I’ve heard that line for eight years.


Regulators are talking about bubbles and manipulation constantly.


The markets have it right  there is a massive Ponzi scheme going on.  Let’s investigate.




“The Commission concludes the requirements of Exchange Act Section . . . be ‘designed to prevent . . . manipulative acts and practices’ and ‘to protect investors and the public interest.’


“A pyramid scheme that is heavily rigged and from which the only way to profit is to sell to a ‘greater fool’ who comes later at a higher price.


“The Commission has raised in previous orders, which have included. . . persons with a dominant position in bitcoin . . . trading based on material, non-public information”


– SEC Order Disapproving a Proposed Rule Change to List and Trade Shares of the VanEck Bitcoin Trust, November 12, 2021


The bitcoin market is way too big to be manipulated.  Bitcoin trades on hundreds of exchanges in dozens of countries.  Bitcoin’s daily volume is 1,000x as much as GameStop, which trades on just one market in just one country.


[SEC Commissioner Hester Peirce makes a very cogent argument that the bitcoin market is, in fact, adequately self-regulated here]




“Bitcoin (and most other Crypto-assets) as an investment asset is difficult to rationalize, which would suggest that we see a buildup of a historic bubble.


“However, legislators have encouraged fresh speculative inflows into crypto-assets through laws such as the German Fondstandortgesetz risk to fuel the bubble and increase the eventual societal problem.”


– Ulrich Bindseil, Director General of the ECB’s Directorate General Market Operations, November 19, 2021


All this extreme positioning on bitcoin doesn’t make any sense.  How can you have a bubble almost nobody owns?  Something like 90% of institutional investors have no exposure to bitcoin or other blockchain tokens.  It’s definitely not a bubble.



“To know thyself is the beginning of wisdom.”

– Socrates




Governments should stop obsessing about bitcoin and look inward.  The biggest Ponzi scheme in history is the U.S. government and mortgage bond market – 33 trillion-with-a-T dollars – all being driven by one non-economic actor with a dominant position who is trading based on material, non-public information.


All this handwringing from the Fed about “the Taper” in future years.  What?!?!  The Fed’s strategy should be “Cold Turkey” – right now.




Somebody should file a Federal Whistleblower Protection Act claim against the Fed under the statute’s clause against “gross waste of funds”.  It’s clearly a huge waste of funds to print $50,000 per family in America to push up the price of the mortgage bond REITs that Fed presidents own and the assets of other wealthy people while destroying the purchasing power of the average American, making homes unaffordable for the 35% who don’t own a home, and saddling our children with more debt that it took to win World War II.


Bonds will experience a Wyle E. Coyote moment.  Not sure if it’s next week or down the line.  After the mid-terms?  But it is certain.





Someday financial gravity will resume functioning.


If you’re an institutional investor with any bonds, but especially if you’re more like the classic 60/40 stock/bond portfolio, you might want to hedge the bond bubble with bitcoin/crypto assets.




I’ve spent my career looking for asymmetric trades – trades where the upside is many times the downside.  Obviously, bitcoin/blockchain is the most asymmetric trade in a generation.


Bonds are the polar opposite.  The potential upside is only a tiny fraction of the very real downside.


The U.S. 10-year note yields 1.34%.  Even if the Fed drives the rate to zero – which is unlikely, but probably the furthest conceivable level – the price of the bond would only increase 13 percentage points.  Now let’s look at the downside . . .




The real rate of return is the yield a bond investor gets after inflation.  For U.S. 10-year notes, the average real rate over the fifty years before money printing started (1957-2007) is 2.63%.


The Fed’s decision to print half of our country’s GDP and use it to push up the price of bonds has forced the real rate to negative 4.65%.  (This obviously begs the question:  Why would any economic actor want to buy something guaranteed to lose money?)



The best way to visualize just how extreme this manipulation has been is to graph the deviation of real rates from their 50-year average.  The gray area is our brave new world of unlimited bond purchases.  We are now an incredible 7.28 percentage points below average.





Bonds investors are going to get absolutely destroyed when the Fed stops manipulating the bond market. 


Here is the market cap of U.S. government and mortgage bonds.  The huge short squeeze the Fed enacted is clear.  It sent the value of bonds up $10 TRILLION.  When the Fed is forced to stop, bonds will fall.



The dotted line in the above is what would happen if the real rates were no longer manipulated and they returned to the 50-year average.  Bond market prices would fall 30 percentage points.  This is against the maximum possible upside of 13.  What if they only go halfway back to normal?  $6 trillion of market cap evaporating!


Buying crypto with only $3 trillion market cap seems like a fantastic hedge.




These growth rates are unsustainable.







The Fed’s manipulation of the mortgage market is causing unprecedented problems. 


In the 12 months ending in June 2021, the median time U.S. homes spent on the market before going under contract was only one week, according to a survey released by the National Association of Realtors.  That marks a record low in data going back to 1989. 



That’s insane.  Why is the Fed **still** buying mortgage bonds?  Trying to make that go negative?




If your institution hasn’t already sold your bonds to the Fed, take the deal. 


The Fed is not going to be able to overpay for your bonds forever.  Take the gift.



Financial gravity will work the moment the Fed stops manipulating the market.


The bond bubble reminds me of a classic country song by Hank Williams, Jr. It’s All Over But The Crying.




Here’s a survey of global inflation since last month.  Eurozone inflation hit a 13-year high.



U.S. year-over-year CPI hit another high – a 39-year record.  You have to go back to 1982 to have seen inflation this high.





“Federal Reserve Chairman Jerome Powell’s inflation record is much worse than official statistics show.  As reported, consumer price inflation is the highest in 30 years.  Based on actual prices, it is one of the highest inflation rates of the postwar period, matching the double-digit increases of the 1970s and early ’80s.


“In the 1970s, the change in house prices counted as inflation, whereas today it’s what people can hypothetically be charged for rent that counts.  The 6% increase in inflation in the past year would be 10%-plus using 1970s methods, since house prices are up nearly 20%, while owner rents are up 3%.”


– Joseph Carson, former chief economist at AllianceBernstein, Wall Street Journal, November 25, 2021


This is true.  The Owners’ Equivalent Rent component of CPI is up only 3.1% year-on-year.  Anybody trying to rent or buy a house/condo knows that’s not reflective of reality.


Sometimes zooming out helps.  Owners’ Equivalent Rent was invented in 1982.  The index is now at 3(.)47359.  I’m sure we’d all be happy to buy a home for only 3x what it cost in 1982.


The reality of home price inflation is this.  Mortgage bond manipulation is driving up the cost of housing at a record rate.





The tsunami of printed money is not just pushing housing, it’s floating all boats.  All real, non-quantitatively-easible assets are surging up – relative to the value of paper money.  


As America grapples with 3.6 million people out of work vs. pre-pandemic non-farm payrolls, the equity market keeps hitting new highs.  That’s clearly the result of policy excess.



Pundits talk about how overpriced stocks are.  By historical metrics, they may sound overpriced.  However, they are inexpensive relative to the bubble that is the bond market.


Goldman Sachs Research did a great job putting it in perspective.  While stocks may seem expensive, they are cheap relative to the manipulated bond market.


“The Fed responded to the pandemic by flooding financial markets with liquidity and pushing the funds rate to zero.  [Editor’s note:   The main impact has been from directly manipulating the long-term bond market.]  Since the March 2020 trough, the S&P 500 index has more than doubled in a nearly uninterrupted upward trajectory to reach its current all-time high . . . .


“At 21.6x, the P/E multiple would rank in the 93rd percentile vs. history in absolute terms.  However, relative equity valuations vs. US Treasury yields would still register as attractive compared with historical averages (46th percentile) . . . .


“The yield gap between the S&P 500 earnings yield (4.6%) and the ten-year Treasury note yield (1.6%) currently equals 301 bp, ranking in the 40th percentile vs. history.”


– Goldman Sachs Macro Outlook 2022: The Long Road to Higher Rates, November 8, 2021





In our August letter we wrote:


Chinese policy is definitely shutting down mining in China.  Our models show that up to 56% of the change could not be explained by price alone.  56% of a 45% drop is 25% of the previous total hardware power has been shut in by policy action.


The fallout of this ban was a significant outside context event (p<0.00001).  


Command economies can shut in capacity by edict.  Not in the free world.  Bitcoin mining is hyper-competitive.  The void will be replaced – and probably very quickly.  Here we’ve graphically represented it as three months. 


The shaded area of shut-in mining capacity is worth $2.0 billion annually.  (25% of the $7.9bn above.)


That “free money” will be soaked up with mining rigs outside of China.


The recovery happened exactly as forecast.  The network difficulty is above the level it was prior to the China ban on mining.



Although difficult to know with certainty, it seems very likely that much of the reboot in mining power is occurring in places with cleaner energy than those utilized by Chinese miners.


The transition to renewables is well underway.





Many investors view blockchain as an asset class and would prefer to have their managers allocate among the various asset buckets.  This compelled us to create Pantera Blockchain Fund, a new “all-in-one” wrapper for the entire spectrum of blockchain assets.  We believe this new fund is the most efficient way to get exposure to blockchain as an asset class.  


The Blockchain Fund is like the super-set of our four existing sector funds.  



The most important feature is that we can invest against the large swings in value between tokens and venture.  Tokens reset very quickly whereas venture is slow-moving.


We’ve already seen that in the short life of the fund.  In May and June tokens got slammed — DeFi down 65%.  However, in venture people were still executing term sheets from April, entrepreneurs still wanted the valuations in their minds at the peak — so venture pricing takes nine-ish months to reset.  In that circumstance, we were able to buy ETH and DeFi tokens at an attractive price relative to venture.  Over the years they will become expensive and we’ll sell the tokens to fund venture deals.  For that reason, I think the new fund will out-perform the arithmetic average of the four sector funds.



Although we have already exceeded our target, we are committed to keeping the fund open through the December 31st and March 31st closings.  Preference will be given to those who indicate their interest first.


The summary of terms can be found here.


For investors who prefer venture, the new fund offers a Venture-Only Class.  This class will have exposure only to the equity deals we do – and will not invest directly in tokens.  It is essentially Pantera Venture Fund IV.


Pantera Blockchain Fund has invested in 14 early-stage token projects and three venture equity deals, with a record pipeline behind it.  Of those, Arbitrum is a leading layer-2 scaling solution powering some of the largest decentralized applications in the ecosystem.  In addition to a handful of DeFi investments, we participated in the $30mm Series B round for BitOasis alongside Alameda Research and others.  The Fund has also invested in the gaming and NFT spaces, both of which are garnering lots of attention from consumers and investors.  Pantera has led or co-led four deals, with more to be announced in the coming months.


As in previous Pantera venture funds, a Co-Investment Class is offered.  Limited Partners investing $15mm or more will have the option to collectively co-invest at least 10% of each venture and early-stage token deal.  If you don’t reach this threshold, and co-investments are of interest to you, we offer excess co-investment opportunities to all LPs of the fund.  In the last twelve months, LPs without co-investment rights were offered the chance to invest in eight deals, such as Arbitrum and Bitso.  They were able to invest $25mm collectively.


Click the button below to begin the investment process online.



Also, please join us for our Pantera Blockchain Fund Launch Call on December 7th at 9:00am PST.  You can register here.





Here’s a glimpse of a cool future.


Last month, over $40mm was raised in a few weeks by the crypto community in an effort to buy the last first-edition copy of the U.S. Constitution still in private hands.  The initiative, formed around ConstitutionDAO, showed the speed and efficiency in which people can mobilize and pool capital around a shared goal using blockchain technology.


Despite losing the bidding at Sotheby’s to Ken Griffin of the Citadel hedge fund, ConstitutionDAO was a fascinating foreshadowing of the future of democracy.  


Decentralized autonomous organizations (DAOs) allow for like-minded folks to collectively work together and commit funds towards a common initiative without centralized leadership.  They allow for community-driven decisions through tokens that represent voting rights.


This concept, enabled by blockchain, will be the fulfillment of an aspiration we’re all familiar with:


“ . . . that this nation, under God, shall have a new birth of freedom and that government of the people, by the people, for the people, shall not perish from the earth.”


— Abraham Lincoln, The Gettysburg Address, November 19, 1863


DAOs are of the people, by the people, for the people.


When they raised $40mm, but were outbid, the ConstitutionDAO tweeted this classic:




Our (vaccinated) Capital Formation partners and occasionally investment team members are traveling to discuss Pantera Blockchain Fund and the blockchain ecosystem with our Limited Partners and potential investors.


We also have organized Blockchain Lunches in some cities, should you want to learn more about blockchain and meet other investors who share your interest.  If you are interested in attending one of our Blockchain Lunches, please fill out the form on this page and we will be in touch regarding availability.

  • Indianapolis, December 7  |  including a Blockchain Lunch at 12pm
  • Dallas, December 8-9
  • Houston, December 8-9
    • o December 9, Blockchain Lunch at 12pm
  • Austin, January 11-12
  • Greenwich, January 13
  • Palm Beach, January 19-21
  • Miami, January 19-27
  • Philadelphia, February 1-2
  • Memphis, February 3
  • North New Jersey, February 8


If you are interested in a meeting, please contact the Pantera Capital Formation team at +1-650-854-7000 or 



Take care,




“Put the alternative back in Alts”



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 Blockchain Fund Launch Call

A detailed dive into our new “all-in-one” blockchain fund.

Tuesday, December 7, 2021 9:00am PST / 18:00 CET / 12:00am China Standard Time

Please register (in advance) via this link:


Investing in Blockchain Conference Call

A discussion of the blockchain opportunity set and how Pantera’s four funds are structured to capture value in this rapidly evolving ecosystem.

Tuesday, December 14, 2021 9:00am PST / 18:00 CET / 12:00am China Standard Time

Please register (in advance) via this link:


Pantera Blockchain Fund Final Closing Call

A detailed dive into our new “all-in-one” blockchain fund.

Tuesday, January 11, 2022 9:00am PST / 18:00 CET / 1:00am China Standard Time

Please register (in advance) via this link:


Investing in Blockchain Conference Call

A discussion of the blockchain opportunity set and how Pantera’s four funds are structured to capture value in this rapidly evolving ecosystem.

Tuesday, January 18, 2022 9:00am PST / 18:00 CET / 1:00am China Standard Time

Please register (in advance) via this link:


Pantera Liquid Token Fund Investor Call

Tuesday, January 25, 2022 9:00am PST / 18:00 CET / 1:00am China Standard Time

Open only to Limited Partners of the fund.


Pantera Early-Stage Token Fund Ltd Investor Call

Tuesday, February 1, 2022 7:00am PST / 16:00 CET / 11:00pm China Standard Time

Open only to Limited Partners of the fund.


Pantera Early-Stage Token Fund Investor Call

Tuesday, February 1, 2022 9:00am PST / 18:00 CET / 1:00am China Standard Time

Open only to Limited Partners of the fund.

Pantera Blockchain Fund Final Closing Call

A detailed dive into our new “all-in-one” blockchain fund.

Tuesday, February 8, 2022 9:00am PST / 18:00 CET / 1:00am China Standard Time

Please register (in advance) via this link:


Investing in Blockchain Conference Call

A discussion of the blockchain opportunity set and how Pantera’s four funds are structured to capture value in this rapidly evolving ecosystem.

Tuesday, February 15, 2022 9:00am PST / 18:00 CET / 1:00am China Standard Time

Please register (in advance) via this link:


Recordings of past conference calls are available on this page.




Polkadot Parachain Auctions Launch; Acala Wins First Slot With $1.3 Billion


Acala is a decentralized finance platform and liquidity hub built on Polkadot.  Polkadot’s first parachain auction began in November, with 10 projects vying for a launch slot and collecting close to $3.5 billion in bids.  Acala secured $1.3 billion across 81,000 wallets to win the auction and secure a 96-week lease slot on the Polkadot Relay Chain.  Acala will now focus on launching the first suite of DeFi services on Polkadot, including staking products, stablecoins, exchange and developer tools.  Pantera previously led Acala’s $7 million Series A round in August 2020.  


StarkWare Raises $50 Million Series C to Scale Blockchains via Zero Knowledge Proofs


StarkWare provides blockchain scalability solutions through its Layer-2 technology on Ethereum powered by zero-knowledge proofs.  StarkWare’s scaling engine StarkEx has settled over $200 billion in trades and 50 million transactions and is used by leading platforms such as dYdX, Sorare, and Immutable X.  Pantera participated in the $50 million Series C round led by Sequoia Capital.  Pantera previously led StarkWare’s $6 million seed round in May 2018, and participated in the $30 million Series A round in October 2018 and $75 million Series B round in March 2021.


Faraway Raises $21 Million Series A to Build Browser-Based Blockchain Games


Faraway is a gaming studio utilizing blockchain technology to create decentralized game economies that give players ownership over their in-game assets.  Faraway will launch their browser-based flagship game Mini Royale: Nations as the first live multiplayer game built on Solana.  Pantera participated in the $21 million Series A round co-led by Lightspeed Venture Partners and FTX, alongside Sequoia Capital, a16z, Solana, and Jump Capital.


GuildFi Raises $6 Million Seed Round to Build Web3 Gaming Infrastructure 


GuildFi is creating an interconnected ecosystem of gaming communities where players can maintain their rewards and achievements across guilds or games.  GuildFi has grown to over 100k registered users and 25k daily active users within three months of inception.  The team plans to expand their platform to include a scholarship portal, game discovery, Proof-of-Play rewards, and a launchpad.  Pantera participated in the $6 million seed round co-led by Defiance Capital and Hashed, with other investors Coinbase Ventures, Alameda Research, Animoca Brands, and Dapper Labs.