Original article: Anthony Pompliano , American entrepreneur and Morgan Creek Venture Partner

Compiled and edited by Yuliya, PANews

Over the past three months, every Bitcoin price correction 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 Co-founder 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 eye-catching statement: "Bitcoin is not a bubble, it's a needle." Can you explain in detail what you meant by this statement?

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 asset allocation. But this view ignores fundamental logic. Bitcoin cannot be a bubble because it is the needle that punctures the current fiat-based bubble.

The global economy operates in a fiat currency system based on credit expansion and inflation—a true bubble. Bitcoin is disrupting this structure, 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 would argue that 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 money network that redefines the relationship between liquidity and credit.

In the traditional financial system, circuit breakers and trading restrictions exist because rapid money circulation undermines the credit system—the very existence of which depends on the relative static nature of money. Bitcoin, however, eliminates this static nature. It represents "money in motion," with no queues, no unlocking periods, and no artificial delays. This characteristic makes Bitcoin a true needle that punctures bubbles in the legacy system.

The correction 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 in this cycle?

Jeff Park: I think this could be the worst bull run in Bitcoin's history, but we should also expect the market's downside to be limited, primarily due to the strong institutional funding behind it. A Bitcoin ETF is a new, unprecedented capital tool, and the importance of this institutional funding "bottom-line support" cannot be underestimated.

For example, retirement funds, IRA accounts, and pension funds can now directly allocate Bitcoin within a compliant framework—an unprecedented development. Furthermore, many institutional and retail investors have set up automated orders, such as “buy when Bitcoin falls to $70,000 or $80,000.” This type of structured buying didn’t exist before the launch of ETFs. This demonstrates that market structure has shifted.

That being said, I still believe there will be market corrections. After all, all commodities experience corrections; they're a natural function of supply and demand. Whether it's when demand is high or when there are more sellers than buyers, Bitcoin is unique in that we can be sure there won't be a sudden surge in new supply. The circulating supply in the market primarily comes from secondary market transactions, and the growth rate of this supply is much lower than historical levels. This is partly why I believe the "four-year cycle" theory should be discarded.

Historically, the issuance of Bitcoin has had a significant impact on the market, but over time, the issuance of Bitcoin has decreased significantly, the block reward has shrunk significantly, while the total number of buyers entering the market has continued to grow. This change in the supply and demand structure has broken the old cycle.

Host: Do you mean that in the past, the block reward was large but the buyer pool was small, and now the market is facing the combined effect of two forces: the block reward is decreasing, and the buyer pool is expanding, creating sustained buying for assets?

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 obtain cash. However, this selling pressure was detrimental to the market and investors. Therefore, for a sane cryptocurrency investor, it was very logical to exit the market before the miners took action.

However, this selling pressure has now subsided significantly. 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 the smaller declines, it seems the duration of pullbacks is also shortening. Past bear markets could last 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 believe there are a large number of investors in the market right now who are waiting for the right entry point. They understand Bitcoin's long-term value, but believe the current price is high and prefer to "wait a little longer." However, they often miss out on these opportunities. Over the past few months, every pullback has been quickly bought, with prices rallied by thousands of dollars in just a few days. This demonstrates sustained buying momentum in the market, which will only intensify as prices rise.

Bitcoin is a classic momentum asset—when prices rise, more people will FOMO (fear of losing) into the market, creating a self-reinforcing upward cycle. More importantly, these investors often don't sell when prices fall, causing the average holding cost of the entire network to gradually increase, thus establishing higher and higher price bottoms.

The rotation relationship between gold and Bitcoin

Host: Gold experienced an epic rally in 2025, rising by approximately 60%, almost reaching a frenzy. Now might be the time to rotate out of gold and into 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 "capital 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 might not be the time to ignore it. Do you agree?

Jeff Park: Yes, absolutely. This actually echoes our previous 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 a momentum rotation in the market. Gold's previous rally was driven almost entirely by momentum, with its RSI above 70 for two consecutive months. I've never seen an asset sustain such a highly overbought state.

Meanwhile, trading volume in the gold options market also surged last week, reaching a record high for call options, indicating a genuine market frenzy. However, momentum always has its limits, and once a correction occurs, investors tend to seek out assets with the next potential upside. Bitcoin, lagging behind gold in various liquidity metrics, offers just such room for a catch-up rally. Therefore, from a trading perspective, Bitcoin is the most logical next rotation direction.

At times like this, Bitcoin often experiences extremely rapid explosive growth - perhaps when we wake up one day, we will see that the growth gap between gold and Bitcoin has been quickly eliminated.

Host: I once talked about gold with Peter Schiff (a renowned gold enthusiast). 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 by the end of the year?" While no one can be certain, we all know that Bitcoin is extremely volatile.

Jeff Park: Exactly. Peter himself is most aware of the power of this "short-term burst." While gold has performed strongly in recent years, nearly matching or even slightly exceeding the Nasdaq's gains from 2008 to date, 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 has been less than 3%.

Trading in these macro-value "store of value" assets is inherently driven by momentum. If gold can recover lost ground through a year-long surge after a long period of lagging, then Bitcoin's pace will only be faster—perhaps achieving a similar rebound in a matter of weeks or even days. Therefore, Peter is correct; Bitcoin is simply the faster horse.

The reason is simple: Bitcoin is not constrained by the same constraints as physical commodity markets. Gold trading involves numerous processes, including warehousing, logistics, and futures position allocation. Bitcoin, on the other hand, is a completely digital, instantaneous market—anyone can click “buy” on Coinbase or other exchanges at any time to participate.

From spot to ETF, the new gameplay of whales

Host: Speaking of the rotation from gold to Bitcoin, another important phenomenon is the rotation within Bitcoin itself—from spot trading to ETF structures. This wasn't feasible in the past because ETFs couldn't make in-kind contributions or redemptions. Now that the rules have changed, can you explain this mechanism and its significance?

Jeff Park: Absolutely. To understand "in-kind 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 are essentially tools that democratize professional asset management for the public. However, the disadvantages of mutual funds are that they cannot be traded intraday, have limited price discovery mechanisms, and are not convenient for redeeming in-kind assets.

The advent of ETFs addressed these issues, but in the early days (especially after 2008), ETF issuers had to apply for "exemptive relief" from regulators. This process was lengthy and favored large institutions like BlackRock, making it difficult for small and medium-sized issuers to enter the market. It wasn't until the introduction of the "ETF Rule" in 2019 that the ETF industry achieved regularization and standardization. Any institution can issue ETFs according to a unified template, eliminating the need for additional approvals—a development that fueled the explosive growth of the ETF market.

However, this rule only applies to funds under the 1940 Act, not commodity funds under the 1933 Act. Bitcoin ETFs fall into the latter category, and therefore initially lacked the ability to redeem in-kind shares. This restriction was finally lifted in July 2025, allowing high-net-worth investors to contribute their Bitcoin holdings directly to ETFs in exchange for ETF shares without triggering tax conditions.

According to BlackRock, they have attracted about $3 billion in Bitcoin from high-net-worth clients this year through this method alone.

Host: So what are the benefits of doing this? What are the advantages of an ETF structure compared to directly holding spot stocks?

Jeff Park: The benefits can be divided into two levels: "quantitative" and "qualitative".

Quantitatively: The ETF structure allows investors to participate in the traditional capital market financial system. For example, through ETFs, lending and short selling can be conducted 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 a safer option than lending spot Bitcoin. This is why many crypto hedge funds choose to hold positions through ETFs rather than spot trading.

ETFs also enable cross-margin trading with non-crypto assets. For example, Bitcoin held on Coinbase cannot be used as collateral to purchase Microsoft or Apple stock. However, under an ETF structure, the custodian can quantify the overall risk and provide financing. This provides new liquidity and leverage tools for long-term coin holders.

Qualitatively: In the wealth management industry, financial advisors' compensation is tied to the size of their client assets under management. If a client holds a significant amount of Bitcoin but it's not regulated, the advisor can't include it in their assessment and therefore can't provide appropriate compensation. However, if the Bitcoin is held in the form of an ETF, the client's asset size will be officially recognized, leading to higher levels 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 into ETFs is equivalent to creating huge profits for traditional financial institutions, but for Bitcoin holders who want to obtain financial services, it is indeed a bridge.

Jeff Park: But everything has its pros and cons. Once Bitcoin is contributed to an ETF, it no longer belongs on-chain 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 is undeniable that the ETF redemption process is complex, especially when it comes to tax base tracking, and more clear guidance is needed in this area.

Host: Another factor high-net-worth individuals are concerned about is security. By entrusting their Bitcoin to an ETF and holding their shares in a securities account, they don't have to worry about theft or misuse. However, with on-chain self-custody, many still experience a frenzy 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, MetaMask was temporarily unable to load the mainnet. The fear of losing access to assets is 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 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: Last topic. Coinbase recently announced it purchased Cobie's NFT for $25 million, and subsequently acquired his company, Echo, for $375 million. Interestingly, the NFT purchase received more attention than the company acquisition. What are your thoughts on this transaction?

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" and technological idealists committed to open innovation. This slogan perfectly allows these two groups to coexist under a common vision. The addition of Echo further strengthens Coinbase's strategic matrix.

Coinbase can be placed on a two-dimensional scale: 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 aspect of financing, issuance, 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 being able to raise funds on Coinbase's primary market and then seamlessly enter the secondary market on the Coinbase exchange. This kind of peer-to-peer, interconnected architecture is what the true crypto economy and internet capital markets aspire to achieve.

Host: This also seems to respond to your repeated dissatisfaction with the traditional market - especially the gap between private equity financing and listing.

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 growth earlier. However, over the past 15 years, the rules have completely changed, creating a significant disadvantage for retail investors.

The change stems from two key events: Facebook's pre-IPO operations and the JOBS Act of 2011-2012.

Before Facebook, the US had a "500-shareholder cap rule"—a company must go public if it has more than 500 shareholders. However, Facebook, hoping to delay its IPO, cleverly circumvented the rule by creating an SPV (Special Purpose Vehicle) to package 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 expand early-stage investment opportunities, 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 become passive investors choosing inferior investment platforms.

Truly high-quality companies avoid raising funds on these platforms, leaving retail investors with limited and low-quality opportunities. This has led to the formation of two parallel markets: an "early-stage private equity market" for wealthy individuals and institutions, and a "secondary trading market" for retail investors, who enter later. This structural divide is, in a sense, a social "cancer," as ordinary people are unable to invest early and share in the dividends of growth.

Host: So you think that the emergence of encryption is precisely to make up for this social division?

Jeff Park: Yes, the true revolution in crypto is that anyone should have the opportunity to participate in both 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 placements to the public market.

Under the current traditional system, investors holding private equity must navigate a cumbersome process: share registration, transfer agent, broker filing, and clearing firm confirmation. Errors can occur at any stage. Even more egregiously, brokers sometimes refuse to accept legally held shares simply because the risk department deems them "high risk." Investors holding legitimate assets are told the system "doesn't accept them," contradicting the very concept of "financial freedom."

What Coinbase needs to do is to open up the entire "pipeline" from primary issuance to secondary circulation, so that retail investors and institutions can stand on the same starting line. This is not only a major benefit to the crypto industry, but also a reconstruction of structural fairness for the entire economic system and retail investors.

Tokenization: The "ultimate weapon" to eliminate all IPO barriers

Moderator: In the blockchain space, the widespread availability of wallets has given all users a fairer starting point. Regardless of the user's funds, background, or experience, on-chain wallets provide everyone with equal opportunities to participate.

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 removes 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 discussion that is closely related to the past ICO era and the regulatory logic emphasized by Gensler, but this discussion is healthy because it is related to two core goals: fair participation for retail investors and transparent mechanisms for institutional investors.

Host: This seems to be a market-driven evolution. While regulations impose limitations, the market is finding its own path. Many people complain about the "qualified investor rules" that restrict retail investors from early-stage investments, but at the same time, they are finding a way around it through the crypto market.