Chief’s ETH & AI Bull Bet | 1000x

What I think the market is sort of missing on ETH is that Wall Street and the powers that be have pretty much anointed 2 crypto assets as the digital forms of money that they are going to show their clients for a long time: Bitcoin and ETH. I do think ETH is actually competing with Bitcoin, and I think that’ll become more obvious over the next 2 to 5 years.

The thing that people are missing is that ETH is becoming an institutional asset. Given how small it is and how underweight I think people are to it, I think it could see an absolute face-ripper.

We’ve got a very special guest today: ChiefingZa, the lion smoking a blunt, who’s here with us to talk about how he became, at one point, the number-one trader on Bybit; why he’s such a gigachad; how we should make money; and how not to lose money. Thanks for joining us.

I appreciate it. GM, everyone. Excited to be here.

So, tell us a little bit about yourself. How did you start trading crypto? Where did this all come from? We need to understand the origin story behind how you became such a gigachad trader.

I’ve never been so flattered as I have been joining this podcast. But, like many others in the space, I got into crypto when I was in university, around 2016 or 2017.

Originally, I was enamored by the concept of hash functions. I thought that was some sort of pure sci-fi tech, and I thought Bitcoin was sci-fi money. Then, obviously, as many do once they delve a little deeper, you find the world of ICO shitcoins and Ethereum. That’s kind of how I got started: Telegram chats, all the subreddits, and the basics.

Did you start off always being interested in actively trading? When you first got into crypto, were you more of a buy-and-hold guy? Were you a scalper? Were you trying to trade ETH and BTC? What did you start off doing?

Unfortunately, I think I’ve always held the mentality that I’m smarter than others, which has made me lose a lot at certain times. I think I always had this penchant for trading and trying to outsmart the market, and a lot of times, failing to do so.

I’ve always had this inclination to try to time the market and find new opportunities, rather than just buy and hold.

Obviously, confidence is pretty important if you’re going to put on some big contrarian bet that proves you right and makes you a lot of money. What are some of the big trades you’ve done that have given you that confidence over the course of the last 6 or 7 years?

I’d say there have been a few trades that were backed by doing the research, having high conviction, holding through a lot of volatility, and, more or less, joining like we talked about—just sitting through a trade and sitting through a trend that you believe in.

The first, again like for many, was DeFi Summer. I was very involved in that ecosystem at the time, so I was in a position where I knew the basics of how to debug failed MetaMask transactions, which at the time was of the essence. The faster you were, the better you did. The same thing applied to interacting with new smart contracts, so I was uniquely positioned to take advantage of that.

The next big trade was ETH/BTC in Q2 of 2021, following the Coinbase IPO. At the time, a close friend and I were always saying that the market wasn’t really appreciating the change that was going to come from EIP-1559. Along with that, you had a very classic topping structure on BTC going into a high-profile event, with a lot of Saylor buying baked into the final leg. Obviously, you also had DeFi and NFTs happening.

That ETH trade was one of my larger notional trades. More recently, and probably how people found the account, was Solana. As most people know, I definitely did sell too early, but I sized it quite hard in the low 20s.

The same idea applied there. In 2022, around the Merge, ETH became the most consensus trade. Everyone said ETH was money, and you had a lot of people even spinning up funds and thinking, “How do we just acquire ETH exposure in the most efficient way?”

At the same time, the vision that the Ethereum Foundation and the ecosystem were pitching was clearly unbundling the system. There were obviously going to be a lot of open questions around that. Solana offered a competitor or differentiator in a monolithic chain, which I didn’t expect to gain as much traction as it has.

To me, Solana was a very crowded trade at the time, as well as a very hated trade. There’s really no other smart-contract platform that offers any different differentiation. Everything else is either an EVM spin-off, an L2, another L1, an L3, or whatever.

Those are the 3 big trades that I’ve hit in my career.

I’m glad we’ve got you on the podcast today. We’ve done some Builder episodes recently, and it’s cool to talk to the people writing the code, building the tech, and building the future. But markets just got spicy. They just got super interesting, and we need to talk shop.

It feels like there’s a ton of opportunity right now. It’s good to have an epic, savage trader on the podcast to chop it up with, because I think everybody wants to know what to do right now.

We were going into despondent bear mode for a while. Things were nuking down into the 50s, and Bitcoin went a little bit lower than most of us thought it would. Then suddenly, Donald Trump gets shot in the head, and we’re so back. Now there’s talk of a strategic Bitcoin reserve, JD Vance has coins in his wallet, he has $250,000 worth of Bitcoin, and he’s a millennial. It almost feels like a paradigm shift has happened overnight.

Biden is self-destructing with every day that goes by, and his administration has been pretty bad for crypto. So, Chiefing, what are we looking at here? Are we supposed to be 10 out of 10 all-in? What’s the quote? Is it, “In the midst of so over, we found out we’re so back”?

It’s amazing. In this market, it’s always when it looks like there’s nothing that can save it—when something comes out of left field, when everybody’s bearish, when everybody’s de-risked, and everyone says, “I guess it’s over. We’re going to trade down to the 40s. Alts are done. Everything’s shit.” There’s always something that happens.

If you want to talk about markets, maybe we should start top-down. What you pointed out always happens, especially in bull markets. Bull markets are characterized by generally positive headlines. When things are so bad for so long in a bull market, you kind of know something good should be coming along the way.

It’s funny. During that drawdown, whatever the duration was, you had people finally coming out and saying the 2 words: “Bear market.” You had people questioning whether we were even in a bull market or a bear market.

In this market, I feel like so many people lack conviction. They almost want their dad, or someone else, to tell them to step up and bid. That’s why everyone says, “GCR said this,” or, “GCR said that.” They’re lending their conviction to someone else.

There was obviously a lot of rhetoric around whether we were still in a bull market or a bear market, but the thing I would emphasize is that we’re definitively in a bull market. If we get into a situation again where it’s so dire and we haven’t had good news, I think you should expect good news around the corner, because that is what characterizes a bull market.

That’s an interesting take. I’ve never thought about the general backdrop being bullish, so we should expect bullish news. I always figured the news was independently distributed and not related to, “It’s been bad for a while, but we’re in a bull market, so we should expect more good news.”

In crypto, you do get these multimonth or even multiyear periods of either utter despair or utter euphoria. It is a more reflexive asset class than some of the other ones I’m used to in TradFi.

Let’s assume that the odds of a Republican administration that’s friendly to crypto just went through the roof. You can see that on Polymarket as well. What are the altcoin trades? Obviously, Chiefing, you’ve made your bread on a few big altcoin trades. Are you looking at altcoins? Are you looking at majors? What’s the trade?

I haven’t really been actively trading. I tend to be a little more passive now. I don’t actively trade with a big portion of the portfolio.

I like to think of it as having your major of choice, because the majors have been so supported this cycle, and then having different theme sectors that you might want to play. For me, people know this by now: ETH is definitely my major of choice, and we can get into that.

In terms of themes, I’m not really looking for a certain theme that would be bolstered by Trump winning, even though I think there are a couple of interesting trades to be had there. I’m personally very fascinated by the crypto-AI intersection. I do think we’re ironically very early there. I don’t think there’s much that’s investable, but there are a few things that excite me.

I like to think of it as asking what other opportunities I think would outpace simply buying and holding, let’s say, an 80/20 basket of ETH and an AI asset. I think people know I like Bittensor.

A clear trade if you want to trade the betting odds on the election would obviously be SOL. SOL is going to be baked into Trump winning, because in a new administration, the odds of a Solana ETF going through are quite high.

I actually think one of the sweeter trades will be nailing the SOL top into the March 2025 unlocks, which will coincide nicely with the ETF decision.

Lido is extremely hated. I don’t love the DeFi rotation, but Hester Peirce came out yesterday and pretty much said there’s no real reason why staking shouldn’t be included in the ETF offerings. I think something like Lido, or the staking field in general, might get attached to Trump winning, because there really isn’t a reason not to stake. It’s purely political, and all investors will want that extra yield.

I don’t know exactly how it plays into Lido other than as a narrative. Obviously, from the get-go, clients will probably want to stick with Coinbase. You could see BlackRock and all the institutions build their own offerings—not that they couldn’t outsource their staking to Lido.

You could have a BlackRock ETH ETF with staking by Lido. That would be the real black pill, and it’s not unthinkable. BlackRock’s CIO at this Coinbase event pretty much said that the future is on-chain.

They have the BUIDL fund, or this money-market fund—I forget what it’s called—and I’m pretty sure it has half a billion dollars, if not more, in it. BlackRock, the biggest financial institution in the world, has committed to putting assets on-chain. It’s not crazy to think that they might stake some of their ETH or do something with Lido.

In that world, I don’t think it’s priced in around here.

You said that this was a bullish argument for DeFi in general, but you also said you’re not super in favor of the idea of a DeFi rotation. Jonah and I have talked about it on the podcast for a while. At some point, we have to allocate to things that are useful. People are going to get tired of buying platforms, and I think you’re already seeing that with a lot of the things performing really poorly this year. A lot of them are the new platforms coming out.

Is your view on DeFi short-term bearish, medium-term bearish, or long-term bearish?

I’d almost say short-term bullish, because the alt complex is so oversold, especially DeFi. Speaking as someone who came into the crypto world through DeFi, it doesn’t captivate people or the marketplace as much as it did before, so I think there are going to be short-term opportunities.

But would I want to hold a decently growing DeFi platform or a burgeoning new AI L1 or AI ecosystem? The valuation cap on the latter is just going to be so much higher.

An idea I’ve been mulling over, which actually came from a friend, is that so many investors are asking themselves how meme coins can do well while all utility coins do terribly. I think it ties into the fact that these crypto tokens aren’t stocks. They’re something a little different.

My friend’s thesis is that tokens are a way to invest in movements, whether political movements or social movements. Holding and buying Bitcoin is saying, “I believe that money and the state should be separated,” and holding it becomes a badge of honor. It’s almost like a religion.

If you’re a long-term crypto investor, you need to evaluate a project based on—“cult” isn’t a term I love, but it is what it is—whether it’s a religion. Is there a movement behind it? Is there an objective reason it exists? Do you have all these people working toward a unified goal? Do you have a single common enemy that people can rally around?

That’s why I think there are going to be short-term trades in DeFi. Lido could be a trade on staking policy, and it would probably do really well. But would I buy and hold a DeFi asset for 1 or 2 years versus something else? Probably not.

That makes sense. It’s more about the risk-reward and the multiples that you’re necessarily going to get on these things.

The question is, are these AI projects and other things you’re looking at already going to be valued so highly? Are they going to come out at really high valuations, and will they actually fulfill those valuations?

I get it, but it’s always been tough for me. In 2022, I said—probably incorrectly—that the next run would be filled with things that actually matter, because people were sick of things that didn’t deliver. Then we got meme coins, and those were by far the best performers.

I guess it also comes down to where you think crypto will be useful. If you think BlackRock is going to start integrating DeFi assets, then everything reprices a ton, or at least the things they integrate do. If you think crypto is still just best for gambling, moving money around, and financial infrastructure, then that changes your answer.

You’ve always made your money by building massive conviction in things that people hate. That tends to work very well. With that in mind, is there something that you think people really, really hate right now that you don’t hate as much?

ETH.

I think ETH fits this bill. It’s unfair to say it’s the most hated asset, because it’s in most people’s crypto portfolios, even though who knows by now. But what I think the market is missing is that Wall Street and the powers that be have pretty much anointed 2 crypto assets as the digital forms of money they’re going to show their clients for a long time: Bitcoin and ETH.

Bitcoin was such a successful launch. It was the most successful launch in their history. Everyone is obviously super excited about it, and their clients clearly are too. I don’t see any reason why ETH doesn’t follow in its footsteps.

The backdrop is that ETH, in general, is so much less liquid than BTC. I think people are overthinking the demand side. In the traditional world, the way people make decisions is market-cap-led. They don’t make financial decisions based on valuation or fundamental analysis anymore.

It’s just, “I put money in my savings account. Go buy me the Nasdaq or the S&P,” and that buys it for you based on whatever the market-cap weighting is. Everyone does a market-cap-weighted index, so why wouldn’t ETH get 30% of the flows?

I’ve heard murmurs that clients are ready for this product to launch and are ready to move some of their IBIT over to the new ETH product. ETH is in a position where the common narratives are that it lost to Solana, gas fees are low, L2s are parasitic, ETH/BTC is down only, and BTC is the better form of money.

If you actually look at it, ETH/BTC hasn’t really moved in 10 or 11 months. I think it’s even higher than it was. October 2023 is the date I always look at for that ratio. It really hasn’t moved.

I do think ETH is competing with Bitcoin, and I think that will become more obvious over the next 2 to 5 years. The shit that people are missing is that ETH is becoming an institutional asset. Given how small it is and how underweight people are to it, I think it could see an absolute face-ripper.

A lot of things have to go right for that to happen, and ETH has not been dealt the best hand this market. But I do think all of that ultimately ends up being fuel for a pretty nasty rally.

One thing I didn’t appreciate until you just said it is how illiquid ETH is. The thing went up 20% in a day on the news of the ETF approval. If it gets even a fraction of the flows of the BTC ETF, and if it’s not even 30% as liquid as BTC, then every dollar flowing in makes a huge difference.

What would be the religion of ETH? Bitcoin is stateless money. That’s what you believe in if you invest in Bitcoin, and the enemy is the U.S. Treasury and the money printer inside of it. What is the ETH religion? What are you buying, and what are you believing in?

I think the ETH religion probably comes down to a completely open, decentralized App Store that anyone can access. Right now, it’s unstoppable finance—financial services that anyone in the world can access. It’s something along those lines.

I don’t think it’s actually—here’s another one of my takes. People always say that Bitcoin has a clear marketing message that TradFi can buy, while ETH doesn’t, and that’s why ETH will fail.

My answer is that you want to buy before they come up with the message, because they’re greedy and want to sell this product. They’re going to come up with some unified message or meme to sell to their clients. You can get into the trade before they do that, so I don’t think the message is as important.

If you had to dumb it down, it would probably be about separating financial services from the state. Jordy also has a good meme around it—I think it’s “community money.”

ETH is definitely used as money. People hoard it as a store of value, use it to trade and buy NFTs, and use it on L2s. ETH is a form of money. It has the store-of-value aspect and the medium-of-exchange aspect.

A lot of this doesn’t really matter from a markets perspective. A lot of it is just philosophical waxing. I think the market is simply wrong about how successful this ETF is going to be.

I wasn’t always this big of an ETH/BTC bull. When BlackRock announced its ETF, I thought, “This thing is breaking down. It’s over. This is a 12-month range break.” Once the ETF marketing actually happened and it was about to launch, ETH wasn’t making new lows. You had this crazy Solana run, and ETH was still holding. I thought, “All right, clearly the next trade is going to be this ETF.”

It’s been such a long build into it, and I think sentiment is still so poor. Most people are convinced they’ll be able to trade the flows afterward, so I’m interested to see what happens. I’m not interested in trading it myself, because I think it’s going to be noisy and I think the majors will continue grinding higher. But the setup is there for ETH.

When you think about actually expressing that viewpoint, are you just buying ETH outright? Are you hoarding it? Are you 100% allocated, or 50%? How do you make sure you make the most money on this without getting shaken out?

For example, you might have had this view before, and then ETH is down 15%. You’re just like, “Ah, shit. What do I do?”

It’s definitely dependent on the type of portfolio you run. Luckily, I’m able to manage personal capital and don’t have any dependence or immediate legal obligations, so I’m able to sit through a bit of higher volatility.

I have mental stops in my head, but at this juncture, I’m personally diamond-handing with a set percentage—a fairly high percentage—of the portfolio. I obviously leave some cash to buy dips. You never know, so be responsible and keep emergency funds.

I don’t see much downside from these levels. What I’ve experienced personally is that trying to actively trade majors this cycle has been extremely difficult. They tend to mean-revert. We have the ETF buying, and you generally have people who are so far down from their all-time-high coin balances, even from 2021, that I think people simply aren’t that exposed to majors.

You don’t have these vicious drawdowns, so I would express the trade with spot ETH and no leverage. I’m not very interested in trading around the ETF flows. If ETH dipped to certain levels, I might try low-leverage longs, although I don’t know if the juice is really there. The mental anguish of having to hold a leveraged ETH position is significant.

ETH is my Trump trade. When you install a new regulatory regime in Washington, D.C., TradFi companies work on multi-year timelines. It takes them the better part of a decade to onboard a new asset class, get their heads around it, and build the plumbing.

Realistically, Bitcoin doesn’t have enough going on on its blockchain for TradFi to use it for anything meaningful. ETH is obviously the first smart-contract platform that arrived on the scene and proved to be stable, so that’s the one that’s been blessed by TradFi.

From my time inside institutional crypto, I watched and learned about plenty of ETH rails being built inside massive conglomerates like BlackRock, Fidelity, and dozens of others. They’ve built all the infrastructure for ETH to settle on-chain, store value on-chain, and move value on-chain.

They’re hesitant to deploy because they don’t want to get rugged or fired for succumbing to another 2022-style FTX event. Most importantly, they don’t want to get sued by the SEC.

If you extract the current SEC, which I think will happen under a new administration, and implant a new one that’s friendly to crypto, a bunch of rules get made and enshrined. Wall Street, to use a blanket term, will be able to light up ETH. They’ll be able to do all sorts of things on top of ETH, maybe even payments.

I think the last bottleneck those companies are waiting for is assurance that they’re not going to get sued for doing crypto stuff.

I never thought of it that way, but I think that’s correct. You could see a lot of these corporations spin up their own L2s. Base has shown that that’s a viable strategy, and the sequencer fees are a great revenue generator on their own, not to mention all the new products you could launch.

You could totally see a world under a new administration where the macro environment allows institutions to get on-chain. It creates a framework for them to do so. I’m sure they’ll explore other chains too, but I think ETH and Solana are probably the 2 they’ll start with.

You mentioned earlier that there’s a thesis saying L2s are parasitic to ETH. Do you believe in the fat-protocol thesis? Do you think most of the value will dribble down to ETH, or do you think these L2s are going to capture it and not transfer it to token holders?

Maybe the next big trade is actually Solana or something monolithic like that. How do you think about allocating between monolithic chains and ETH-centric chains?

I’ve said this since the start of the cycle: I think L2s are probably the most uninvestable segment in crypto, at least in liquid markets. In venture, the returns have been staggering. Not everyone is unlocked yet, but if you invested in the last vintage, all these L2s have done extremely well.

I think L2s are almost parasitic to themselves. I think all the value will flow back to ETH. I don’t think a lot of the value will be affected by L2s siphoning away transaction fees in the interim.

Andrew Kang was putting out threads about institutions valuing ETH on a P/E basis, but none of that is happening. I don’t think L2s siphoning away transaction fees is really going to affect ETH’s value proposition much.

The value flows back to ETH. Increased L2 usage increases ETH’s form-of-money use case, because for the most part they’re using ETH as gas. In a world where you can have decentralized sequencers and pass the gas spent to stakers, it all looks like L2s are their own little economies passing dividends back to their holders in the form of ETH.

That strengthens ETH as an internet community-money use case.

As a trader, do you think L2s are going to move up with ETH when you get an ETF? Is there a short-term trade we can take, or are these guys just fucked? Do you have no interest in touching them even if we get an ETF?

It’s funny, because if I say they’re fucked and there’s no interest in touching them, that’s probably when you bid. That’s kind of when you bid.

I would try to look at the market-structure data and positioning to see if it’s lopsided. These markets are hard, because the OTC markets for these assets have gotten much deeper, and people are smarter about how they hedge. At least the desks are smarter about how they hedge these coins.

You haven’t seen any insane short squeezes happen in a long time, other than the DWF manipulation. You don’t have your MobileCoin or Aptos moves. Even TIA shorts are paying hefty amounts of funding, and the coin isn’t really moving anywhere.

I think they’re just fucked for now. If you wanted to trade them and find alpha, you’d need a mix of positioning data and deep research into unlock schedules. You’d have to track all the tokens that have been unlocked so far, see what investors are doing with them, and see when people usually distribute and sell tokens.

You’d have to do a lot of on-chain forensic work. It would be doable, but you’re coming back to Jonah’s point: you can do all this work, or you can just hold ETH and probably get the bulk of the return with much less volatility.

Have you ever considered calling Andre and telling him you have it? If things get bad, we might have to break that one out.

It’s amazing how much the market has changed from that perspective. There used to be so much alpha in tracking all these people and seeing whether Andre was going to pump something. Now, even though Bitcoin is trading at $60,000 to $63,000 and is doing very well, things like Worldcoin, which have a pretty crazy cartel behind them, went up 50% and straight back down.

Things just don’t seem to work as much. Worldcoin is the stupidest idea—not just in crypto, but in anything—that I’ve heard in a long time. Scanning people’s eyeballs is a giant orb that people scan their eyeballs with. Not since Juicero, the juice machine that didn’t work and tried to value itself as a tech company 10 years ago, have I seen an idea this dumb.

Let me steelman Worldcoin for you. You need some way to deal with bots. With AI coming up, you’re going to get to a place where it’s very easy for people to game systems. Knowing that somebody is human is extremely important, whether you’re building a platform, building a product, or trying to incentivize people to use it.

How do you know you’re not just getting taken advantage of? Worldcoin at least presents an attempt at solving this by saying, “If we get everyone in the world to scan their eyeballs, we can prove that you’re human.”

I get the premise, but that’s a big if. Who the fuck is going to scan their eyeballs? Are you?

I scan my eyeballs to skip the line at TSA. We talked about this recently, and everyone was saying, “If you have CLEAR, you did the same thing.” Then I thought, “Damn it, I did the same thing.”

CLEAR also says the weirdest shit. Every time I go, I tell them to change the little voice-over. When you scan your eyes, at the end they say, “We have finished taking pictures of your eyes.” You’re just like, “Dude, say anything else.”

That’s how you innovate. I’m making sure the Worldcoin team is listening to this. You can add a different audio confirmation.

I will happily take a million Worldcoin a year to consult you and tell you how you should run your project. Just let me know.

At some point, we need to talk to the people who actually earn millions of tokens per year advising and helping tokens launch. There’s a whole market-making business. Firms like GSR and Wintermute actually do that sort of thing, and there’s a lot of it going on behind the scenes in crypto.

It would probably be valuable to talk to those guys. In the short run, I think the only people trading most utility coins are the market makers. When I look at the liquidity in some of these altcoins—we could call them utility coins, or anything that isn’t a major or a meme—it really just looks like market-maker-on-market-maker violence every day.

It doesn’t look like there’s real participation. These things are loosely correlated with Bitcoin and ETH, and everybody shits on me when I say they’re going to underperform because they just trade like leveraged Bitcoin and ETH.

That’s only because somebody at Wintermute has a correlation model that makes Worldcoin move somewhat in line with ETH, but with more percentage points per day because it’s Worldcoin and not a major.

I really think that ends at some point, especially when these unlocks occur. But I might be missing the next big narrative that needs to be ridden.

I think I’m waiting until these altcoins get so hated that maybe it’s time to start selectively buying ahead of a regulatory paradigm shift.

You don’t think they already are?

Not enough. I’m kind of with Jonah. I meme on Jonah on Twitter when he does the threads saying, “Here’s why all altcoins are shit,” and he absolutely deserves it. He did that with SOL at $20, saying, “Here’s why Solana is shit.” I remember trolling him before it went vertical.

These things can remain hated and do terribly at the same time. With inflection points, there’s often some catalyst or trigger. If it’s a particular category, something incites people, you can see the market react, and I think you generally have time to act.

The only other altcoin I hold a sizable position in is TAO. Everything else is, for the most part, a trading position. I don’t think there’s much that’s investable. Obviously, there are some things—I might not have done all my homework—but most of these things are, as Jonah says, shit.

Take me through the day of figuring out what’s investable, even for the short term. You say most of these are trading positions. How do you find the alts for trading positions when you’re constructing your book?

Set aside, let’s say, 5% to 10% for more active trading. You could be watching the news, trading headline events, or trading a catalyst such as a protocol upgrade.

There are certain times, especially in trending environments, when you can gain signal from what influential accounts are posting. You can get a sense for the zeitgeist of the moment, and it’s up to your intuition to decide how much signal there is.

You’re obviously watching dashboards and seeing what positioning looks like. I’ve thought about this even for this podcast: there are some loose general frameworks, but I consider myself more of a vibes investor and trader. You do have to lean on intuition in some of these situations.

In terms of unearthing new opportunities, it’s monitoring news flow and market structure. What are people trading? What’s gaining volume? What’s decreasing in volume? Where is attention going? Where’s the general flow of liquidity? That’s what I would look at.

I look at more opportunities and say no than say, “Yeah, let’s do that.”

Walk us through using that playbook, play by play, to arrive at the conclusion that you should accumulate a slug of TAO. How did you do that?

Starting top-down, I’m assuming we’re in a bull market, so I think you want to be structurally long these assets.

From a thematic perspective, I’m a big believer in crypto AI for a few reasons. Crypto AI reminds me a lot of DeFi in the early days, and even of Bitcoin—I wasn’t around in the earliest days—where you have a unifying theme and rallying cry that gets everyone together.

Bitcoin is, “We’re going to separate money from the state.” Ethereum is, “We’re going to separate finance from the state.” To me, decentralized AI is, “We’re going to separate AGI from the state.”

Bitcoin and AI are probably the 2 most powerful narratives that can exist. We obviously have no idea what AGI is going to look like, but we can be pretty certain it’s going to be life-altering. It’s not hard to imagine a world in which any single state actor wants to control and influence it.

That power is too great to be confined to a single power. I’m not saying anything that interesting has been built so far. I’m saying the rallying cry, the narrative, and the message are very strong. They’re going to entice people into it, and they already are.

You’re seeing independent AI developers tinkering with these systems in their spare time. Many have spun up Bittensor subnets or are mining certain subnets. Barry Silbert launched his decentralized AI investment trust, so it’s very clear this is going to be a movement that sees a lot of capital flows.

Retail investors don’t have an avenue to access the best AI talent. You can buy Nvidia or Microsoft, and those trades have obviously done really well, but you can’t access private-market valuations.

In crypto, I don’t think many things are investable, but there are going to be a few projects that are. You have to do the work of finding them.

You have this very powerful story and theme that can last multiple cycles. I think it’s an objectively good movement. The world would be much better off if we could separate AGI from the state.

There will be a steady flow of capital. Any new capital raised by traditional funds will have to look at this category, and there’s a good chance that retail capital flows in as well.

When I look across the things you can invest in, they’re all narrative-driven to an extent. Bittensor is the only actual decentralized community—or something that looks like it’s forming into one—that has grown organically and in a grassroots manner from day one.

Back in October 2023, they might have had 4 subnets. I think they’re up to 38 now, and the quality of them is increasing. There’s one called Subnet 8, which is a trading bot. Miners are creating different trading algorithms, and you can copy-trade behind the best ones on Bybit.

I haven’t back-tested it, but I follow it on Twitter. I think they’ve lost maybe 2 or 3 trades out of 50 or 60. They’re definitely momentum trades. They buy big dips and sell rips, but this is essentially investing in systematic strategies that have been built as a Bittensor subnet.

The monetary policy mirroring Bitcoin is interesting too. It’s an asset that tends to be hoarded when it’s that scarce. The founder is definitely a zealot-like figure. Again, I’m deep in this thought that you want to invest in movements, and you need leaders who almost sound deranged—almost an AI Jesus.

I think the founder has taken on that form, which is good. I don’t know if it’s all going to work out, but you need someone who can constantly rally the troops and paint a world that’s different from today.

When I first looked at it, I was just hanging out in the Discord and watching. It was honestly all engineering-related questions. It wasn’t, “Please, sir, price target. My family.”

The types of things you normally see in a crypto Discord weren’t there. There was no price talk allowed in the main channel. I saw a genuine community forming around it.

From a trade perspective, I first bought it around $216 in Q4. It had just done a 50% correction from a huge move. I’d heard about it on the initial run-up and was feeling insane FOMO, but I didn’t enter. A lot of sharp people around me were getting into it.

The thing people don’t get is that it’s not using a blockchain for the actual AI computation. It’s creating this incentive game around building models. It’s super meta, and it probably might not work, but it’s starting to work.

If it does work, I think it can be pretty big. If anything, it can have an insane hype-driven move. It’s one of the only investable assets in AI where you can say, “It might not work, but it seems to be growing, it’s grassroots, and I need to put money in the space somehow.”

Barry Silbert being a huge backer and holder isn’t going to hurt it. He’s obviously going to pump resources into it, just like he did with ETC.

That was a compelling vision. With AI coins in general, I always thought that if somebody were able to build a real AI product, it would attract so much usage and investment because, as you said, you can’t access anything in the AI market right now.

That’s why Bitcoin miners across the board had this massive rip solely because they said they were going to build facilities for AI—essentially saying, “We’re going to give you high-performance compute, and we’re going to build this over the next 5 years.” They all tripled.

Even then, it’s not really a direct investment in AI. It’s an investment in something that might build good warehouses. If they actually build a good product, it’s kind of the only place you can go to get exposure.

My view on Bittensor is definitely more of a longer-term investment. It isn’t a trade. In terms of a trade, I bought a fair amount around $212 to $220. There was a huge dislocation between the wrapped version on-chain and what it was trading at on centralized exchanges.

The chain had gone down. It was a small vulnerability, but the chain was halted, and the only way people could off-board was if they held wrapped TAO. They could sell it on-chain and get their liquidity out. It was trading at a 10% to 15% discount.

If you read the Discord, the bridge was coming back online, so that was a pretty quick 10% to 15%. You couldn’t size it that aggressively, but you could still size it. Prices are up around 40% since then, so that was a fun little tactical trade.

My other long-term view is that most of the AI coins you see—Livepeer, Render, and others—could actually just be their own Bittensor subnet. I noticed a trend earlier. The ecosystem got a bit derailed with some recent developments, but it’ll be back on track.

In Q1 and Q4 of last year, you saw projects like Kaito, MyShell, and Inference Labs launch their initial products as Bittensor subnets. There’s a big reward in subsidies if you launch one of the better models.

To me, it was working. It’s a clever way to bootstrap. It’s basically saying, “Instead of launching on your own with no resources, come launch on Bittensor and you’ll be paid to do so.”

If you create that flywheel, there’ll be enough demand on the other end to offset the emissions. We’re probably in year 3. I don’t know exactly when it went live, but we saw with Ethereum that the concept of high emissions can be changed by the community.

This is a dynamic thing, not a static thing. I think it’s one of the more interesting grassroots ecosystems that has developed this cycle, and I don’t think it’s getting as much love as it could or should.

That’s super exciting. I want to try to poke a theoretical hole in it, because that’s one of the best trade pitches I’ve heard in a long time.

We all witnessed the vicious brutality of the bear market in 2022. It’s fresh in everybody’s mind. There are multiple ways to lose money: an exchange can rug you, Wormhole can get hacked, or you can simply be down bad on your bags.

The anatomy of that bear market is very clear and present in all of our minds. Wouldn’t you say that AI is at the peak of the hype cycle and perhaps primed for a bear market? Maybe not a vicious bear market, but what happens if Nvidia trades down 50%? What happens if AI cools off? Does that impact Bittensor, or valuations in crypto, or is it completely distinct and undervalued?

I’d say they’re somewhat loosely connected. I don’t think you can make the argument that they’re highly correlated. Nvidia ran, maybe doubled, and really took over everyone’s imagination in the stock market while crypto AI coins fell 70%.

If there were a tight relationship, that shouldn’t have happened. People should have been saying, “I’m buying the dip on AI coins because Nvidia is up.” Those flows obviously aren’t there.

I think AI coins are really just a reflection of the alt market in general and any idiosyncratic things happening in that ecosystem. It would be foolish to say that if Nvidia really drew down, it wouldn’t be bad for AI coins, but they’re relatively under-owned.

Compared with Nvidia’s global market cap, these things are tiny. It won’t really matter. There’s a finite number of them, and at some point you run out of sellers.

Render makes no sense to me, but people buy it, hold it, and want to believe in it. It’s small. In the grand scheme of things, crypto is so small comparatively that I don’t think the flows would matter over a 3-month time horizon.

Could you have a 1- or 2-week pullback? For sure. Could people try to play that trade? Definitely. But I don’t think it would be sustained. I don’t think price discovery in these coins is happening on the basis of what’s happening in AI.

That’s a good way of phrasing it. Maybe they’re not even comparable. Maybe we can’t compare Bittensor to Nvidia. It’s more like looking at what Cisco did during the tech bull market of 2000.

The Bitcoin equivalent at the time was the TCP/IP protocol underlying the internet. Cisco was selling the network-switching equipment and hardware, kind of like Nvidia does, while TCP/IP was the protocol. TCP/IP wasn’t investable, but now you could easily have a situation where Nvidia comes off because GPUs are oversupplied and compute gets cheaper.

That’s bad for Nvidia, but it’s bullish for protocols that need compute. I hadn’t thought about it that way.

It’s cool to have somebody actually do a proper altcoin shill that I can buy into. There’s been a lot of it, and it doesn’t make much sense to me, but that one I can get behind.

There’s not much that makes sense to me either. It’s beautiful. I love being in an industry where nothing makes sense.

Speaking of nothing making sense, Chiefing, you mentioned Discord. You and Avi are obviously a lot younger than I am. When I look at Discord, it’s the same as when I walk into a nightclub these days. Gen Z can’t focus for more than 20 seconds, so the DJ switches the song every 20 seconds. It’s an ADHD, apocalyptic nightmare for me.

I view Discord the same way. It’s millions of messages per second of brain-melting nonsense. You mentioned that you use it for alpha. How on earth can you find alpha in that mess? What do you guys do in there, and what do you look for?

The question of what you guys do in Discord is hilarious to me. It’s like asking, “What do you do on Bloomberg chat, Jonah?”

There are 3 messages per minute on Bloomberg chat, not 3 million.

You just have to find the right channels. If you were around back in the day, there was a channel in the Synthetix Discord called Degen Trading. That channel might have found the most 100x opportunities in history. People were just sharing ideas in there.

Obviously, it was DeFi Summer, so it was a different time. But you just sit there and read the conversation. There are all these subchannels, and a lot of them are organic—not necessarily organic, but a lot of the channels are just engineers trying to get stuff done.

They don’t think anyone is following them, because there’s no reason for anyone to be in that channel other than engineers trying to get stuff done. You can browse around and get a sense of whether the project is well run, whether the documentation is well done, and how much help the team needs from engineering groups to get things off the ground.

You can get a sense of how well a project is run just via the discourse. But you have to go into autist mode a little bit and sit there and read.

Maybe I’m just too social and normal, and not on the spectrum.

You take 20 milligrams of Adderall, sit in front of Discord, and let it stream into your eyes. This is financial advice. I promise you, you’ll come out a richer man on the other side.

A lot of people are always asking—it’s like the Ronnie Coleman thing. Everyone wants to be a bodybuilder, but no one wants to lift heavy-ass weights. Everyone wants to make it in crypto, but no one wants to take 20 milligrams of Adderall and sit in Discord all day.

It’s not that hard, folks. It’s really not that hard.

It’s so funny because it’s true. As I meet you guys and this crypto crowd—the real OG on-chain degen traders who made it and made it big—the more I realize that these guys are self-taught traders who are far better than most of the traders I’ve worked with at premier, white-shoe institutions of high finance.

You’re putting in the work. It’s just a different kind of work than digging through a 10-K or a 10-Q. You’re trying to find signal in a fire hose of noise called Discord.

Speaking of a fire hose of noise—which this podcast is—I think that’s probably a good amount of noise for the people today.

Chiefing, I love talking to you as always. This was a ton of fun.

Thanks, guys. I really appreciate you having me on. This was fun.

Thanks for coming on, Chiefing. I know what to call you now. Let’s keep talking. This TAO thing is interesting.

None of this is financial advice, of course. We don’t know anything. We’re 2 people and a green lion that smokes weed. Don’t listen to us. Do your own research.

Good luck out there, everyone. Until next time, stay safe and don’t get assassinated.