Interview with ProCap BTC Partner: Bitcoin Bull Market Not Over, Pullbacks to Be Milder Than Before

Anthony Pompliano, American entrepreneur and co-founder of Morgan Creek

Compiled & Organized by: Yuliya, PANews

Over the past three months, every pullback in Bitcoin’s price has been quickly pushed higher by buying pressure. Currently, with Bitcoin’s price back above $112,000 and capable of swinging by thousands of dollars within days, this strong buying signal indicates a new trend of inflows from both institutional and retail investors. In this episode, Anthony Pompliano, co-founder of Morgan Creek, invites Jeff Park, Head of Alpha Strategy at Bitwise and Chief Investment Officer and Partner at ProCap BTC, to delve into topics such as “Why Bitcoin is not a bubble but the needle that bursts bubbles,” the rotation of funds between gold and Bitcoin, the trend of Bitcoin whales injecting spot assets into ETFs, and the significance of Coinbase's acquisition of Echo for institutional and retail investors.

Bitcoin is not a bubble but the needle that bursts bubbles

Host: Jeff, you once tweeted a very striking statement: 'Bitcoin is not a bubble, it’s the needle.' Could you elaborate on what this means?

Jeff Park: Many people believe Bitcoin is a bubble, especially towards the end of its four-year cycle, when they tend to be more cautious about asset allocation. However, this view overlooks the fundamental logic. Bitcoin cannot be a bubble because it is the 'needle' that bursts the current fiat-based bubble.

The global economy operates within a fiat system based on credit expansion and inflation, which is the real bubble. Bitcoin is dismantling this structure and redefining the concept of 'money'—it is a permissionless, freely flowing asset that alters the velocity of money. Bitcoin's existence forces us to rethink what 'store of value' should truly mean.

Host: Some might argue that gold is the 'needle,' as it has long been considered the foundation of the monetary system. What’s your take on that?

Jeff Park: Gold indeed plays a supporting role in the fiat system, but it is essentially the 'air' within the bubble—the entire fiat economy is built upon gold as a store-of-value asset. However, gold is not a 'useful network'; it is a passive store of value. Bitcoin, on the other hand, is an active, programmable monetary network capable of redefining the relationship between liquidity and credit.

In the traditional financial system, the existence of 'circuit breakers' or 'trading restrictions' is due to the fact that excessively rapid circulation of currency can undermine the credit system — the existence of credit depends on the relative stability of currency. However, Bitcoin eliminates this stability, representing 'currency in motion,' with no queues, no lock-up periods, and no artificial delays. This characteristic has truly made Bitcoin the 'needle' that bursts the bubbles of the old system.

The pullback will be milder, and the 'four-year cycle' is now history.

Host: Some believe that Bitcoin may still experience a 50% or larger retracement. What’s your view? Can we expect milder fluctuations in this cycle?

Jeff Park: I think this might be the worst bull market in Bitcoin's history, but at the same time, we should also expect limited downside movements, primarily because of the strong institutional capital backing it. The Bitcoin ETF is an unprecedented new capital tool, and we cannot underestimate the importance of this institutional capital providing 'bottom support.'

For example, retirement funds, IRA accounts, pension fund managers, and others can now directly allocate Bitcoin within a compliant framework — something unprecedented. Moreover, many institutions and retail investors set up automatic orders, such as 'buy when Bitcoin falls to $70,000 or $80,000.' This type of structural buying did not exist before the launch of the ETF. Thus, the market structure has fundamentally changed.

That said, I still believe there will be corrections in the market. After all, all commodities undergo corrections, which are natural phenomena occurring as a result of supply and demand dynamics. Whether during times of high demand or when sellers outnumber buyers, Bitcoin's uniqueness lies in the certainty that no sudden new supply will emerge; the circulating supply mainly comes from secondary market trading, and its growth rate is much lower than historical levels. This is one of the reasons why I believe the 'four-year cycle' theory should be discarded.

Historically, Bitcoin issuance had a significant impact on the market, but over time, the issuance volume has significantly decreased, with block rewards substantially shrinking while the total number of buyers entering the market continues to grow. This change in supply and demand structure has disrupted the old cycles.

Host: Are you saying that in the past, block rewards were large, but the pool of buyers was small, whereas now the market faces the combined effect of two forces: declining block rewards and an expanding pool of buyers, creating continuous buying pressure for the asset?

Jeff Park: One hundred percent correct; it’s a dual effect. During Bitcoin’s early supply phase, miners needed to maintain their mining operations through capital expenditures, leading to certain organic selling pressures in the market. These pressures mainly came from well-capitalized institutional miners who had to sell Bitcoin to repay debts or fund capital expenditures for the next five years. Such selling behavior was typically unrelated to price since the primary goal was to obtain cash. However, this selling pressure was detrimental to the market and investors. Therefore, for a rational cryptocurrency investor, exiting before the miners act is a very logical move.

However, this selling pressure has significantly weakened at present. New entrants are predominantly long-term holders rather than short-term traders, which has notably moderated market volatility.

Host: Besides the decrease in the magnitude of declines, it seems that the duration of corrections is also shortening. Past bear markets might last for one and a half years or even two years, but now corrections often only last a few weeks. Do you think this is also related to institutional buying?

Jeff Park: I believe so. There are currently many investors in the market waiting for the right entry point. They understand the long-term value of Bitcoin but feel that the current price is too high and prefer to 'wait a little longer.' However, they often miss the opportunity to enter. Over the past few months, every pullback has been quickly bought up, with prices rebounding by thousands of dollars within just a few days. This indicates there is sustained buying momentum in the market, which will further strengthen as prices rise.

Bitcoin is a typical momentum-driven asset—when prices rise, more people experience FOMO (fear of missing out) and enter the market, creating a self-reinforcing upward cycle. More importantly, these investors tend not to sell during declines, causing the average holding cost across the entire network to gradually increase, thereby establishing one higher price floor after another.

The Rotation Relationship Between Gold and Bitcoin

Host: Gold experienced an epic rally in 2025, rising by about 60% and nearly reaching a state of frenzy. Now might be the time for rotation from gold to Bitcoin. We know there is a certain pattern between gold and Bitcoin—typically, Bitcoin only starts to rise after gold has gone up for about 100 days. Moreover, some have mentioned the year-end 'capital chasing trend,' and Bitcoin has historically performed well in Q4. All these signs seem to indicate that although Bitcoin's gains this year have been lower than expected, now may not be a moment to overlook. Do you share this view?

Jeff Park: Yes, I completely agree. In fact, this echoes the point we mentioned earlier—gold is also a kind of 'altcoin' for Bitcoin. Recently, gold fell by about 4%, while Bitcoin showed relatively strong performance under such conditions. Although this is just a one-day trend and should not be overinterpreted, it is enough to show that momentum rotation in the market is occurring. Gold’s previous rally was almost entirely driven by momentum, with its RSI indicator remaining above 70 for two consecutive months—a level of sustained overbought intensity I have never seen in any asset.

Meanwhile, trading volume in the gold options market surged last week, setting a record high for call option volume. This suggests the market is indeed in a frenzy. However, momentum always has its limits, and once a correction occurs, capital tends to seek the next asset with upside potential. Bitcoin lags behind gold on various liquidity metrics, making it perfectly positioned for this kind of 'catch-up' potential. Therefore, from a trading logic perspective, Bitcoin is the next most logical rotation direction.

At times like these, Bitcoin can often experience extremely rapid explosive movements—perhaps one morning we'll wake up to find the gap between gold and Bitcoin’s gains quickly closed.

Host: I once spoke with Peter Schiff (a well-known gold enthusiast) about gold. He said that gold has risen 60% this year, while Bitcoin has only increased by 18% to 20%. I asked him at the time, 'Is it possible that by the end of the year, Bitcoin will outperform gold?' While no one can be sure, we all know that Bitcoin is highly volatile.

Jeff Park: Exactly, Peter himself is very aware of the strength of these 'short-term bursts.' Despite gold's strong performance in recent years, almost matching or slightly surpassing the Nasdaq’s gains since 2008, this performance has actually been concentrated in just a few time windows. If we look back over a longer period, say from 2002 onwards, gold’s annualized return is actually less than 3%.

The trading of such macro 'store-of-value assets' is fundamentally highly reliant on momentum. If gold can 'recapture lost ground' through a year of explosive performance after lagging behind for a long time, the pace of Bitcoin will only be faster—perhaps achieving the same magnitude of rebound in a matter of weeks, or even days. Therefore, Peter is correct; it’s just that Bitcoin is the faster horse.

The reason is simple: Bitcoin is not constrained by the limitations of physical commodity markets. Gold trading involves warehousing, logistics, futures position allocation, and many other steps, whereas Bitcoin operates in a fully digital, instantly executable market—anyone can participate at any time by simply clicking 'buy' on Coinbase or other exchanges.

From Spot to ETF: New Strategies for Whales

Host: Since we’re discussing the logic of rotation from gold to Bitcoin, another important phenomenon is the internal rotation within Bitcoin—from spot to ETF structures. This kind of operation was not feasible in the past because ETFs could not conduct 'in-kind contributions/redemptions.' Now, the rules have changed. Could you explain this mechanism and its significance?

Jeff Park: Of course. To understand 'in-kind contributions/redemptions,' we need to revisit the development of ETFs and mutual fund systems. The earliest mutual funds were based on the Investment Company Act of 1940, which allowed investors to cooperatively hold a basket of assets in a co-op model, whether passive index funds or actively managed funds. Essentially, they were tools to democratize professional asset management for the masses. However, mutual funds had drawbacks: they couldn’t be traded intraday, their price discovery mechanisms were limited, and they weren’t convenient for in-kind asset contributions/redemptions.

ETFs solved these problems when they emerged, but in the early days (especially after 2008), ETF issuers had to apply for 'exemptive relief' from regulators—a lengthy process favoring large institutions like BlackRock, the 'old players,' making it difficult for smaller issuers to enter the market. It wasn’t until 2019, with the introduction of the 'ETF Rule,' that the ETF industry became standardized and regulated, allowing any institution to issue ETFs under a unified template without additional approval—this fueled the explosion of the ETF market.

However, this rule only applied to funds under the Investment Company Act of 1940 and did not cover commodity-based funds under the Securities Act of 1933. Bitcoin ETFs fall under the latter category and thus initially lacked in-kind contribution/redemption functionality. It wasn’t until July 2025 that this restriction was finally lifted—high-net-worth investors can now contribute their Bitcoin holdings directly in-kind to ETFs in exchange for ETF shares, avoiding taxable events.

According to BlackRock, through this method alone, they have absorbed approximately USD 3 billion from high-net-worth clients into their Bitcoin offerings this year.

Host: What are the benefits of doing this? What advantages does the ETF structure offer compared to directly holding spot Bitcoin?

Jeff Park: The benefits can be divided into two levels: 'quantifiable' and 'qualitative.'

At the quantitative level: The ETF structure allows investors to participate in the financial system of traditional capital markets. For example, through ETFs, lending and short-selling operations can be conducted in a regulated environment with lower counterparty risk. This is different from unsecured lending in the crypto market; lending activities within an ETF are safeguarded by central clearing, compliant market makers, and custodians. Therefore, for investors seeking to safely earn returns on Bitcoin, lending out ETF shares within the ETF framework to earn interest is safer than lending out spot assets. This is also why many crypto hedge funds choose to hold positions via ETFs rather than directly holding spot assets.

Additionally, ETFs can enable “cross-margin” financing with non-crypto assets. For instance, holding Bitcoin on Coinbase cannot be used as collateral to purchase Microsoft or Apple stocks, but within the ETF structure, custodians can conduct a quantitative assessment of overall risk, thereby providing financing limits. For large-scale long-term Bitcoin holders, this represents a new tool for liquidity and leverage.

At the qualitative level: In the wealth management industry, financial advisors’ compensation is tied to the scale of client assets under management. If clients hold substantial amounts of Bitcoin outside the regulatory system, advisors cannot include these holdings in their assessments and thus cannot provide corresponding services. However, if the Bitcoin is held in the form of an ETF, the clients’ asset scale will be formally recognized, enabling them to enjoy higher levels of service and credit lines.

Therefore, ETFs not only offer an upgrade in financial instruments but also enhance the visibility of wealth classes.

Host: In other words, placing Bitcoin into an ETF creates significant benefits for traditional financial institutions, but for Bitcoin holders seeking financial services, it serves as a bridge.

Jeff Park: However, every coin has two sides. Once Bitcoin is contributed to an ETF, the investor no longer owns it on-chain and cannot participate in on-chain economic activities. I believe holding both Bitcoin and Bitcoin ETFs might represent a more balanced approach since the two are not mutually exclusive. Investors can allocate part of their assets on-chain to participate in DeFi and place another portion in ETFs to enjoy traditional financial services. Nevertheless, it must be acknowledged that the ETF redemption process is complex, particularly regarding tax basis tracking, which still requires clearer guidance.

Host: Another factor of concern for high-net-worth users is security. By entrusting Bitcoin to an ETF, the shares are held in a securities account, eliminating worries about theft or operational errors. In contrast, when self-custodying on-chain, many users still experience anxiety with each transaction, often sending test transactions first to prevent mistakes. Of course, this sense of “security” comes at a cost — ETFs charge management fees, but many consider this “insurance premium” worthwhile.

Jeff Park: Take the recent AWS outage, during which MetaMask was temporarily unable to load the mainnet. That fear of “inaccessible assets” reminded people once again that while self-custody offers freedom, it also comes with risks and uncertainties. As real-world incidents of 'wrench attacks' (i.e., violent threats to steal private keys) increase, the custody security provided by ETFs has become a stabilizing psychological factor — after all, ETF shares cannot be directly coerced into transfers like private keys can.

Coinbase’s Ambition: Breaking Down Barriers Between Primary and Secondary Markets

Host: One last topic. Coinbase recently announced the acquisition of Cobie's NFT for $25 million, followed by the $375 million purchase of his company Echo. Interestingly, the news about the NFT purchase garnered more attention than the company acquisition itself. What are your thoughts on this deal?

Jeff Park: This acquisition is highly symbolic. Coinbase has once again demonstrated its strategic vision — under the slogan of 'promoting economic freedom,' it has successfully integrated two originally opposing forces in the crypto world: on one side are the Bitcoin maximalists who wish to 'exit the system,' and on the other are the technology idealists committed to open innovation. This slogan allows both groups to coexist under a shared vision. The addition of Echo further strengthens Coinbase’s strategic framework.

Coinbase can be placed within a two-dimensional coordinate system: the horizontal axis represents customer types — ranging from retail investors at one end to institutional investors at the other; the vertical axis represents market attributes — spanning from primary markets (value creation) to secondary markets (value circulation). Coinbase is not just an exchange but also a reconstructor of financial infrastructure, connecting financing, issuance, trading, and liquidity management, thereby achieving a crypto-world version of 'vertical integration.'

In my view, this is precisely the 'Holy Grail' pathway for rebuilding the financial system. Imagine a project that can complete its issuance and financing on Coinbase's primary market and then seamlessly transition into circulation on Coinbase's secondary market exchange. This 'end-to-end' integrated architecture represents the true form pursued by the crypto economy and internet capital markets.

Host: This seems to echo your frequent critique of traditional markets — particularly the gap between private financing and public listings.

Jeff Park: Yes, the structure of the traditional stock market has become increasingly inefficient over the past two decades. Looking back to before the 2000s, companies often chose to go public at an early stage, allowing ordinary investors to participate in growth earlier. However, in the past 15 years, the rules have fundamentally changed, greatly disadvantaging retail investors.

This change stemmed from two key events: Facebook's pre-IPO maneuvers and the JOBS Act of 2011 to 2012.

Before Facebook, the U.S. had a '500-shareholder cap rule' — once a company exceeded 500 shareholders, it was required to go public. However, Facebook wanted to delay its IPO and circumvented the rule by creating SPVs (Special Purpose Vehicles), consolidating hundreds of investors into a single 'accredited investor.' This approach opened a 'Pandora's box,' forcing regulators to redefine the boundaries of 'crowdfunding.'

The JOBS Act was intended to address systemic flaws and provide more people with opportunities for early-stage investments, but it inadvertently created side effects. It allowed companies to remain in private funding stages longer without needing to go public early. Platforms such as Republic, Wefunder, and SeedInvest, which claim to enable crowdfunding for retail investors, instead became inferior options by default.

Truly high-quality companies do not seek funding on these platforms, and the opportunities available to retail investors are limited and of poor quality. This has resulted in two parallel markets: one catering to wealthy individuals and institutions in the 'early private market,' and another where retail investors enter much later in the 'secondary trading market.' This structural divide is, in a sense, a 'cancer' within society, as ordinary people cannot participate in early investments or share in growth dividends.

Host: So you believe that the emergence of crypto is precisely to address this societal divide?

Jeff Park: Yes, the true revolution of encryption lies in the fact that everyone should have the opportunity to participate in both the primary and secondary markets simultaneously. The retail financing platform built by Coinbase through Echo, combined with Sonar's on-chain engine, can make this vision a reality. Once this connection is completed, it means that 'tokenization' is truly achieved—investors no longer need to face multi-layered intermediary structures or wait for the complex conversion of assets from private financing to public markets.

Under the current traditional system, when investors hold private equity, they must go through cumbersome processes: share registration, transfer agents, broker reporting, and clearinghouse confirmation. Any of these steps can potentially result in errors. Even more absurdly, brokers sometimes reject shares legally held by investors simply because the risk department deems them 'high-risk.' Investors who clearly hold legitimate assets are told that 'the system does not accept them,' which runs counter to the concept of 'financial freedom.'

What Coinbase aims to do is to connect the entire 'pipeline' from primary issuance to secondary circulation, allowing retail and institutional investors to stand on an equal footing. This is not only a significant boon for the crypto industry but also represents a reconstruction of structural fairness for the broader economic system and retail investors.

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

Host: In the blockchain space, the widespread adoption of wallets allows all users to start from a fairer position. Regardless of how much capital users have, their 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 the cost of IPOs; instead, they have imposed more legal and administrative barriers on companies. The original intention of 'allowing more people to participate early' has been offset by complicated procedures and fees.

Tokenization eliminates these obstacles.

When ownership can be directly issued, transferred, and traded in the form of on-chain tokens, the entire financing process will become transparent, efficient, and frictionless. What Coinbase is promoting is precisely this kind of 'true on-chain equity structure,' which is not only a technological innovation but also a systemic turning point.

Of course, this will also reignite the discussion about 'what constitutes a security'—a topic closely related to the ICO era and the regulatory logic emphasized by Gensler. However, such discussions are healthy because they relate to two core objectives: equitable participation for retail investors and transparent mechanisms for institutional investors.

Host: This seems to be a 'market-driven' evolution. While regulation sets limits, the market is finding its own way forward. Nowadays, many complain that the 'accredited investor rule' restricts retail investors from entering early-stage investments, but at the same time, they are bypassing this through the crypto market.