Crypto Bull Run Fueled by Fiat Debasement? Dan Morehead’s Comment Sparks Debate

Pantera Capital founder and CEO Dan Morehead says the current crypto bull run remains far from over. He links its momentum to what he calls “one trade”, a global migration of capital away from fiat currencies and into scarce digital assets. Speaking with Real Vision’s Raoul Pal, Morehead and Pal discussed how fiat debasement, structural deficits, and policy mistakes are fueling this continuing rally.

Morehead described the ongoing economic cycle as deeply tied to monetary policy. “We have full employment. Inflation is debasing our assets by 3% a year, and they’re cutting rates. Like, it’s crazy,” he said. He noted that when inflation was at 8% in 2021, the Federal Reserve held interest rates near zero. That decision, he explained, created a policy mismatch that weakened monetary discipline amid record fiscal deficits.

He argued that rising prices across assets do not necessarily reflect strength but rather the falling value of fiat money. “It’s the price of paper money that’s plummeting,” he said. This shift, he believes, defines today’s macro environment, where liquidity dominates and traditional valuation anchors have become distorted.

Liquidity as the New Macro Driver

Raoul Pal framed the market’s behavior through a broader lens of liquidity. He referenced Global Macro Investor’s total global liquidity index, saying that “the Nasdaq, since 2012, has a 97.5% correlation, and Bitcoin is about 90%.” In his words, “None of it matters. It’s all one trade.”

According to Pal, the market no longer operates through individual asset narratives but through a unified liquidity cycle. Morehead agreed, calling it the “greatest macro trade of all time.” Both noted that as liquidity expands, assets with higher beta, like crypto, react most aggressively.

The two also discussed how major financial institutions have begun to embrace the “debasement trade.” Morehead said, “JP Morgan’s talking about it. And I got an email from Goldman today, the debasement trade. I’ve been talking about it for 12 years.” Pal added that large banks are now openly addressing currency debasement and offering broader access to digital assets for clients.

This trend, they explained, marks a significant shift from crypto-native circles toward mainstream financial adoption. What began as an alternative hedge is now being incorporated into institutional strategy playbooks.

Institutional Allocation and Market Integration

A key factor in Morehead’s thesis is under-allocation. “How can you have a bubble nobody owns?” he asked. He noted that median institutional exposure to crypto remains “literally 0.0.” Over time, he expects allocations to reach 8% to 10%. Pal added that family offices, which typically start with 2% exposure, often reach 20% as price appreciation increases their portfolio weightings.

Morehead also described the deepening connection between crypto and public markets. He said demand for publicly listed crypto-linked assets is enormous. He explained that tokens offering tradability, staking returns, and liquidity continue to lead the market.

His firm has made significant investments in Solana, viewing its strong ecosystem and developer activity as potential drivers for long-term growth. He even suggested Solana could one day surpass Bitcoin in market capitalization.

Yet, Morehead acknowledged that bull markets never move in straight lines. He noted that past uptrends often lasted two years before giving way to two-year downturns. Still, he believes today’s market may behave differently as more institutional capital enters and the structure matures. So, if fiat continues to lose credibility and institutions accelerate entry, could the “one trade” become the defining investment cycle of this decade?

Conclusion:

Dan Morehead maintains that crypto’s bull run remains alive, driven by fiat debasement, liquidity growth, and institutional under-allocation. As more capital shifts into Bitcoin and Solana, he views this expansion as part of one long macro trade shaping the next financial era.

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