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Right now, we’re in the midst of what I would call the early stages of a potential crypto market bull market. Chatting with different folks, it seems like a lot of people were sidelined. Most people have been caught offside.

1. Is the Crypto Bull Market Back?

You don’t get big, big, big industry catalysts often, and this feels a lot like that. If you’re going to take risk at any point, you take risk early and then remove risk as time goes on. Fun times in markets once again.

I feel like every time we do this, it’s a great day to record. The last 2 weeks have been very different from the prior 2 weeks, and really from the prior 3 to 6 months. Right now, we’re in the midst of what I would call the early stages of a potential crypto market bull market, and I emphasize “potential” because that’s a lot of what we’re going to talk about here today.

Let’s just start off: how’s everyone feeling about this market right now? Are we still guilty until proven innocent, or do we think this rally really has legs?

I think it has legs. That doesn’t mean we’re not going to get big leverage washouts from everybody buying breakouts and everything, but I think we probably just continue to chug higher in Bitcoin over the next several weeks and months.

I think a lot depends on next year’s price action. I think a lot depends on how the tail end of this year wraps up with midterms, Iran stuff, Bessent’s continued work with the Treasury, and what he does from here, which I guess we could get into in a bit.

Generally speaking, I think trends get changed by a catalyst—either a super-bullish catalyst or something super-bearish that happens and completely nukes the market. It just bottoms it. FTX is an example of the latter, and Bessent’s recent policy actions might hopefully be an example of the former, where you catch everybody offside.

Everybody knows that positioning in crypto on a speculative basis was at pretty much all-time lows relative to equities and everything else going on. You get that perfect storm where everybody isn’t positioned well, and then you get new life blown back into the sails of the debasement trade. Everybody is scrambling.

Last week, I was like, “All right, well, this is great.” I’m clearly buying into this because this has the potential to set a multi-week or month-long uptrend. I just want to see what the follow-through is with respect to actual buyers and whether they’re also buying that story.

ETFs are a great example of it. Prior to that, flows had pretty much stagnated—outflows, inflows, a little bit of everything—and then all of a sudden, since then, we’ve had $200 million to $300 million of inflows a day in Bitcoin ETFs. You’ve had inflows into the other ETFs for ETH, HYPE, and even SOL, I think.

It clearly feels like a nice little shift in the market to me. I think there are legs, especially on certain names, which I guess we could get into. I’m quite bullish, looking to buy dips and build out positions on leverage washouts and flushes.

I think the Treasury announcement is something you can’t really fade. It’s clearly the start of what they’re potentially intending to do. It’s not the end of their announcements; it’s the beginning of them.

On Lighter specifically, as a small tangent, did you see what I posted in the chat this morning? This protocol called LongX is launching tokenized perpetual exposures from Lighter. Kind of cool.

I think you’re going to see some money markets eventually blow up off these, but you’re starting to get that building on top of Lighter—that composability. These are the kinds of things that crypto is uniquely suited to do, so I thought that was pretty cool.

It will definitely be full-on perp season. It feels like—yeah, this thing here.

They’ll probably have a 1.5x leveraged token, a 2x, something like that, and a 3x. I’m interested to see how this thing does. I know people have tried some of this stuff in the past, but not this exact model.

There’s that Squeeth thing, but that was also insanely expensive to hold. We haven’t had truly liquid onchain perps like we do now with Hyperliquid and Lighter.

I don’t really get what this solves.

You can borrow against them. You can pull out margin if your position is up, you know?

Yeah.

Which is the same thing, right?

I guess you can borrow more exotic assets against it. I’m assuming they allow you to just borrow stables. They’re not going to allow you to borrow exposure in something exotic.

Yeah, maybe not.

Exposure in something exotic would be a whole different risk parameter.

Yeah, maybe just getting the assets onto Robinhood.

Yeah. No, I’m definitely bullish from a market perspective. I think most people have been caught offside. Chatting with different folks, it seems like a lot of people were sidelined.

There’s obviously a massive short squeeze, which is probably part of the bear case: how much of this activity was actually just people getting squeezed out of shorts? You’d love to see a continuation with the AI trade.

The issue with the AI trade was always competing for capital, and it seems like that’s on pause at the moment. We know how quickly capital can rotate, right?

Do you have concerns around how much frontier-model profitability is a source of capital? We’ll touch on long-term rates and their impacts on the ability to finance a lot of this compute buildout, but I think all this stuff does give some pause.

The big issue with AI in terms of what it did for the crypto trade was that it was very deflationary, so it was counter to the debasement thesis. If you have the idea that the AI trade wouldn’t play out with the same degree of certainty as it did before, that brings debasement back into focus.

The reflexivity of crypto and the lack of positioning in it certainly make this an attractive time. No one’s saying we’re immediately going back to all-time highs, but there’s a lot of room between here and there, and I think that makes the opportunity attractive.

The next question is how you express that bet. It’s been primarily the same trades for everyone, which is the worrying part, right? Everyone’s in HYPE, Zcash, PUMP, and Lighter, obviously to varying degrees. Not everyone caught everything, but there seems to be somewhat of a consensus.

There’s an argument to be made that HYPE and Lighter are getting fairly priced. It’s a flows thing for sure right now, with HYPE in particular getting perp flows plus the buyback from USDC, and those flows come with an amplifier.

2. HYPE & the Next Alt Season

I think those assets continue to do well. The question is, do you buy dips in those, or do you keep those positions on and look for the slightly less obvious but still attractive enough plays that can—not catch-up trades, necessarily, but basically overlooked opportunities—when everyone is longing the consensus stuff?

That’s a good point, because I’m kind of in that boat. That’s exactly the decision I’m trying to make with my portfolio, because my portfolio is effectively just HYPE at this point.

It’s not just HYPE; it’s [__] HYPE.

Yeah, it’s pretty much just HYPE. My question is, what do I buy on dips? Because I think dips are for buying, generally speaking. The answer for me is not more HYPE.

I have so much HYPE relative to my portfolio that what’s the difference between 70% of your portfolio going up versus 75% or 80%? It’s really not that big of a deal. I’d rather maybe take a little bit more risk, seeing as I think we’re still pretty early in a trend that’s forming.

One thing I’ve been thinking about—and I messaged Ceteris about this on the weekend—is that generally, with altseason, and maybe this is a good segue to Robinhood’s chain eventually or something, when you have a native token doing really well, you get a big wealth effect that flows through to that ecosystem.

You had it with ETH, you had it with SOL, and I guess Bitcoin initially, right? Then ETH and then SOL, and you had altseason occur because of that wealth effect.

Now I’m looking at the landscape of things, and I look at HYPE. HYPE is clearly the token that’s had the biggest wealth effect over the last year, pretty much since TGE—up 50x or 40x from TGE to today.

I’ve had the thesis for quite a while that there would eventually be a HYPE season, a HyperEVM season, an onchain season for the Hyperliquid ecosystem, simply because of that same wealth-effect dynamic that has played out over every cycle for the last 8 or 9 years.

And so, I've been wrong, obviously, on this for the last year, but I don't think I'm going to be wrong forever. I think we're probably going to see it, especially with this recent announcement from Kinetiq and the Alysium Hyperliquid L2 launch. Essentially, my thesis is that there are a bunch of people who have made a lot of money on HYPE and would like to keep their money in the Hyperliquid ecosystem, generally speaking. I think you see that across the board.

There's just nothing for them to actually do in the Hyperliquid ecosystem. I guess you could stake some HYPE and do some basic things, but there isn't really a way for them to engage in the type of speculative activity that you would expect to see on a chain or ecosystem directly related to Hyperliquid, which is the main use case.

The way HyperEVM was set up—I know this was one of Ceteris's initial critiques, even before HyperEVM was live, when the details came out—is just not something that can support that type of activity. I think Kinetiq going after this and trying to solve a problem that everybody in Hyperliquid land wants to see solved is a really good sign.

If they succeed, it builds out the plumbing that allows people to speculate and do things on HyperEVM in a way that hasn't been available. If you can do that, then you just see flows go there easily, and you probably see some Hyperliquid alt season happen.

My bet on that is—I don't know—I'm just buying Kinetiq, and more and more of it, because I think it's probably the easiest way to play that higher-speculative-beta thesis on a coin that I think is still going to be one of the best major performers over the next several months, without buying direct exposure to HYPE. That's kind of what I'm thinking of doing. I would like to buy more HYPE, but buying more HYPE now versus maybe buying some Kinetiq doesn't make much sense if I want that exposure to the Hyperliquid ecosystem and related activity.

I definitely think that this—I haven't looked too much into Kinetiq, like all the infrastructure details—but it'll be way more performant than HyperEVM. I think that probably makes sense. HyperEVM—the team launched it just to be like, “Hey, we got this thing. You can come build on it. It's permissionless, whatever.”

But there's never really an incentive for them to spend a lot of effort on it, right? Their time is way better spent on HyperCore and Hyperliquid. We definitely don't need more new chains, but that doesn't mean this one can't do well, because this specific chain probably makes more sense than a lot of the chains we already have right now.

I think you could maybe see something there. I saw Phantom also added HyperEVM today on their app, so maybe you get some of the HyperEVM coins. But I don't know if you get an EVM-style bull market, to be honest. I think it's tricky if you look at when it's happened historically.

It’s rarely been additional infrastructure. Sure, you had JUP pump when SOL did well, along with some of the DeFi stuff, but it was basically memes, right? Just this sponge, this unbounded sponge that doesn't get pinned down by fundamentals and can just go nuts.

So buy JUP.

I'm not sure some memes will do well. I just have no edge in figuring out which ones they're going to be, realistically, and I'm probably going to end up missing it. But I worry that fundamental stuff is just way less attractive unless it can really tap into HYPE in a way where its revenue can accelerate by virtue of what HYPE is doing and it's somehow accretive. Maybe there's something that does that, but I think the low-revenue stuff is just not going to be chased as hard.

3. What Wins This Cycle?

I think that's a really tough spot for this market. I think what we've seen over the past couple of weeks—I’m kind of stealing some of this from Noah from Tia, who had a tweet on it—but crypto basically ran out of sellers. There's always selling, so it didn't completely run out, but it ran out of the majority of selling. Then the regime kind of changed, and people just wanted to buy stuff.

But there's still not a lot of things to buy, and a lot of the so-called fundamental coins are still rich again, even after that little pump. If there's a lot of this money coming back into crypto, then in the 2021 cycle, crypto was much more of a tech trade, right? It was Ethereum revenues, DeFi, the future of finance—all that stuff. That's what people were buying, and L1 tokens got crazy because that's a pure tech-type trade based on network growth and all this other stuff.

If this cycle is more of a debasement trade, then what is going to do well in crypto? There are a lot of these coins that just sit in no-man's-land. They're good protocols, but they don't make enough money to justify their valuations, even after a small pump.

If this is a debasement-trade-style market, I actually think you could see ETH doing better than Solana and stuff. I'm not buying ETH, but I could see that under that kind of market, where ETH is actually one that people buy. This is why Zcash is getting bid. I don't know if Zcash has been getting bid purely because of privacy, but it can soak up a lot of liquidity.

Yeah. Yeah, I mean, it's a combination of flows and positioning, which I think kind of goes hand in hand with flows, and, for me, fundamentals that aren't appreciated by the market. For me, 2 positions I like outside of the standard ones that everyone generally holds are AERO and GRASS. I've been talking about these for a while, but I think AERO has the ETH migration in the middle of September. They're going to bring on a bunch of TVL from that, and at the same time, they're adjusting their issuance process to be dynamic with fees and adding additional revenue lines that don't have an offsetting inflation component.

I think you just have a lot less issuance and a lot more TVL. I don't think there's a lot of positioning for it right now if you look at OI relative to FDV and a handful of other things. They don't really have venture investors, so I think there's a strong setup there. If you think ETH does well and activity picks up, they're also doing a bunch with tokenized stocks, so there are a lot of tailwinds on that front.

I think GRASS is another one that's just broadly misunderstood by the market in terms of revenues and value accrual—specifically, the idea that there's an equity component siphoning away value, which isn't the case. I think it's just a matter of time before they improve the market's understanding of how their token situation works and where their revenues actually stand. Again, it's another one of those that I don't think has much positioning in it, so flows can be pretty one-sided once the tide turns.

As HYPE goes to $100 and LIGHTER does well, I think what LIGHTER is doing—call it $100,000 in revenue a day, or $36 million a year on a $360 million FDV—becomes something you need to think about. Obviously, people value market cap, and FDV wouldn't be the fairest way to look at it because there are tokens in circulation. I'm not bearish on Lighter; I hold the bag. I think it will still keep doing well, and I have no intention of selling it, but as the cycle goes on, it becomes more about which opportunities are being overlooked while sharing a lot of the same qualities you like about assets you're already in.

Yeah. It's kind of like this divergence, to Ceteris's point: you either need to be the revenue-generating protocol or application meta, or you need to be something that, when fundamentals matter, people gravitate toward. You see that with a number of these names, like HYPE.

Unless your potential growth or the market you're growing into can produce substantial revenues, it almost hurts you to have a revenue-generating side to whatever you're building as an application. But if those revenues aren't large, you have to hit a certain threshold where the market actually starts to appreciate them. If you don't have that or you don't reach that, you're in this no-man's-land.

4. Consensus Trades vs. Hidden Alpha

That's why I think there's a lot of concentration. One of my questions for you guys was going to be around dip-buying and looking at what you'd want to get more exposure to. Obviously, there's a handful of names that it seems like everybody is in right now or that are very consensus. That also pairs with the fact that there just aren't as many attractive assets out there, at least in the crypto market, to buy right now.

Is that necessarily a bad thing? Is consensus a bad thing? Is chasing consensus right now a bad thing because of how momentum-driven this market is? Getting into something like Zcash here or HYPE—not to say we have a crystal ball or price projections—but I think there's a very good chance that those continue. The winners continue to outperform, and the winners continue to push even if they're more consensus names today.

Do you burn yourself by trying to find the things that are less covered, undiscovered, or non-consensus when a lot of the flows and momentum tend to gravitate toward the small handful of names that are consensus but have momentum and tailwinds behind them?

Yeah, just to add to that point, I think what's helpful is that you kind of need triggers or catalysts for why you think those non-consensus plays will begin to be consensus, because that's a good invalidation of your idea, right? That way, when the thing that I thought would actually make it appreciated by the market played out, I have clarity on it.

I think that's kind of your trigger. Otherwise, you're in a world where you're just waiting forever, and you don't have any real, definitive clarity on whether or not this thing has the potential to become consensus. So I think, when you're doing that, it's important to have some form of invalidation that you follow. Otherwise, you do get stuck buying something that no one else ever will.

Yeah, that's definitely true. I've found myself in that position a few times in my life, and I don't like it because it makes you feel extra stupid, right? When you're like, “Ah, damn. I could have just been in this easy consensus trade and done well, and I tried to be smarter than the market and then just didn't have my kill conditions or whatever.”

I also think a lot of people aren't really good at that in general. I think Yan is actually very, very good at that, so I'll probably go look at those names after this call and add them to my watch list. But I think most people will probably do it very poorly.

If you do get a multimonth trend generally in crypto, the coins that have already shown their strength will probably continue to do well. We've always seen that. In 2021, with Solana, AVAX, or whatever it was, everybody tried to get super cute and rotate into everything else—all the other L1s and everything. You could have just owned those 3 things for the entire time and absolutely crushed it.

I don't know if it will be exactly the same this time around, or maybe it'll be closer in terms of the outperformance of the majors relative to things that aren't entirely consensus at the start. I also find it kind of interesting. I was going through charts this weekend because I haven't done it in a while.

Usually, when we start a bull market—if this is the start of a bullish trend for at least a few months, as I'll keep saying—generally speaking, all of the coins in the market are trading off their lows. They've all drawn down 50%, 60%, 70%; they're trading off their lows, and that's the situation you find yourself in.

This time around, that's not the case. We have a few coins, for the first time since I've been in crypto, that are trading at all-time highs or close to all-time highs relative to Bitcoin, when Bitcoin is first starting to enter some kind of bullish trajectory. We haven't seen that before.

Clearly, HYPE is one of the ones I'm talking about: trading at all-time highs relative to its Bitcoin pair and its USD pair as Bitcoin is transitioning from a horrifically bearish 6-, 7-, 8-month period to a bullish trend. Something like that—I don't want to fade that at all. We haven't seen a coin in price discovery at the start of a bull market with all of the catalysts—like, I don't know, degen buying via perps, Trump saying Hyperliquid on TV. It just feels like there's more coming in terms of this regulatory aspect of things, which I think is super bullish for both HYPE and Lighter.

I definitely think it's harder than ever to go against the consensus.

You get punished for it so badly if you're wrong.

There's definitely other stuff. I haven't done a single trade since the market ripped. I've just been watching things go. I'm starting to look at things like Grass. I've been looking at Grass for a long time, and it's always just dogshit, but it makes sense, right?

I'm trying to think about when this thing is going to move. I was thinking about selling some Zcash at $400 or $500 to buy Grass, and then I didn't. Now it's like, do I sell Zcash at $770 to do it, or is Grass still going to languish for a month and Zcash is going to have this crazy $1,500 rip? It's very hard to time.

Even something like MetaDAO. MetaDAO has been trading pretty well. I'm still waiting for it to get into new price discovery, and it keeps getting rejected from that. There are other things, too, that I think can maybe do well later in the cycle.

The way I'm thinking is that, for at least a while, you'd expect these consensus trades to continue getting most of the attention, and then you can start to see capital begin to flow. Late in the cycle, you do see some of these interesting crypto AI, store-of-value-type things that could maybe start doing well.

So I think hitting those rotations perfectly is very, very, very hard. Zcash is such a hard one for me. I'm still bullish on it going higher; the chart just looks so good. But at the end of the day, it has had a lot of good stuff recently, and I wouldn't be surprised if it went back to $500 relatively quickly.

It's such a violent coin, up and down. I had this tweet about it the other day: it started the year at $500, went down 60%, went up 3×, went down another 60% in a day, and then went up 3× from that.

I think that's probably why it rips so hard: a lot of people don't buy it on spot. They're probably just buying it on perps or something, and they're all getting rinsed over and over and over on it. Then there are just 10 people like Ceteris who actually own spot Zcash.

And then there's that one dude who's traded it perfectly somehow.

Yeah. Yeah. You know, there's that one dude who—

Yeah.

And half a guy who actually uses it. Yeah.

But yeah, like there are a lot of

5. Zcash & the Next Rotation

Yeah, there are a lot of interesting coins that aren't moving that you'd kind of expect to at some point. It's just a question of when, exactly. How much higher do HYPE, Lighter, and Zcash need to pump before those ones really start breaking out?

Do we even get some sort of L1 trade back? I think everyone's written off the L1 trade. The L1 trade was usually early cycle. What if Solana pumps at the end of the cycle this time? The dynamics now are just very interesting, and you really can't look at history and try to replicate things that happened in the past.

You basically just need to inverse it, right? Memes first, then memes last; L1s first, then L1s last. The positioning on them is nonexistent, right? You can definitely get some squeezes, but it's hard to see sustained moves.

The tricky part is that there's reflexivity: if it trades well for a little while, then the DATs pick up a little bit, and they add fuel to the fire. You kind of see that with HYPE. I haven't been tracking whether the Zcash DAT is still deploying today.

It's not really a DAT.

Is it just GBTC but for Zcash?

Oh, that's the ETF. I think he's talking about Cypherpunk, which I do own. It was a DAT originally and was running the DAT thing, selling at-the-market and buying Zcash. It stopped doing that about a month or 2 ago, but recently they acquired 17% or 18% of Zcash's mining power.

There are implications for Cypherpunk here, and then there are implications for the Zcash market as a whole. One thing is that they're going to hold on to most of this Zcash. If you have 20% of the hash power that's accumulating Zcash, that's good for Zcash network health. You're getting rid of that instant dumping.

For Cypherpunk, since Zcash is such an old coin and was basically left for dead for 7 years, there has been no development. People haven't been building ASICs for Zcash mining, and so there's a 7-month lag to actually get new supply.

Right now, the miners who are mining Zcash, since it has gone up so violently, are insanely profitable. It's much more profitable than Bitcoin mining or doing any AI-type stuff. That's interesting leverage for Cypherpunk. Apparently, at current prices, I think the payback period for their $33 million mining investment is 0.7 years.

But if Zcash goes on this crazy run and they're holding a lot, which reduces supply, and the mining hash power is still not coming online, they're set up in a pretty interesting spot. I'm not sure what they'll do once all those ASICs come onto the market.

You would expect mining to become close to zero-margin in the long run, as we've seen in Bitcoin mining, but there is this interesting dynamic for the next 6 months to a year. If we are entering some kind of crazy bull market, that's interesting.

So, yeah, Zcash is just a hard one for me, man. I think Zcash is really cool.

I think the tech is really cool. I think privacy—I like a lot of stuff about it. I'm not the same level of evangelist about it as other people, but I also wasn't cynical enough not to get on board. I would be very surprised if Zcash hit these crazy targets people are coming out with, like $5,000 to $10,000. It could happen, though. You always have to consider that these kinds of things can happen.

This whole debasement thing—it is a coin that can suck up liquidity because you don't get spooked out of buying something overvalued when it's purely this: if you're just using it, if you're just looking at Bitcoin and memeing 5% of Bitcoin and stuff, it can run. I do think there are a lot of qualities of Zcash that make it genuinely a good store of value behind Bitcoin.

I don't know if Zcash is purely a privacy trade, to be honest with you. It's yes and no. The team is really smart. If you look at the Zcash development team versus Bitcoin, it's completely different, right? They're building a lot of cool stuff around Zcash 2.0, and they're scaling Zcash with Tachyon coming out later and everything.

It's also one of those coins that people seem to love or hate, which is good. You need a lot of hate for it to keep doing well. HYPE was very hated. Some people still hate HYPE. I didn't hate HYPE at the beginning, but I thought, “This is not a real chain. This is kind of shit. It's just like a token. It's like 3 validators in total.” But you have to give props to what Hyperliquid did. They crushed it, right?

There are still a lot of people who have the position that HYPE is shit, right? Another hot coin is PUMP, which I also own, disclosure. I saw that CMS had a good tweet today. He was saying that maybe the biggest impact of FOMO has been how good it's been for PUMP—not just because it's obviously got people trading again, but because I think it's starting to convince people that PUMP's revenues are real, right?

People have been so skeptical about PUMP. How is PUMP making all this revenue in the bear market? This looks so fake. This is money laundering, whatever. Even when I was posting FOMO charts in the Delphi Reads chat a few weeks ago, everyone was like, “What? Why are so many people using FOMO?”

FOMO now has 100,000 active traders, and it's purely from Instagram ads and stuff.

Yeah, because they went after a market that isn't us. No one we really know uses it.

Yeah. Did you see the Vector guy?

On purpose?

Did you see the post by the Vector guy?

Yeah. Basically comparing how they built Vector, what their plans were for it, and what FOMO got right.

Yeah. Vector was the original FOMO. It was the same thing, but they just went after crypto people.

Yeah, they went after pro traders because that was the existing market that was highest-value for them and the power users. FOMO went after a much wider distribution and played more of the volume game. Again, it's worked.

I think it comes back to distribution. Distribution is still obviously extremely important, and, as we've said, it's getting more and more important. The more AI slop you have out there, the more everyone's attention is being pulled in so many different directions.

To try to tie this back to the grass analogy, which I think was a really good one, you're trying to find something that's non-consensus, undiscovered, or underowned, but then you're waiting for that catalyst and trying to figure out what that catalyst is. If we use Grass as the proxy, Yan, you've done some really great work and put out a bunch of tweets and posts. We've got more research coming out on Grass in the next couple of weeks talking about this.

Do you think it's a distribution or awareness problem? I'll use Grass as the example or the proxy, but you could insert other fundamental trades or investment ideas that are underowned or non-consensus right now. What gives you the confidence to go into something or scale a position into Grass, expecting that the market will eventually recognize what you see? I'm curious about your thought process and why the market hasn't recognized what you see yet. Is it just a distribution and awareness thing?

Yeah. I think it's important to think through why this isn't consensus, right? Is it that they're building a cool product but they don't have the revenue yet, which I think is probably a harder problem to solve? Or is the revenue there and it's a confidence issue? I think that's a much more straightforward one, particularly in a market environment like this, where people are looking for these types of dislocations.

For them, it's a comms-type issue. There's just general unawareness around how they're doing and what the future plans are for the business. How big is this market? What does their existing stack allow them to do in the future? How does it tie into the token?

Right now, they do this semiannual revenue update. For a protocol like them, none of their activity is on-chain, so it's not like you can go on DeFiLlama and track their metrics. You need these comms, and you do have that with others here. It is directly related to how often they're disclosing and what they disclose.

All of these things combined have caused them to trade at a steep discount. Basically, the market doesn't have enough communication to dispel the low-hanging FUD, right? You combine the FUD with the price action, and then it becomes a very easy consensus fade. I think there's absolutely no positioning in it.

I believe in the revenues, and the fact that there is a token component here suggests that the economic incentives are such that they will make adjustments on this front. That's the opportunity you see in front of you.

In particular, for them, it's valuable to get the token value up because they are the foundation sitting on quite a bit of capital. The business itself is 7x year over year, so the metrics become very attractive for them to raise additional capital and compete directly with AI companies in their sphere.

It's important for them to do that because it allows them not to fall behind on the lead they currently have. The verticals they're going into have comps raising at $1 billion to $3 billion valuations. I think there are a lot of reasons for them to course-correct on this front.

You do have that invalidation if you believe in it. But that's from a trade perspective. We invested with Delphi Ventures, and we haven't really sold the token, so we're kind of long-term aligned here. My incentive for them to really correct course on this front is that I think it's helpful for them to raise additional capital in the future and continue growing the business.

From a pure trade perspective, you do have the invalidation of: they come forward and disclose all this stuff, but does the market still not believe them? Then there's your invalidation. I guess the initial assumption is whether or not they will try to make adjustments. I think there are too many reasons for them to do so.

Your invalidation after that is basically: do those changes move the needle from the perspective of the market? How much does token price actually impact the fundamentals of the business or product itself, right?

I think another interesting lens is how much token price impacts the fundamentals of the business or product itself. The teams that are able to do this—I think you say this about Grass. You could also maybe make this argument about HYPE. To a certain degree, HYPE is just such a phenomenal product in Hyperliquid itself that price can fluctuate, but it doesn't really have as big of an impact on what the team is doing and building.

There's this point in the market where, if the token really is the product, as we've seen in prior cycles and throughout the whole history of crypto, that's where things can start to get really dicey, because maybe your entire balance sheet or treasury is within your own token. That obviously leads to underinvesting and funding, and then it just kind of trickles down to zero because you never found product-market fit in the first place, right? That was a lot of what the market has looked like over the years. But then, if you've earned the right to have a token, the price and fluctuations don't necessarily impact the fundamentals of the business, and the opportunity for the business is extremely large, or much larger as you grow into it.

I feel like there are some of these projects and teams that can very much take advantage of that, if that makes sense.

Yeah. So, a fun thought exercise for HYPE, I guess, would be: From the beginning, they sent all the money back to the token. Obviously, the token trades well; the token is a great marketing tool for the platform, and people come and trade there. But people aren't really trading there for the value of the token.

So the question, I guess, would be: If you were to compare HYPE in an alternate universe where, rather than sending all the money back to the token, they said, “Okay, we're sending all the money to marketing and growing the platform, and then once we cross this threshold of revenue, we will send 50% of every dollar of revenue to buy back the token. Once we cross this threshold of revenue, we will send 99% or 97% of every dollar”?

They get to where they are now, and I'd say maybe at a similar revenue point, but they used all that money to grow the platform. I think the platform would be bigger, right? I do think there is wasted capital to some degree. The comparison is basically what they would look like if they reinvested in growth rather than into the token.

You can try to make the argument for HYPE that they're actually better off reinvesting everything into the token, but I don't know if it's the correct one. But for GRASS, this is more akin to a traditional business. Like you mentioned, the token is not very consequential right now to the business, but I think where it is consequential is in the need to raise additional capital in the future.

They're expecting to be highly profitable, right? They're expecting $70 million in revenue and $40 million in operating profit this year. So that is going to be a substantial amount of cash to reinvest, but I still think you can accelerate progress, especially at a time now where having a lead is massively important.

In that sense, I do think having a strong token is important because it just allows you to tap into capital markets and accelerate business growth from that perspective. I don't think it's a second-order effect on revenue, not a first-order effect. But, yeah, I'm curious what you guys think on the HYPE side of whether they would be better or worse off doing this kind of gradual buyback and putting the rest into marketing, or just going straight into the buyback as they have been now.

With HYPE, I think the HYPE token model is way too entrenched and loved. It's a part of HYPE. I think pivoting from that would probably not go well for them.

No, no. This would have been day zero if they had set out—

Yeah, I don't think HYPE would have done as well when it launched.

Really? Even if they telegraphed it and said, “Once we cross $100 million in revenue, or whatever annual rate, we will send 99% of the revenue to the buyback”?

Maybe. The thing is, HYPE's buyback just got them so much trust in the market very quickly. I see it, right? Having productive capital versus just buying back—I don't know. With HYPE, it's just a hard one to know because I think HYPE's entire success—not its entire success, but a huge amount of its success as a token, and the general goodwill that it's built within crypto, is tied to the fact that they've just indiscriminately put all of their revenue pretty much into buybacks.

It's effectively saying, “You own the protocol. You own the house the same way that anybody else does,” as opposed to, “We have discretion over where this money goes.” I fully see the argument that having some money go to other things is probably more productive, and you can do other stuff, but I don't know. It's so hard to decouple the two because I think you don't get HYPE to where HYPE is without what it's done every day since it launched.

I also like that they generally don't listen to anybody on the internet or in crypto. They just—

You think they know better than people in Discord?

Yeah. They just have an idea and a plan, and they do it. They don't care what anybody says. I find that refreshing, as opposed to everybody who just looks for signal, which I think is important to varying degrees.

Anything different would make it hard to think they would do as well.

Yeah. It kind of goes to what José would bring up with MetaDAO. The good founders don't want input from everybody. They have their plan. They think they've clearly thought about the business, what makes the most sense given the environment, and the things that they're launching in—

I mean, to be clear, MetaDAO doesn't have—

I know, I know, I know, but—

Founders make decisions. They make the decisions, but there is—

—some unnecessary, untrue FUD—

Easy—

Relax, you know what I'm saying?

It is like that, for sure.

Whereas with this, I don't know. Generally, I like—

Founders having control is still just them having more firepower to execute on what they want to do.

If GRASS's revenues were all public, I think it would trade fine. I know it's hard, and I know why it's not public, but I think that matters more.

That matters more than the buyback or anything.

Yeah. I think people still don't like having to trust them. EV3 came out and said, “We looked at the numbers, and they're all legit.” I think people still want to look at it themselves.

What is public, then? What if they just published a document? It still could be made up, right? You need an auditor to—

Well, yeah, because it's an off-chain business, right? So it's not as easy. Hyperliquid is fully on-chain; everything you can just look at on-chain, and so it's much easier to—

I mean, if it were audited in a professional way, like you would file any public—

If you had DeFiLlama look at them and put them on DeFiLlama as legitimate off-chain revenues, that would go a long way. These are DeFiLlama-verified—

I lean with Ceteris. I think it's more about transparency and trust—or the lack of trust—with things. That builds goodwill, which then leads to flexibility with different things, outperformance, and just a general benefit of the doubt.

That was the whole issue with Pump, right? That was exactly why Pump was performing so poorly for so long: People just didn't trust them. But then FOMO comes out and kind of indirectly gives credence to Pump's story, and all of a sudden you start seeing Pump rerate pretty quickly.

To me, that seems more like the transparency story than anything fundamental, because we still don't really have direct insight into Pump's revenues. But at least people can make that comparison with FOMO, and they're like, “All right, maybe it is mostly legitimate for the most part, and we were wrong.”

Yeah, it's a good point. Even though Pump's revenues are on-chain, just because revenues are on-chain doesn't mean that they're legitimate, right? There are ways that you can make on-chain metrics look a certain way. Something like HYPE is way less fakeable, though. When it's doing the numbers it's doing, it's like, “Okay, even if this is fake, this is a lot.”

Well, you can just back into it with volumes and everything, right? You can—

6. NFTs & Robinhood Chain

It's a lot easier to sniff out shit on exchanges than it is—

Yeah, with the other stuff.

Where do you guys think the next rotation is, if there is one? I don't know how deep—

I honestly think that NFTs can get a bid. I'm not buying any.

Oh boy.

I'm not buying any. Listen, I'm not buying any. My way of expressing this view is that I own FWB.

This is just a backdoor FWB shill.

No, it's front door.

We need the clip. Go ahead. We need the clip.

But if it's this whole debasement trade thing, then what can go up a lot with no fundamental value? NFTs, right? People getting excited about NFTs again. There has been a little bit of a resurgence in NFTs, so we'll see.

Again, I'm not going out there and buying NFTs. I've played that game before, and it did not go well for me. I think that, for whatever reason, I just can't analyze the art properly to understand what people will end up liking.

I thought the CryptoCorgis were going to—

Dude. Bad Kids.

Bad Kids—(laughter)—are Bad Kids. Can you pull some of those up, Kevin? Those are some legit pieces of art.

That's some legit—(laughter)—pieces of art.

Bad Kids. I had so much—You know what people say?

“Why are you so rich, Mom?”

You know what people say? “Put all your money in your best idea.” That’s why I don’t do that, because Bad Kids.

[laughter]

It’s almost like a moment of silence for—[laughter]

Jeez, head of research.

Oh no.

Hey, for a moment there, they were doing—

How many of these do you have?

No, I don’t have a lot. I still have some left, but I don’t even want to open a Cosmos wallet. They’re just—

It’s probably sitting there. Can you bridge them over to Flaunch or no?

That would actually be sick.

Well, that was my thing about why I thought Flaunch could wind up being something, and not just a flash in the pan. I feel like a lot of people have looked at it as finally having a way to offload, or get some type of liquidity on, a lot of these NFT assets that have had no bid and haven’t had a bid for years now.

Yeah. Pull up this Dune page, because I think it’s good. It shows the story of Flaunch right now. You can see that all the initial revenue from it was heavily incentivized. Then it kind of died off, but 2 days ago they did their inaugural NFT launch, and it made a lot of money doing that.

Now the protocol has come down a bit, right? So for them, it’s really about whether they can get one of these spike days every week, or even every other week. That can be a pretty good protocol over the long term.

For them right now, the reason why I own it is to express an NFT view. If NFTs do really come back and you get more high-profile launches, I think a lot of people will be interested in launching them through Flaunch, and you could get these spike days every once in a while.

It would be nice to see the non-launch days have a higher floor, too, with people playing it every day. We’ll see how that goes. I still think it’s one of these interesting, novel protocols that hasn’t completely died off. Seeing how many fees it can make when it has a launch people want to do is a good sign. It just needs to consistently get these, which is harder to predict.

Have you guys been fucking around on Robinhood Chain at all?

I have not used Robinhood Chain. I really should have, but—

Yeah, it’s a little too brainy for me right now.

Yeah.

I mean, I was like—I just enjoy looking at these mechanisms. The Olympus DAO—there’s the NFT one and the other one. I have 0 assets on Robinhood Chain, so this is not a shill.

My concern there—and I hope everyone there makes all the money in the world—is that the audience you need for something like that to do well has been washed out, right? You have this survivorship bias of folks who are usually sellers of stuff like that. It’s the long-term conviction guys. A few of them make life-changing money, but most of them round-trip life-changing money.

I think the user base for something like that to have extended legs, plus the hot ball of money, isn’t necessarily there. The counter would be that they’ve been washed out so long ago that there’s a new batch of them here, and maybe it goes for a while. But I would rather watch those from the sidelines at this point.

Yeah, that was my thinking about why I didn’t go over there. It’s just like—

I think we’re too old, man.

We might just be.

But yeah, native wealth-effect tokens—SOL went up 10x, so all the memes and all that shit flew. You don’t have a Robinhood Chain coin like you have ETH, I guess, right? ETH has pumped a decent amount over the last week, so maybe you get that.

When I was thinking about what ecosystem I thought would pop off the most in this next bullish cycle, it was hard for me to say Robinhood Chain because, to your point, it seems like it’s all the people who survived—all the trenchers who are pretty savvy, whose survival instincts didn’t get fully washed out.

It seems like all of them are playing PvE a little bit and PvP a bit until some of these things get listed on Robinhood, and then using that as their exit liquidity to a degree. That was my initial thinking. It’s clearly had a pretty good week, with all of these things going up 50% or 60%.

I mean, the Robinhood listing is a great point as this massive catalyst for any of these things, particularly the ones that do well. It’s in their interest to list them and get liquidity, because then everyone just flocks over to the chain thinking, “I need to get in the thing that’s the next thing that’s going to get listed.”

There’s definitely a little catch-up, or relative-value, trade. I look at something like Pawns, right? You want to have exposure to a top launchpad, or infrastructure that’s built on a new chain, and we’ve seen this time and time again with new chains that came up.

I think it’s something that probably will continue to have legs, but unless you’re super active and very plugged in on where that hot-ball money is going to rotate within that ecosystem, it’s not an area I’m personally playing either. Marcus from research has really been talking about that Pawns thing every day for 2 weeks.

It’s done well, too.

Yeah, very well.

Very well. That’s the closest fundamental-thesis type of play that you can get to on something like Robinhood Chain.

Yeah. It seems like they’re running back the—

Launchpads on Robinhood.

And that’s just really hard for me, because we’ve been there and done that.

Yeah. I mean, how many of those—That was so much of the prior cycles.

They had these other things. It’s like, you buy the NFT, then you can burn it, and you get the trading fees from stock trading.

Yeah, like Quotron.

Yeah. It’s just—I don’t know. It’s hard for me to—

You’re just too old, dude.

Yeah. I like a nice, clean coin that you hold and then sell.

I can buy it in my Roth IRA.

I love a good ETF. I really love a good ETF. A nice global equity index—that’s a fun—

The ACWI.

That’s a fun coin for me.

Fire.

You just don’t have to think about anything. Korea’s doing well? Cool, I’ve got exposure to that.

How much have you done with on-chain stocks, like some of the tokenized assets? Instead of doing it in a brokerage, doing it actually on-chain?

No, but I think it’s cool. I still think it’s cool to get them on-chain, and there are parts of the world where that’ll be really big. I also just don’t really trade stocks, so I’m not exactly the client for that. I already have access to do that if I wanted to.

Yeah, more so just ease right now. If you’ve got capital or stables and you’re trying to get exposure to the underlying in an easy way—

Maybe I just have a very specific way of how I separate my stocks and—

Ceteris has the right way. You offboard money to buy stocks, and that money never comes back. That’s how you bank profits and compound over time.

Yeah. I don’t even hold stablecoins, but I should probably change that. I should get better at it. To this day, I still go through massive swings with my crypto portfolio all the time. Somehow, I have 0 trauma from drawing down so many times.

I’ve learned 0 lessons in bear markets.

Well, do you realize the losses, or do you just—

Hold for tax purposes, potentially? Right. It’s just easier for me. Whenever we go through a period of euphoria, you can usually tell when things are getting really, really crazy.

Yeah, you start calculating how much your positions—

Like the AI agent stuff. You knew things were getting crazy.

It’s like, I should probably—because that was also at the end of—

It’s like, yeah, this is probably a time when—I didn’t think the market was going to go down from there. I still took a massive bath in a lot of AI agent stuff, but at least I sold some—a bunch, too.

What a time.

I remember I bought—I did really well in Virtuals and that whole ecosystem, and then—

I did a big Virtuals buy, and then I put it all into AI16Z at 220.

Nailed it.

That’s a 1-hour round trip, too.

Yeah. To each their own, man. Honestly, everybody has to do what they’re comfortable with. I don’t think my strategy is for everyone. You can make a lot, but I’m not out here to make the most money in crypto. I just do what I’m comfortable with.

I feel like crypto has enough volatility. Spot crypto has enough volatility for me, and there are enough opportunities every cycle. That’s just what I do.

And yeah, I don't bring money back in. I work and get paid income, and I'll put that in when the market has gone down a lot, right? It's like my fixed-income portion of the strategy.

Right?

Yeah. Yeah.

Yeah. Every 2 weeks, you just see a green candle on FWA [?]. [laughter] There it goes.

7. Positioning for the Next Leg

It's like the coin—yeah, like the Coinbase deposits from all the COVID checks back in the day. [laughter]

Last question. I think a good place to leave it is, depending on who you talk to, there's definitely a sense that there are a lot of people who are still sidelined. And sidelined is very much a spectrum, right?

Where do you guys sit right now in terms of being fully deployed, maximum risk-on on one side, and all stables on the other? Are you heading into this latest—whatever we want to call it, either the early stages of a bull market or just a recent rally—were you guys pretty max risk, and your bags were packed for some type of rally to occur? Or are you still sidelined to a certain degree, waiting to see if we get more dips to fully deploy? I'm just curious how you guys are thinking about positioning here.

My portfolio is up this year without owning HYPE or stables. I feel like that's actually pretty good. So I've managed to rotate ideally.

The rotator.

A Venn diagram of people who don't own HYPE and are up on the year. Very slim.

Yeah, I think it's very hard. I can't give any good advice on this. I'm not trying to be a dick and be like, “You're sidelined,” because you probably missed a big part of the drawdown, right? So I can't really talk shit.

I was out here. I was in the arena. It's just not something I'm good at. I have literally zero. I feel good because I feel like a lot of momentum has turned, but it's just really hard to be like, “Yeah, I'm going to do my first entry on Zcash at $770.” I don't know. That is definitely a scary proposition. Bitcoin, I feel much more comfortable with if I were sidelined.

I agree. It's not gone up that much.

Still down on the year, right?

Yeah. All the majors are still down on the year.

Much less down than they were a week ago, though. Thank goodness.

Yeah.

Oh, wow. What a beautiful green.

The year to date is just red everywhere.

Fantastic green box.

Holy cow.

So crazy.

Wow. Yeah. I don't know what bear market everybody else was in, but geez, it sucks.

What else is green on this?

VVV crushed it.

Morpho.

I mean, Jito sold off a ton to end the year.

Wait, ARC is up.

I mean, those things sold off so much that—

Yeah, I guess it might be a little—

A pump for ants.

On the grand scheme of things. Pump.

Pump. Wow.

Wow.

Zcash.

Yeah. Not a lot of green on this board.

Yeah. I mean, I'm pretty much fully allocated to the market at this point. I'll be looking to maybe buy some perp trades if we get some washouts on these 20%, 25%, or 30% pullbacks after we ran up as much as we did.

But I don't know, man. I think you just have to be exposed early. Sometimes the hardest thing to do is buy a candle that's up. I'm not saying you buy the candles today, but generally speaking, the reason that feels uncomfortable is because it usually comes with a lot of the upside and potential retracement.

You just have to understand that you don't get big industry catalysts often. We didn't even talk about the Treasury thing, right? We didn't go through that, but something that has the ability to shift majors as much as that in the span of a week probably isn't something that's short-lived. Number 1, like I mentioned at the beginning, it's the start of all possible types of intervention, and it's not the end of it.

So if anything else happens at any point over the next couple of months, they've already signaled that they're willing to do whatever they have to do to make sure markets continue to function properly. That generally is bullish for the debasement trade, given what that means. You're still early in the trend. The announcement was last week, right?

For example, when we bottomed off FTX, we pumped a little bit and then went sideways for a while. Within that sideways price action, BlackRock announced that they were filing for Bitcoin ETFs. You had a pump for a week—not even 3 days—and then it went sideways and fully retraced that before we ran into the actual parabolic move on Bitcoin on the back of ETFs and regulatory acceptance, to a degree.

This feels a lot like that in the sense that there's been a big shift in signaling, with lots of people positioning offside. You're super early in the trend, and it feels uncomfortable to buy so close to a top or whatever. But generally speaking, if you're going to take risk at any point, you take risk early and then remove risk.

The opposite.

Right?

People do it late because it's like, “Oh, this has been running, so it's going to keep going.”

It confirms your bias over time.

Interesting. That's why it's different this time. Last time, you had ETFs coming—they were going to buy our bags—and then it was like, “Saylor's going to keep buying our bags.” Here, it's, okay, they should be coming in to buy our bags, but we don't have this very obvious, semi-guaranteed buyer, at least for some period of time.

Which I think gives people the most pause. I agree. We didn't even talk about Saylor, but it was really bullish that he did not buy any Bitcoin during this. He's just a USD maxi right now. [laughter]

Yeah.

Just selling more and more MSTR.

I mean, he's got $6 or $7 billion of cash now, right?

He's completely fine.

I think it just topped the amount of converts they have, right? At least it derisks or takes out a potential whale.

Or he could start buying Bitcoin again, with that said—

Which he will.

Yeah, I'm really curious to see what he—

Yeah, STRC is in such a funny spot because now you can just short it, and what's your real downside here? There's just infinite synthetic selling that can come in. That's the same reason algorithmic stablecoins have difficulty repegging, because what's the benefit of holding from $98 to $100?

With shorts, you have infinite synthetic selling where it's like, all right, if he decides to deploy the cash and do whatever, I have some meaningful upside if it moves 10%, and/or I lose 2 cents on the dollar. The real way this synthetic selling gets blown out—not blown out, but closes—is if so much of it comes in and funding gets really negative, which you'd expect to happen at a certain point.

8. The Debasement Trade Is Back

But again, what's your real downside? I think he's got to work through a decent amount of these shorts. The hope is that if he works through enough of them, they sold at $98 and then they have to buy back at $100, and he gets a bunch of liquidity to sell at par.

I agree. I also think that not having a buyer you can point to can make people hesitant, but I also look at it as a fundamentally bullish thing because there is a fundamental macro bullish catalyst, like we talked about before. Your buying pool actually gets a lot bigger. It'll be more diversified, but it becomes a lot bigger if we're moving into this phase that we've been talking about for a while, right?

I'll just quickly give a shout-out to those who haven't read a bunch of our year-ahead macro market stuff. We talked about exactly this—the impossible dilemma around the Treasury, funding, and funding liquidity, and how this was all going to manifest.

If I'm being honest, I thought it would manifest sooner in the year. It was more top of mind then. But then you had the whole AI trade take off, debasement got pushed to the side, and that was no longer the hot thing, let's say.

I do think this debasement narrative coming back is a very, very important structural, fundamental bid driver for Bitcoin going forward. We haven't really had that, especially for most of this year. One of the most telling charts is looking at how Bitcoin and gold have been trading basically in lockstep for the better part of the last 3 months, bottoming at the same time.

There was that discrepancy between Bitcoin not playing catch-up to gold earlier in the year. Then, as both rolled over—because, again, the debasement trade was out of favor—you saw this reaction function, which tells me it's a very clear signal that a lot of this new buying pressure is going to come in from institutions and investors who recognize that the debasement trade never really went anywhere.

If anything, with wars and fiscal deficits, all of that has only gotten worse this year. It just wasn't something people talked about because AI dominated so much of the headlines. The underlying fundamentals here are still very much there; they never went away.

It’s just now shining a light back on them.

Yeah, I fully agree. Honestly, I think it’s the most bullish setup for a cycle that we’ve potentially had in years. You had COVID and stuff—great. That was kind of crazy. Stimulus and everything. 2017 was kind of crazy, too, with the first $20,000 touch and everything like that.

But from a fundamental standpoint, everything going on—the fundamentals haven’t looked better for the debasement trade than they do now, right? Every year that goes by, they look better and better.

But now you have a bunch of things, and I’m still not fully ruling out a Treasury-type Bessent SBR potential thing over the next year and a half to 2 years, while this administration is still in power before the 2028 election and whatever. I’m still not fully ruling that out.

I know everybody’s kind of forgotten about that, and it’s effectively priced at a 0% probability right now in the market, but I’m not ruling it out at all. Especially with Druck. You have the Druck cabal, you have Soros, you have wars, you have Bessent. You know, Soros was their boss—both of their bosses—for decades.

I wonder if Druck cares about privacy.

Paul Tudor Jones—all of them are buying crypto stuff. Paul Tudor Jones is buying back Bitcoin for the first time in a while, right? So it just seems like all the bigwigs in the know are kind of telegraphing this debasement trade to an extent.

Group chats are popping off.

Yeah, I’m sure.

I think D.O. [?] would love to see Druck trade FOMO for a day.

Warren Trell is trading. Oh, no. He’s on the Pump app. I haven’t really been keeping up, but I’ve heard incredible things are happening with Shirley on Pump.

Prices going up solve a lot of things. Not everything, but they solve a lot of things.

Close to everything for me.

All right, Jason. Appreciate you joining. Appreciate everyone tuning in. We’ll be back with more debauchery soon.