HEADWINDS BECOMING TAILWINDS[1]

By Cosmo Jiang, General Partner

 

Crypto markets can be a whirlwind, but when you zoom out, each of the few years tells a distinct story.  2021 was a period of exuberance and innovation.  In 2022, we saw the inevitable bursting of that speculative bubble.  The narrative of 2023 then naturally became about headwinds: deleveraging, capital outflows, users looking elsewhere, and intensified regulatory scrutiny.  Yet, as 2024 progressed, there were the first signs of each of those headwinds starting to become tailwinds.  Now, as we look ahead to 2025, this could be the year where many tailwinds push the industry forward into an accelerated phase of growth.

 

Political and Regulatory Inflection

 

The political and regulatory landscape for digital assets is undergoing a paradigm shift.  Crypto has emerged as a pivotal force in U.S. politics, and we believe the “crypto vote” played a decisive role in shaping the outcome of the election. Looking at the data, the digital assets industry can argue it was the swing vote, and much like the “fulcrum security” in a capital stack, could have disproportionate influence over future developments.  The shift isn’t just political theater; it has already proven to be substantive in just the short couple of weeks, paving the way for clearer rules that will foster innovation and entrepreneurial energy.

 

This regulatory clarity is long overdue.  The industry has been asking for clear rules of the road and welcomes sensible regulation. Without it, the industry had labored under a paradoxical setup: projects that avoided value creation like memecoins faced little resistance, while those aiming to build meaningful products that delivered real value were often stifled.  We believe a new comprehensive legislative framework will reverse this dynamic, creating a system that rewards innovation and value creation.

 

Capital Flows Increasing

 

Bitcoin ETFs have been a resounding success, attracting over $35 billion in net inflows and surpassing $100 billion in assets under management — making them the most successful ETF launches of all time.  Remarkably, bitcoin ETFs outpaced even the NASDAQ QQQ in inflows last year, the second most recognized stock index.

 

 

We think this is just the beginning and anticipate a wave of new ETF launches, including ethereum with staking, solana, and multi-asset products.  Capital markets are also opening up, with Wall Street banks actively pitching crypto companies in anticipation of an active slate of activity.  This renewed flow of capital and investor education will continue to buoy the industry.

 

Fundamentals Improving

 

The crypto industry’s fundamentals are strong.  Real economic value capture of Layer 1 blockchains, the equivalent of revenue, transaction fees is now $6 billion annualized.  Total annualized revenue generated by onchain applications amounts to $10 billion.  User engagement is also hitting new highs this cycle, with daily active addresses hovering around 17 million.  As we’ve emphasized in the past, stablecoins are emerging as a “killer app” of crypto, with onchain transfer volumes and supply reaching new peaks, proving their utility as a payment and savings solution.

 

 

We believe fundamentals will ultimately drive prices, and improvements in these metrics — both at the macro and project-specific levels — should set the stage for sustained growth.

 

Rational Policy and Business Practices

 

Increasing regulatory clarity may unleash the entrepreneurial potential that has long been constrained.  The industry has lived in this twilight zone where if you were to launch a token with explicitly no semblance of value – it was legal.   But if you tried to create value and tie it to your token – you got shut down.  That’s the opposite of a normal functioning society.  Capitalism is built on proper incentives, and we believe we’re heading back to rational business practices.

 

Our new President has stated that he wants the U.S. to be the “crypto capital of the planet”.  This is huge, as the last few years we have seen a departure of talent, capital and innovation in this industry to other jurisdictions.  Innovation follows entrepreneurs, and we are now having many conversations with those who previously left the U.S. who are now signaling their readiness to return home.

 

The creation of the role of the White House AI & Crypto Czar is particularly important to call out. The appointment elevates crypto side-by-side with AI. This makes sense when you recognize these will be the two fastest and most exciting growth sectors in the world in the coming years.

 

Macro Tailwinds and the Road Ahead

 

While concerns about interest rates and macro data persist, it’s important to take a step back and view the bigger picture.  The U.S. economy remains robust, and while rates may stay higher for longer in the near term, their overall trajectory is downward.  Simultaneously, fiscal policies in both the U.S. and China are loosening, increasing global liquidity.

 

 

As these macro trends align with the crypto industry’s structural tailwinds, we believe the stage is set for a period of durable growth.

 

The Next Chapter

 

There’s a possibility we are moving beyond the speculative boom-and-bust cycles of the early days and are now entering a phase of mass adoption and diffusion.  This next chapter could embody more sustainable and meaningful growth, presenting compelling opportunities for long-term investors.

 

2025 is shaping up to be a defining year for the crypto industry.  With political, regulatory, and macroeconomic tailwinds converging with strong industry fundamentals and accelerating innovation, we believe the future is as bright as ever for crypto.

 

 

SOLANA GROWTH

By Cosmo Jiang, General Partner and Eric Wallach, Investment Analyst

 

The Solana ecosystem has demonstrated significant growth across nearly all metrics over the past year, achieving several milestones:

1. becoming the leading platform for new developers,

2. hosting the largest decentralized trading volumes across all blockchains, and

3. surpassing Ethereum in fee generation for the first time.

 

We’ll walk through some of this progress in more detail.

 

Ecosystem Growth and Adoption

 

Solana strengthened across key operating metrics we track in 2024. Monthly active addresses, a proxy for users, surged to nearly 160 million by December 2024, representing a 26x increase from the 6 million active addresses recorded in late 2023. This growth in user adoption far exceeded even our optimistic projections from a year ago.

 

 

Trading activity on Solana broke records throughout Q4 2024. The network’s aggregate DEX volumes consistently exceeded Ethereum’s, with monthly volumes surpassing $30 billion – a dramatic reversal from just a year ago when Solana’s volumes were a fraction of Ethereum’s.

 

Notably, Raydium, Solana’s flagship decentralized exchange (“DEX”), became the highest-volume DEX across all blockchains for the last two consecutive months of the year. In November alone, Raydium processed $125 billion in trading volume, surpassing Uniswap’s $90 billion by 30%. This achievement demonstrates Solana’s growing dominance in DeFi and a fundamental shift in the competitive landscape of decentralized trading.

 

 

In addition, Solana’s robust token creation ecosystem continues to flourish. From representing less than 1% of new tokens across major chains in late 2023, Solana now consistently accounts for over 90% of all new tokens appearing on DEXs. This year-over-year market share capture demonstrates that the platform’s technical advantages are what enable it to attract a new generation of crypto developers and traders.

 

 

Even when innovation doesn’t start on Solana, it eventually finds its way there, as is evident in the emerging AI agent sector. While this trend originated on Base (the Ethereum Layer 2 launched by Coinbase), Solana quickly became the dominant venue, capturing 64% of mindshare and over 50% of market capitalization. By December, AI agent tokens accounted for over 10% of Solana’s DEX volume, more than double the 5% share on Base.  Solana is becoming a preferred platform for emerging crypto sectors.

 

Developer Ecosystem Expansion

 

As the inimitable Steve Ballmer once said, “Developers, developers, developers, developers”. Perhaps the most significant milestone for Solana in Q4 2024 was its emergence as the leading blockchain platform for new developer activity. According to Electric Capital’s Developer Report, Solana attracted nearly 8,000 new developers in 2024, making it the blockchain ecosystem that attracted the most new developers. This represents the first time since 2016 any platform has surpassed Ethereum in attracting new developers.

 

 

Solana ecosystem’s developer growth at scale has been particularly impressive against the broader market backdrop. While the overall crypto industry saw an average 9% decline in developer activity, Solana achieved an 83% year-over-year growth in monthly active developers.

 

This shift in developer preference toward Solana reflects several fundamental strengths: the platform’s technical capabilities, growing user base, and robust economic activity. The fact that Solana maintained this momentum through Q4, even as the broader market showed signs of developer fatigue, suggests that this is not a temporary phenomenon but rather a structural shift in the blockchain development landscape.

 

Revenue and Economic Activity

 

Network revenue growth also paints a compelling story. Real Economic Value measures the aggregate revenue generated by a network, combining network transaction fees and maximum extractable value (“MEV”) tips (similar to payment for order flow). On that basis, Solana generated ~$400M revenue in November or ~$5B annualized, before moderating a bit during the December holiday.

 

Source: Blockworks Research

 

Solana’s growth in Q4 2024 was so significant that, for the first time, it generated more monthly revenue than Ethereum – 37% more across the full quarter.  One year ago, it was just 2% of Ethereum’s.

 

 

Looking Ahead

 

2024 was a transformative year for Solana, demonstrating that fundamental growth in adoption, development, and economic activity ultimately drives value creation. For the full year, SOL appreciated +87%, with a particularly strong +24% performance in Q4.

 

Looking forward to the rest of 2025, we maintain strong conviction in Solana’s trajectory. The ecosystem’s recent achievements, leading the industry in new developer interest and revenue generation, validate our thesis about Solana’s competitive advantages.

 

We also believe Solana is among the most likely next digital assets to have an ETF. It has strong fundamentals that undergird a positive investment case, is a widely traded digital asset on large reputable exchanges that can be monitored, and its ownership is widely decentralized – all key considerations. There four issuers with pending applications for a spot Solana ETF (Bitwise, Canary, Grayscale and Van Eck). Each of them re-filed their Solana ETF 19b-4s in late January and the SEC has until March 14, 2025, to respond. We believe the market continues to underestimate the probability and impact of a Solana ETF.

 

We remain long-term focused and optimistic, as we believe Solana is still in the early stages of mainstream adoption.

 

 

REAL VISION HIGHLIGHTS :: “WHY 2025 COULD BE CRYPTO’S BIGGEST YEAR”

 

Dan sat down with Raoul Pal, Co-Founder and CEO of Real Vision, to discuss the year ahead in crypto.  Dan and Raoul have known each other for 25 years and have both been investing in crypto for over a decade.  Both acknowledge that 2025 may be consequential year for the industry.

 

Watch the full podcast here.  We’ve summarized the key takeaways below.

 

Macro Trends and Fed Policies Impacting Crypto

The conversation began by addressing the impact of Federal Reserve policies on the economy and crypto markets.  Dan argued that the Fed’s long-term low-rate strategy contributed to a significant inflation impulse, leaving the U.S. with limited tools to address mounting debt and fiscal challenges.

 

Dan:  “The Fed made a massive mistake keeping rates way too low, way too long.  Unwinding mistakes is a lot harder than doing a little bit at a time….

 

“The U.S. now spends more on interest than on defense, which is a wild place to be.  Most countries, when faced with this, inflate their way out of it.”

 

The Rising Debt Crisis and Blockchain’s Role

 

As the global debt burden grows, Dan and Raoul highlighted blockchain’s potential as an alternative to traditional financial systems.  They discussed bitcoin as a “stateless currency” that could act as a hedge against monetary mismanagement.

 

Raoul:  “Most people don’t realize it, but governments globally are debasing currencies by about 8% a year.  Bitcoin is a hedge against that.”

 

Dan:  “We’re seeing the separation of money and state.  Bitcoin is a currency that does everything other currencies do but isn’t controlled by a single nation.”

 

Bitcoin’s Growth and Institutional Adoption

 

The discussion highlighted the growing interest in bitcoin among institutions, fueled by regulatory progress and ETF approvals.  Dan predicts that institutional allocations to bitcoin and other crypto assets will increase over the next couple years.

 

Dan:  “BlackRock and Fidelity offering bitcoin ETFs broke the last barriers for institutions.  Now, no one can say, ‘We can’t invest in Bitcoin for compliance reasons.’”

 

Raoul:  “We’re seeing bitcoin emerge as a strategic reserve asset, not just for individuals but potentially for nations.”

 

Middle East and Global Crypto Adoption Trends

 

The panel touched on the Middle East’s growing interest in blockchain as sovereign wealth funds begin to explore crypto as part of their diversification strategies.

 

Dan:  “The GCC nations are realizing that blockchain suits their needs as a frontier market with substantial capital to deploy….

 

“Once the U.S. establishes a bitcoin strategic reserve, we’ll see other countries, especially those seeking to hedge against U.S. dominance, follow suit.”

 

Tokenization and Real-World Asset Integration

 

Tokenization of assets like real estate, treasuries, and commodities was highlighted as one of the most exciting areas of blockchain innovation.  Dan pointed to projects already tokenizing billions in real-world assets.

 

Dan:  “Figure has $10 billion of mortgages on the blockchain.  It’s not just talk—it’s happening….

 

“Ondo is tokenizing treasuries, allowing anyone with a smartphone to lend money to the U.S. government.  That’s revolutionary.”

 

Crypto as the Fastest Growing Frontier Economy

 

Both speakers agreed that blockchain represents the fastest-growing economy in history, with the potential to expand from $3 trillion to $100 trillion in the next decade.

 

Dan:  “Blockchain is a new economy.  It’s like an asset class being born, just like EM and commodities in the 1990s.”

 

Raoul:  “We’re at 3% of the journey.  When people ask if it’s too late, I tell them, ‘No, this is just the beginning.’”

 

AI and Crypto Convergence

 

The intersection of AI and crypto was highlighted as a transformative area, with blockchain enabling decentralized governance, ownership, and incentivized data sharing for AI applications.

 

Dan:  “AI agents need a native financial system, and blockchain is it.  Decentralization makes AI more accountable and accessible….

 

“Blockchain incentivizes people to share private or valuable data for AI models, creating an economic value layer for AI.”

 

Generational Shift and Crypto’s Sociopolitical Impact

 

Dan noted the shifting demographics of crypto adoption, with younger generations driving the sector’s growth and even having a major impact on the U.S. election result.

 

Dan:  “Young people love crypto.  It’s their way to build wealth in a system that has otherwise priced them out of housing and other opportunities….

 

“Crypto is no longer a partisan issue.  With 50 million Americans owning crypto, it’s political suicide to oppose it.”

 

Looking Ahead

 

Dan and Raoul concluded by reflecting on the opportunity in crypto markets, emphasizing that despite the growth so far, the journey is just beginning.

 

Raoul:  “This is the greatest macro opportunity of all time.  Our job is not to mess it up.”

 

Dan:  “Blockchain is still in the first inning.  Most institutions are at zero allocation, but that’s changing fast.”

 

 

THE YEAR AHEAD CALL RECORDING

 

The Pantera investment team shares insights on the state of the blockchain industry, what’s in store for crypto this year, and how the path to mainstream adoption may unfold.  Watch it by clicking the button below.

 

 

 

KEY TAKEAWAYS FROM DAVID SACKS’ CRYPTO Press Conference, February 4, 2025

 

Last week, David Sacks held a press conference to outline the administration’s crypto agenda, emphasizing regulatory clarity, onshoring innovation, and strengthening U.S. dollar dominance through stablecoins.

 

Regulatory Clarity and Ending Arbitrary Enforcement

 

Sacks criticized the previous administration’s inconsistent regulatory approach, which he said drove innovation offshore and penalized crypto founders without clear rules. He emphasized the need for a predictable regulatory framework to foster industry growth in the U.S.

 

 “We’re coming off, frankly, four years of arbitrary prosecution and persecution of crypto companies where the SEC wouldn’t tell founders what the rules were, but then they would prosecute them.”

 

Onshoring Crypto Innovation

 

He argued that keeping crypto development within U.S. borders would enhance consumer protection and economic leadership.

 

“By moving the innovation onshore, it’ll be easier to separate out the good actors from the bad actors, and we want to encourage the good actors, the innovators, while protecting the market from the bad actors. I think a market structured legislation with clear definitions and fair rules will do that.”

 

Stablecoin Legislation and Dollar Dominance

 

Sacks positioned stablecoins as critical to maintaining U.S. dollar dominance and driving demand for U.S. treasuries, aligning with new legislation introduced in Congress.

 

“Stablecoins really have the potential to ensure American dollar dominance internationally, to increase the usage of the US dollar digitally as the world’s reserve currency and, in the process, create potentially trillions of dollars of demand for US treasuries, which could lower long-term interest rates.”

 

In January’s blockchain letter, we wrote about this last topic in greater detail.  Read about how crypto may be the answer to de-dollarization here.

 

 

Sincerely, 

@cosmo_jiang

 

“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.

 

Early-Stage Token Fund Investor Call

Tuesday, February 11, 2025 12:00pm Eastern Standard Time / 18:00 Central European Time / 1:00am Singapore Standard Time

Open only to Limited Partners of the fund.

 

Pantera Fund V Call

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

Tuesday, February 18, 2025 12:00pm Eastern Standard Time / 18:00 Central European Time / 1:00am Singapore Standard Time

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

 

Venture Fund II Investor Call

Monday, March 3, 2025 12:00pm Eastern Standard Time / 18:00 Central European Time / 1:00am Singapore Standard Time

Open only to Limited Partners of the fund.

 

Venture Fund III Investor Call

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

Open only to Limited Partners of the fund.

 

Blockchain Fund Investor Call

Tuesday, April 1, 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.

PANTERA FUND V

 

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 opening its successor, our fifth venture-style fund, Pantera Fund V, in 2025.

 

Similar to its predecessor, Blockchain Fund (IV), 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 a decade across eight venture and hedge funds.

 

Limited Partners have the flexibility to invest in just venture (Class V for “Venture”), or in venture, private early-stage 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 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.

 

Pantera Fund V will have its first closing on June 30, 2025.  We are targeting $1 billion.

 

You may register interest in the Fund below.

 

 

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, Menlo Park, San Juan, or London, please follow this link to apply.  Some positions can be done remotely.

PORTFOLIO COMPANY OPEN POSITIONS[3]

 

Interested in joining one of our portfolio companies?  The Pantera Jobs Board features 1,500+ openings across a global portfolio of high-growth, ambitious teams in the blockchain industry.  Our companies are looking for candidates who are passionate about the impact of blockchain technology and digital assets.  Our most in-demand functions range across engineering, business development, product, and marketing/design.

 

Below are open positions that our portfolio companies are actively hiring for:

 

Visit the Jobs Board here and apply directly or submit your profile to our Talent Network here to be included in our candidate database.

[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.

 

[3] This section does not relate to Pantera’s investment advisory services.  The inclusion of an open position here does not constitute an endorsement of any of these companies or their hiring policies, nor does this reflect an assessment of whether a position is suitable for any given candidate.

 

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.