockchain is billions of people will soon be able to access the global financial markets. That is just an amazing, empowering thing.”

 

Total Addressable Market

 

“The total addressable market, as investors like to say, is staggering. Crypto’s still only about three trillion. The markets it’s going after are literally the biggest on Earth. Tens of trillions. Hundreds of trillions. And blockchain has applications, usefulness, in essentially all of those different things.”

 

Strategic Bitcoin Reserves

 

“I think within the next few years there’s going to be essentially an arms race to get into bitcoin strategic reserves.

 

“And then the US has 11 million years of workers’ wages buried in a stone pyramid in Kentucky in gold. That’s obviously very antiquated. That’s what the pharaohs did 40 centuries ago. I think that’ll be transferred into crypto or bitcoin over the next few years.”

 

Equities Overvalued – Buy Bitcoin

 

“If you’re looking for a place to invest, the old-school assets really do seem scary from an Equity Risk Premium standpoint. Either bond yields have to go up 75 basis points, or stocks have to come down quite a bit. Blockchain is the safest place to hide.”

 

– Dan Morehead, TOKEN2049 Dubai, Keynote Presentation, May 1, 2025

 

 

BITCOIN SURPASSES AMAZON AND ALPHABET

By Erik Lowe, Head of Content

 

To illustrate Bitcoin’s potential societal impact and the asymmetry of this trade, we’ve compared its market cap to publicly-listed companies over the years – starting at our second Pantera Blockchain Summit in 2014:

 

“At the dinner a few hours before the late-night poker game, Morehead had joked about the fact that, at the time, all the bitcoins in the world were worth about the same amount as the company Urban Outfitters, the purveyor of ripped jeans and dorm room decorations – around $5 billion.  ‘That’s pretty wild, right?’,  Morehead said.

 

“‘I think when they dig up our society, all Planet of Apes-style, in a couple of centuries, Bitcoin is probably going to have had a greater impact on the world than Urban Outfitters.’”

 

– Nathaniel Popper, 2015, Digital Gold

 

 

Bitcoin has recently overtaken Alphabet and Amazon.

 

Three left to cross off….

 

 

Sincerely,

 

@cosmo_jiang

@erik_m_lowe

“Put the alternative back in Alts”

PANTERA CONFERENCE CALLS[2]

 

Our investment team hosts monthly conference calls to help educate the community on blockchain.  The team discusses important developments that are happening within the industry and will often invite founders and CEOs of leading blockchain companies to participate in panel discussions.  Below is a list of upcoming calls for which you can register via this link.

 

Pantera Fund V Call

An overview of Pantera’s fifth venture-style fund that offers exposure to the full spectrum of blockchain assets.

Tuesday, June 17, 2025 12:00pm Eastern Daylight Time / 18:00 Central European Summer Time / 12:00am Singapore Standard Time

Please register in advance via this link:

https://panteracapital.com/future-conference-calls/

 

Liquid Token Fund Investor Call

Tuesday, July 8, 2025 12:00pm Eastern Daylight Time / 18:00 Central European Summer Time / 12:00am Singapore Standard Time

Open only to Limited Partners of the fund.

 

Early-Stage Token Fund Investor Call

Tuesday, August 5, 2025 12:00pm Eastern Daylight Time / 18:00 Central European Summer Time / 12:00am Singapore Standard Time

Open only to Limited Partners of the fund. 

 

Join us in learning more about the industry, the opportunities we see on the horizon, and our funds.

FUND V SUBSCRIPTIONS ARE NOW OPEN

 

We’ve found that most investors view blockchain as an asset class and would prefer to have a manager allocate amongst the various asset types.  This compelled us to create Pantera Blockchain Fund (IV) in 2021, a wrapper for the entire spectrum of blockchain assets.  We are now opening its successor — our fifth venture-style fund, Pantera Fund V — for subscriptions.

 

Similar to its predecessor, we believe this new fund is the most efficient way to get exposure to blockchain as an asset class.  It is a continuation of the strategies we have employed at Pantera for twelve years across twelve venture and hedge funds.

 

 

Limited Partners have the flexibility to invest in just venture (Class V for “Venture”), or in venture, private tokens, and locked-up treasury tokens (Class P for “Privates”), or the all-in-one Class A.

 

 

As in all previous Pantera venture funds, we strongly support helping our LPs get access to private deals in this fund.  Fund LPs with capital commitments of $25mm or more will have the option to collectively co-invest in at least 10% of each venture equity, private token, and special opportunity deal that the Fund invests over $10mm in.  There is no management fee or carried interest on co-investments for those with co-investment rights.

 

We will endeavor to offer co-investment opportunities, on a capacity available-basis, to other LPs as well.  These co-investment opportunities are subject to 1/10% fees.

 

We are now accepting subscriptions for Fund V.  If you’re ready to invest, please click the button below to begin the process.

 

 

If you are new to Fund V and would like to receive additional information, click here.  We also invite you to join our next call on Pantera Fund V on Tuesday, June 17, at 9:00am PDT / 12:00pm EDT.  You may register here.

 

 

Pantera donates 1% of revenue from all new funds to 1% For The Planet.

PANTERA OPEN POSITIONS  

 

Pantera is actively hiring for the following roles:

 

If you have a passion for blockchain and want to work in New York City, San Francisco, San Juan, or Abu Dhabi, please follow this link to apply.  Some positions can be done remotely.

[1] Important Disclosures – Certain Sections of This Letter Discuss Pantera’s Advisory Services and Others Discuss Market Commentary. Certain sections of this letter discuss the investment advisory business of Pantera Capital Management and its affiliates (“Pantera”), while other sections of the letter consist solely of general market commentary and do not relate to Pantera’s investment advisory business. Pantera has inserted footnotes throughout the letter to identify these differences. This section provides educational content and general market commentary. Except for specifically-marked sections of this letter, no statements included herein relate to Pantera’s investment advisory services, nor does any content herein reflect or contain any offer of new or additional investment advisory services. This letter is for information purposes only and does not constitute, and should not be construed as, an offer to sell or buy or the solicitation of an offer to sell or buy or subscribe for any securities. Opinions and other statements contained herein do not constitute any form of investment, legal, tax, financial, or other advice or recommendation.

 

[2] Important Disclosures – This Section Discusses Pantera’s Advisory Services. Information contained in this section relates to Pantera’s investment advisory business. Nothing contained herein should be construed as a recommendation to invest in any security or to undertake an investment advisory relationship, or as any form of investment, legal, tax, or financial advice or recommendation. Prospective investors should consult their own advisors prior to making an investment decision. Pantera has no duty to update these materials or notify recipients of any changes.

 

This letter is an informational document that primarily provides educational content and general market commentary.  Except for certain sections specifically marked in this letter, no statements included herein relate specifically to investment advisory services provided by Pantera Capital Management Puerto Rico LP or its affiliates (“Pantera”), nor does any content herein reflect or contain any offer of new or additional investment advisory services.  Nothing contained herein constitutes an investment recommendation, investment advice, an offer to sell, or a solicitation to purchase any securities in Funds managed by Pantera (the “Funds”) or any entity organized, controlled, or managed by Pantera and therefore may not be relied upon in connection with any offer or sale of securities.  Any offer or solicitation may only be made pursuant to a confidential private offering memorandum (or similar document) which will only be provided to qualified offerees and should be carefully reviewed by any such offerees prior to investing.

 

This letter aims to summarize certain developments, articles, and/or media mentions with respect to Bitcoin and other cryptocurrencies that Pantera believes may be of interest.  The views expressed in this letter are the subjective views of Pantera personnel, based on information that is believed to be reliable and has been obtained from sources believed to be reliable, but no representation or warranty is made, expressed, or implied, with respect to the fairness, correctness, accuracy, reasonableness, or completeness of the information and opinions.  The information contained in this letter is current as of the date indicated at the front of the letter.  Pantera does not undertake to update the information contained herein.

 

This document is not intended to provide, and should not be relied on for accounting, legal, or tax advice, or investment recommendations.  Pantera and its principals have made investments in some of the instruments discussed in this communication and may in the future make additional investments, including taking both long and short positions, in connection with such instruments without further notice.

 

Certain information contained in this letter constitutes “forward-looking statements”, which can be identified by the use of forward-looking terminology such as “may”, “will”, “should”, “expect”, “anticipate”, “target”, “project”, “estimate”, “intend”, “continue”, “believe”, or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events or results or the actual policies, procedures, and processes of Pantera and the performance of the Fund may differ materially from those reflected or contemplated in such forward-looking statements, and no undue reliance should be placed on these forward-looking statements, nor should the inclusion of these statements be regarded as Pantera’s representation that the Fund will achieve any strategy, objectives, or other plans. Past performance is not necessarily indicative of or a guarantee of future results.

 

It is strongly suggested that any prospective investor obtain independent advice in relation to any investment, financial, legal, tax, accounting, or regulatory issues discussed herein.  Analyses and opinions contained herein may be based on assumptions that if altered can change the analyses or opinions expressed.  Nothing contained herein shall constitute any representation or warranty as to future performance of any financial instrument, credit, currency rate, or other market or economic measure.

 

This document is confidential, is intended only for the person to whom it has been provided, and under no circumstance may a copy be shown, copied, transmitted, or otherwise given to any person other than the authorized recipient.