Author: Anthony Pompliano, American entrepreneur and Morgan Creek Venture Partner; Translated by Yuliya, PANews
Over the past three months, every Bitcoin price pullback has been quickly driven higher by buying. Now, with Bitcoin's price back above $112,000, fluctuating by thousands of dollars in just a few days, this strong buying signal signals a new wave of institutional and retail capital entering the market. In this episode, Morgan Creek Venture Partner Anthony Pompliano invites Jeff Park, Head of Strategy at Bitwise Alpha and Chief Investment Officer and Partner at ProCap BTC, to discuss in depth why Bitcoin isn't a bubble, but the needle that punctures it, the rotation of funds between gold and Bitcoin, the trend of Bitcoin whales pouring spot assets into ETFs, and the implications of Coinbase's acquisition of Echo for institutional and retail investors. Bitcoin is not a bubble, but the needle that pops it. Host: Jeff, you once tweeted a very striking line: "Bitcoin is not a bubble, it's a needle." Can you elaborate on what you meant by that? Jeff Park: Many people believe Bitcoin is a bubble, especially at the end of a four-year cycle, when they tend to be more cautious in their asset allocation. But this view misses the fundamental logic. Bitcoin cannot be a bubble because it is the needle that pops the current fiat-based bubble. The global economy operates in a fiat currency system based on credit expansion and inflation; that is the true bubble. Bitcoin is disrupting this structure and redefining the concept of "money"—it is a permissionless, freely liquid asset that changes the velocity of money. Bitcoin's existence forces us to rethink what a "store of value" should be. Host: Some might say gold is the "needle" because it has long been considered the foundation of the monetary system. What are your thoughts? Jeff Park: Gold does play a supporting role in the fiat currency system, but it's essentially the "air" in the bubble—the entire fiat economy is built on gold as a store of value. However, gold isn't a "useful network"; it's a passive store of value. Bitcoin, on the other hand, is different. It's an active, programmable monetary network that redefines the relationship between liquidity and credit. In the traditional financial system, circuit breakers and trading restrictions exist because rapid money flows undermine the credit system—the existence of credit depends on the relative static nature of money. Bitcoin, however, eliminates this static nature. It represents "money in motion," with no queues, no lockout periods, and no artificial delays. These characteristics make Bitcoin the true "needle" that punctures the bubble of the old system. The pullback will be milder, and the "four-year cycle" is history. Host: Some believe Bitcoin could still experience a 50% or larger retracement. What are your thoughts? Can we expect more moderate volatility during this cycle? Jeff Park: I believe this could be the worst bull run in Bitcoin's history, but at the same time, we should expect the market's downside to be relatively limited, primarily due to the strong institutional funding behind it. Bitcoin ETFs are a new and unprecedented capital instrument, and the importance of this "bottom-line support" from institutional funds cannot be underestimated. For example, retirement funds, IRA accounts, and pension funds can now directly allocate Bitcoin within a compliant framework—this is unprecedented. Furthermore, many institutional and retail investors have set automated orders, such as "buy when Bitcoin falls to $70,000 or $80,000." This type of structured buying didn't exist before the introduction of ETFs. This clearly demonstrates that market structure has changed. That being said, I still believe the market will experience a correction. After all, all commodities experience corrections; they're a natural function of supply and demand. Whether it's during periods of strong demand or when sellers outnumber buyers, Bitcoin is unique in that we can be certain that no new supply will suddenly emerge. The circulating supply primarily comes from secondary market transactions, and this supply growth rate is far slower than historical levels. This is partly why I believe the "four-year cycle" theory should be abandoned. Historically, Bitcoin's issuance has had a significant impact on the market, but over time, issuance has significantly decreased, the block reward has shrunk significantly, and the total number of buyers entering the market has continued to grow. This shift in supply and demand has disrupted the old cycle. Host: Are you saying that in the past, the block reward was large, but the buyer pool was small, but now the market is facing a combination of these two forces: a declining block reward and a growing buyer pool, creating sustained demand for the asset? Jeff Park: Absolutely correct. It's a dual effect. In the early stages of Bitcoin's supply, miners needed to maintain their mining operations through capital expenditures, which led to a certain amount of organic selling pressure in the market. This selling pressure primarily came from well-funded institutional miners who were forced to sell Bitcoin to repay debts or to cover capital expenditures for the next five years. This selling behavior was generally unrelated to price, as the primary purpose was to generate cash, but this selling pressure was detrimental to the market and investors. Therefore, for a sensible cryptocurrency investor, it would be very logical to exit before the miners acted. However, this selling pressure has now significantly subsided. New buyers are more likely to be long-term holders rather than short-term traders, which has significantly reduced market volatility. Host: In addition to smaller declines, it seems that the duration of pullbacks is also shortening. Past bear markets could last for a year and a half or even two years, while pullbacks now tend to last only a few weeks. Do you think this is also related to institutional buying? Jeff Park: I think so. There are a large number of investors in the market today who are waiting for the right entry point. They understand the long-term value of Bitcoin, but think the current price is too high and tend to "wait a little longer." However, they often miss the opportunity to enter. In the past few months, every pullback has been quickly bought, and the price has rebounded by thousands of dollars in just a few days. This shows that there is sustained buying momentum in the market, and this momentum will be further strengthened as the price rises. Bitcoin is a typical momentum asset - when the price rises, more people will FOMO and enter the market, forming a self-reinforcing upward cycle. More importantly, these investors often do not sell when the price falls, resulting in a gradual increase in the average holding cost of the entire network, thereby establishing higher and higher price bottoms. The Rotation Between Gold and Bitcoin: Gold experienced an epic rally in 2025, rising by approximately 60%, almost reaching a frenzy. Now may be the time for a rotation from gold to Bitcoin. We know there's a pattern between gold and Bitcoin—usually Bitcoin follows gold's upward trend about 100 days later. Furthermore, some people have mentioned a year-end "money chase," and Bitcoin has historically performed well in the fourth quarter. All signs suggest that while Bitcoin's gains this year haven't met expectations, now may not be the time to ignore it. Do you agree? Jeff Park: Yes, absolutely. This echoes our earlier point—that gold is also a Bitcoin altcoin. Recently, gold has plummeted by approximately 4%, while Bitcoin has shown relative strength in this environment. While this is just a one-day trend and shouldn't be over-interpreted, it demonstrates that a momentum rotation is occurring in the market. Gold's previous rally was driven almost entirely by momentum, with its RSI indicator above 70 for two consecutive months. I've never seen any asset sustain such intense overbought conditions. Meanwhile, trading volume in the gold options market skyrocketed last week—setting a record high for call options trading, indicating that the market is truly in a frenzy. However, momentum always has its limits. Once a correction occurs, funds tend to seek out the next asset with potential for growth. Bitcoin lags behind gold in various liquidity indicators, providing just this kind of "catch-up" potential. Therefore, from a trading perspective, Bitcoin is the next most logical rotation. At times like these, Bitcoin often experiences extremely rapid market surges—perhaps one day we'll wake up to see the gap between gold and Bitcoin's gains quickly closed. Host: I once spoke with Peter Schiff (a renowned gold enthusiast) about gold, and he said that gold has risen 60% this year, while Bitcoin has only risen 18% to 20%. I asked him, "Is it possible that Bitcoin will surpass gold before the end of the year?" While no one can be certain, we all know that Bitcoin is extremely volatile. Jeff Park: Yes, Peter himself is most aware of the power of this "short-term burst." Although gold has performed strongly in recent years, nearly matching or even slightly exceeding the Nasdaq's gains since 2008, this performance has been concentrated in a few windows of time. Looking back over a longer period, such as since 2002, gold's annualized return is less than 3%. Trading in these macro "store of value" assets is inherently driven by momentum. If gold can recover lost ground through a year-long surge after lagging behind for a long time, then Bitcoin's pace will only be faster—perhaps achieving a similar rebound in a matter of weeks or even days. Therefore, Peter is right, but Bitcoin is the faster horse. The reason is simple: Bitcoin is not as constrained as the physical commodity market. Gold trading involves numerous processes, including warehousing, logistics, and futures position allocation. Bitcoin, on the other hand, is a completely digital, instant-execution market—anyone can participate at any time by clicking "buy" on Coinbase or other exchanges. From spot to ETFs: A new play by whales. Host: Since we've discussed the rotation from gold to Bitcoin, another important phenomenon is the rotation within Bitcoin—from spot to ETF structures. This wasn't feasible in the past because ETFs couldn't make in-kind contributions/redemptions. Now that the rules have changed, can you explain this mechanism and its significance? Jeff Park: Of course. To understand in-kind contributions/redemptions, we must first trace the development of the ETF and mutual fund systems. The earliest mutual funds were based on the 1940 Act, which allowed investors to collectively hold a basket of assets in a cooperative model. Whether passive index funds or actively managed funds, they were essentially tools that democratized professional asset management for the general public. However, mutual funds had drawbacks such as the inability to trade intraday, limited price discovery mechanisms, and inconvenient redemptions of physical assets. The advent of ETFs addressed these issues, but in the early days (especially after 2008), ETF issuers had to apply for an "exemptive relief" from regulators. This process was lengthy and favored large institutions like BlackRock, making it difficult for smaller issuers to enter the market. It wasn't until the introduction of the "ETF Rule" in 2019 that the ETF industry achieved regulation and standardization. Any institution could issue ETFs using a unified template, eliminating the need for additional approvals—a move that fueled the explosive growth of the ETF market. However, this rule only applied to funds under the 1940 Act and not to commodity funds under the 1933 Act. Bitcoin ETFs fall into the latter category, and therefore initially lacked physical redemption capabilities. This restriction wasn't finally lifted until July 2025, when high-net-worth investors could contribute their Bitcoin holdings directly to the ETF in exchange for ETF shares, avoiding tax consequences. BlackRock revealed that this method alone has already attracted approximately $3 billion in Bitcoin investments from high-net-worth clients this year. Host: So what are the benefits of doing this? What are the advantages of an ETF structure over directly holding spot gold? Jeff Park: The benefits can be categorized into two aspects: quantitative and qualitative. Quantitatively: The ETF structure allows investors to participate in the traditional capital market financial system. For example, through ETFs, they can engage in lending and shorting in a regulated environment with low counterparty risk. Unlike unsecured lending in the crypto market, lending within ETFs is backed by central clearing, regulated market makers, and custodians. Therefore, for investors seeking to securely earn returns on Bitcoin, lending ETF shares to earn interest within the ETF framework is safer than lending spot assets. This is why many crypto hedge funds choose to hold positions through ETFs rather than spot assets. Furthermore, ETFs can achieve "cross-margin" with non-crypto assets. For example, Bitcoin held on Coinbase cannot be used as collateral to purchase Microsoft or Apple stock. However, within an ETF structure, the custodian can quantify the overall risk and provide financing, creating a new liquidity and leverage tool for long-term holders. Qualitatively, in the wealth management industry, financial advisors' compensation is tied to the size of their managed client assets. If a client holds a large amount of Bitcoin but is not covered by the regulatory system, the advisor cannot include it in the assessment and therefore cannot provide appropriate compensation. However, if this Bitcoin is held in the form of an ETF, the client's asset size will be officially recognized, allowing them to enjoy a higher level of service and credit lines. Therefore, ETFs not only provide an upgrade to financial instruments but also change the visibility of wealth classes. Host: In other words, putting Bitcoin in an ETF creates enormous benefits for traditional financial institutions, but it's indeed a bridge for Bitcoin holders seeking financial services. Jeff Park: But everything has its pros and cons. Once Bitcoin is contributed to an ETF, it's no longer an on-chain owner and cannot participate in on-chain economic activities. I believe that a dual allocation of Bitcoin and a Bitcoin ETF may be a more balanced option, as the two are not mutually exclusive. Investors can allocate some assets to participate in DeFi on-chain and some to ETFs to enjoy traditional services. However, it's undeniable that the ETF redemption process is complex, especially when it comes to tax base tracing, and this area still requires more clear guidance. Host: Another factor high-net-worth individuals are concerned about is security. By handing over their Bitcoin to an ETF, their shares are held in a securities account, eliminating the need to worry about theft or misuse. However, with on-chain self-custody, many still experience a flutter in their hearts before every transfer, conducting test transactions to prevent errors. Of course, this sense of security comes at a price—ETFs have management fees, but many believe this "insurance premium" is worth it. Jeff Park: Just like the AWS outage a few days ago, which briefly prevented MetaMask from loading the mainnet, the fear of losing access to assets serves as a reminder that while self-custody offers freedom, it also carries risks and uncertainties. With the rise in real-world "wrench attacks" (where private keys are seized through threats of violence), the perceived security of ETF custody has become a psychologically reassuring factor—after all, ETF shares cannot be directly transferred through threats like private keys can. Coinbase's ambition: breaking down the barriers between primary and secondary markets. Host: One last topic. Coinbase recently announced the purchase of Cobie's NFT for $25 million, and subsequently acquired his company, Echo, for $375 million. Interestingly, the news about the NFT purchase received more attention than the company acquisition. What are your thoughts on this deal? Jeff Park: This is a highly symbolic acquisition. Coinbase has once again demonstrated its strategic vision—under the slogan of "promoting economic freedom," it has successfully integrated two previously opposing forces in the crypto world: Bitcoinists who want to "break away from the system" on the one hand, and technological idealists committed to open innovation on the other. This slogan allows the two to coexist under the same vision. The addition of Echo further strengthens Coinbase's strategic matrix. Coinbase can be placed in a two-dimensional coordinate system: the horizontal axis represents customer type—retail investors on one end, institutions on the other; the vertical axis represents market attributes—from the primary market (value creation) to the secondary market (value circulation). Coinbase is more than just an exchange; it's a rebuilder of financial infrastructure, connecting every link—raising funds, issuing shares, trading, and liquidity management—achieving the crypto world's version of "vertical integration." In my opinion, this is the "holy grail" path to rebuilding the financial system. Imagine a project completing its issuance and financing on Coinbase's primary market, and then seamlessly entering the Coinbase exchange's secondary market. This kind of "peer-to-peer" interconnected architecture is what the true crypto economy and internet capital markets aspire to. Host: This seems to echo your repeated dissatisfaction with traditional markets—particularly the disconnect between private equity financing and IPOs. Jeff Park: Yes, the structure of the traditional stock market has become increasingly inefficient over the past two decades. Before the 2000s, companies often opted for IPOs at an early stage, allowing ordinary investors to participate in their growth relatively early. However, over the past 15 years, the rules have radically changed, becoming extremely unfavorable to retail investors. This change stems from two key events: Facebook's pre-IPO operations and the JOBS Act of 2011-2012. Before Facebook, the United States had a "500-shareholder cap rule"—once a company had more than 500 shareholders, it had to go public. However, Facebook, hoping to delay its IPO, cleverly circumvented the rule by creating an SPV (Special Purpose Vehicle), which packaged hundreds of investors as a single "accredited investor." This practice opened a Pandora's box, forcing regulators to redefine the boundaries of "crowdfunding." The JOBS Act was originally intended to address institutional flaws and provide more people with access to early-stage investment, but it has had a negative impact. It allows companies to remain in the private equity stage longer, eliminating the need to go public early. So-called "crowdfunding platforms" accessible to retail investors, such as Republic, Wefunder, and SeedInvest, have instead become passive investors seeking lower-quality funding. Truly high-quality companies avoid raising funds on these platforms, leaving retail investors with limited and lower-quality opportunities. This has led to the creation of two parallel markets: an "early-stage private equity market" for wealthy individuals and institutions, and a "secondary trading market" for retail investors, which enters later. This structural divide is, in a sense, a societal "cancer," as ordinary people are unable to invest early and share in the dividends of growth. Host: So you believe that the emergence of crypto is precisely to address this societal divide? Jeff Park: Yes. The true revolution in crypto lies in the fact that everyone should have the opportunity to participate in both the primary and secondary markets. Coinbase's retail financing platform, built through Echo, combined with Sonar's on-chain engine, can make this vision a reality. Once this connection is complete, tokenization will become a reality—investors will no longer have to deal with multiple layers of intermediaries or the complex transition of assets from private financing to the public market. Under the current traditional system, investors holding private equity must navigate a cumbersome process: share registration, transfer agent, broker registration, and clearing firm confirmation, with errors potentially occurring at any stage. Even more egregious, brokers sometimes refuse to accept legally held shares simply because their risk management department deems them "high risk." Investors holding legitimate assets only to be told the system "doesn't accept" them runs counter to the very concept of "financial freedom." Coinbase aims to open up the entire pipeline, from primary issuance to secondary circulation, putting retail investors and institutions on the same page. This will not only be a significant boon to the crypto industry but also a restoration of structural fairness for the entire economy and retail investors. Tokenization: The Ultimate Weapon for Eliminating All IPO Barriers Host: In the blockchain space, the widespread availability of wallets has given all users a more equal starting point. Regardless of the amount of capital, background, or experience, on-chain wallets provide equal opportunity for participation. Jeff Park: However, policies like the JOBS Act have never truly reduced IPO costs. Instead, they have increased legal and administrative barriers for companies. The original intention of "enabling more people to participate early" has been offset by complex procedures and fees. Tokenization eliminates these barriers. When ownership can be directly issued, transferred, and traded in the form of on-chain tokens, the entire financing process becomes transparent, efficient, and frictionless. Coinbase is promoting this "true on-chain equity structure," which is not only a technological innovation but also an institutional turning point. Of course, this will also reignite the discussion of "what are securities"—a topic closely tied to the past ICO era and the regulatory logic emphasized by Gensler. However, this discussion is healthy because it relates to two core goals: fair participation for retail investors and transparent mechanisms for institutional investors. Moderator: This seems to be a "market-driven" evolution. Although regulations have set limits, the market is finding its own way out. Today, many people complain that the "qualified investor rule" restricts retail investors from entering early-stage investments, but at the same time, they are finding a way around it through the crypto market.
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