E107: Arthur Cheong: There's Never Been a Better Time To Get RICH in Crypto

33:55But there's also, everyone talked about it, huge unlock happening in March. I think that sometimes there's some path dependency here. If that unlock happened at a time where market is very weak, in the short term that will cause some pressure but if the unlock happen at a time where market is actually very bullish I think it doesn't matter it's kind of what happened a year a year and a half ago a bit less yes everybody was like yeah there's the FTX overhang and all that stuff and the Noxana just pumped like crazy yes exactly back to what we were saying before when everybody is acknowledging something too much usually doesn't happen, right?

34:37Or it was already priced in. Yes. Actually, it's Chris Bernisky who was saying like the last two months, like probably the weakness in Sol. I mean, you're saying it's like the change in hands, but also he was saying these unlocks, they'll probably happen earlier than people think. And then when you're going to say, ah, now it's the unlock time, probably it's going to be done already. Yeah. It could. Yeah. How do you denominate your fund? In Bitcoin, Solana, dollars? We denominate it in dollar. In dollar, okay. Yes. Okay. Even internally for yourself to think, because we said before, the goal is to outperform Bitcoin, right?

35:14Yes. Okay. We denominate it in dollar, but yeah, our aim, objective is to outperform Bitcoin. And eventually, a combination of Bitcoin and other top crypto, an index of Bitcoin and other top crypto assets. You mentioned, Solana, with 50 % of kind of chances to flip ETH in market cap. What's your view on Ethereum? I mean, you told me we're not bullish on ETH. Why? Yes. I think that

35:46the way that Ethereum has been executing on the technical roadmap, in a way, they have never changed. But the problem is the market and the industry have changed. we are after so much experimentation and innovation I think that market is settling on the acceptable spectrum of the trade-off between performance and decentralization so I think I believe you just had Hasib on on the podcast right he published a great article a few years ago on decentralization actually matters less than you think it's actually more for censorship resistance not decentralization for the sake of decentralization so I think the question we should ask about when we talk about decentralization is is this level of decentralization sufficient for the level of censorship resistance we want I think that Sonar is getting there you know have a very obvious pathway to get there so if you're already sufficiently decentralized what you care about it should be optimizing on performance and Ethereum doesn't have a very clear path to get there it's pathway to right now is delegating all the consumer adoption, the usage and growth to the layer 2.

37:03That is the roadmap right now. But the key challenge of that is I don't think the success of layer 2 means that success get translated to the success of Ethereum, at least not on a one-to-one basis. When you look at the logically right now, at least, you know, yes, you have the blobs, the blob fee are increasing, but most of the fee captured by the layer 2 they are only transferring a very small percentage of that to Ethereum so that's a very fundamental part of it I agree also that those are probably not what make any layer 1 go up you know it's ultimately it's actually really on strengthening the monetary premium of the native asset which is ETH itself but when you have so much layer 2 and even many layer 2 especially I think base is going to enable account abstraction using USDC to pay for gas fee.

37:59So in that sense, if let's say in the next two years, BASE become, or some other layer 2 become extremely successful on-boarded many users, they allow the user to pay for gas fee in USDC. So your attachment to ETH as an asset is actually very low. Like yes, the layer 2 technology is great. I use BASE, I use Arbitrum, et cetera, but why do I care about ETH? Yes, it's a base layer, but it's just like we're using internet, mobile phone. Do we really care about the backend infrastructure? that the further remote from the end user the less that the end user is going to care about that infrastructure and the native asset behind it especially if they don't even need to pay for gas fee so if going by the layer 2 route what that means is ethereum need to focus on strengthening the monetary premium of the if as an asset but yet right now they are also having a lot internal debate that is that the route they want to focus on and go down like don't care about the um you know paying for gas fee those doesn't matter but we want to continue to double down on the value proposition of if as the pristine asset collateral and the one with the highest monetary premium in crypto but yet a lot of the technical upgrade they push out kind of reduce the monetary premium of if as an asset there were some um they want to change the issuance of if you know they want to reduce the staking reward.

39:22This have not been implemented yet, but I think there were a decent number of discussions on the ETH research forum on they want to do that. And that actually will affect a lot of the DeFi applications and all this thing, but they don't really care. At least there's a decent number of the ETH foundation people that doesn't really think that matters. So even then, they have not been able to figure out what is the direction for ETH as an asset. So I think, and I don't see that changing. this debate has been happening for the past six months it's still a debate right now I have three things to say about that I'll start with Bayes you talked about Bayes I saw the other chart, obviously I have no idea if the numbers are true right, but it's kind of in line with what you were saying you're saying that Coinbase gets for every transaction or whatever every thousand bucks they get like 70 or 80 % Coinbase, and then there was another thing in between, maybe Bayes itself and then there was ETH, and ETH was like They also give it to the OP collective as well.

40:21Exactly, exactly. So basically it's exactly OP. So basically it was a Coinbase, like 70 plus percent OP. 15, yeah. Yeah, and then basically almost nothing is. And you're like, I don't know if this is correct, the numbers, but you're like, oh wow, okay. I understand what the problem. Then another thing I would say about Ethereum for me, that really confirmed the problem. You're saying Solana, they have almost sufficient decentralization for what's needed, right? It was, I think it was in Bangkok,

40:57doing the ETH conference in Bangkok. Yep. And there was this talk by Eric Wall, and he loved ETH, but he says, I do everything on Solana now. And he's talking to these ETH developers, right? So the audience is ETH developers. Yep. And then you listen, so it was really a great talk. And then you listen to, he's basically triggering them and asking them questions and you see the way they answer they're completely not on our same planet right yeah they're just like the answers make no sense might make sense we want to decentralize all that stuff but it's so not practical that then you realize oh man if those are the people who are basically building ethereum and the future even doing all this they're so out of touch right they're just like not practical yeah which is a mega red flag, right?

41:47And then when you said they don't really have a plan for like what they want for Ethereum. But if, as I said, not Ethereum. Exactly. So basically I had Gavin Wood from Polkadot, right? And it really reminds me, we talked for three hours and he's a real one, right like they build you basically invented solidity yeah yeah so but you can see and that's where i kind of like joined the the ethereum guys which is are you trying to build something that's really solid in terms of technology and therefore you take a lot of time and then the asset is like like the problem is it's all about incentives right yes and incentive is around money for a lot of people who come and build and so what i really felt with gavin was uh was that was um i was talking more about the marketing side because like we we know what we're building is really solid and so i you know i talked to the guy like he's obviously a genius and then i see the community was like dot is gonna do 10x whatever i don't know if he's gonna do 10x maybe maybe not but like it's so disconnected right yeah and so i really understand and and respect the big builders who are very long-term driven you have to right we have to understand the the incentives and the prices but like it's also very refreshing to see some people who are uh uh thinking about long-term right i mean the reason you can say is because they make so much money they don't give a fuck like maybe right but it's also like hey we're here with a certain ethos and so there's really this thing where I see for Ethereum where it's a mix of like I feel like they don't understand it's not practical at all but at the same time you can take one their side by saying hey like the people who've been there building since the very beginning I'm trying to build like some really solid tech should the price of the token is not the thing that should matter the most, right?

43:54No, yes, I agree. That is a good argument. It just means that if it's not a good investment. Well, that's fine. And I guess that's fine for most of the community member. And yeah, but yeah, I mean, and I don't think if you become a failure, I mean, if you still be successful by most metrics, it's just that it's not a, as an asset, it's not a good investment. Yeah. So you mean like it's going to underperform, which it's done already, right? Yes. or you mean like at some point because for me like the ecological question is what what does Yves become if Sol becomes bigger and I think it will be there so there's a few ways that the how Sol can flip Yves is one is just Sol is growing way faster and yeah just like Yves stay here or like continue to underperform like only go up like let's say when Bitcoin is going up 50 % Yves is going up 10-20 % happen over a few years and then Solana catch up.

44:53Another one more bearish scenario which is not our base case is actually Ethereum just keep going down and then Solana is catching up. That's not our base case. When you look at let's say DeFi TVR Ethereum mainnet still have the largest TVR that I don't think Solana can overtax that in a short amount of time. Yeah. But that is a current situation. We talked about base, right? You said you're on bullish ETH but your very bullish base why I think it's because they are able to leverage on the coinbase resource to really onboard the user base coinbase have more than 100 million registered user so that is a huge amount of user that they can tap on and actually when you look at the

45:48evolution of the internet you are seeing that this happened in both the Silicon Valley and the Chinese internet industry where everyone started where the tech mattered the most but eventually it becomes the distribution channel that mattered the most which is why a lot of the big tech company in the US what they do is they don't have to be the best in building the product, any good startup build it, they will just, if they found that that product actually have product market feed, they can immediately scramble a team. They'll build something even inferior, they have a better distribution channel and they can just acquire the team.

46:32So I think one good example is a lot of people hate Microsoft Teams, but actually Microsoft Teams have way more users than Zoom right now. Why? It's purely because of the distribution channel. They destroyed Slack also, right? Everybody was talking about Slack, but then you look at the charts and you're like, man, this is incomparable. Exactly. Microsoft team just have significantly a lot more users right now because of the distribution channel. So it's arguably not a better product but the distribution channel is just so strong that they are able to overtake the competitors. And I think that is what is going to slowly happen to crypto where the distribution channel just matters a lot more.

47:11And when you think about it, it makes sense because crypto is an open source technology. there's no mode in the tech itself because everyone can just copy your code and deploy something very similar so the mode should actually come from not the tech should actually come from the non-tech part of the business what are these kind of distribution channels that you're seeing now that could be huge in the future I mean Coinbase is one definitely what else? Binance is still one anyone who have a crypto wallet that are transferring stablecoin. Yeah, like all the top crypto wallets, they continue to be the top distribution channel.

47:55Unfortunately, they always have an issue on really monetizing it. But recently, there's been some encouraging sign. One of the crypto wallets called Exoders, they've just got listed. Yeah, that's when apparently they list at 1 billion plus market cap. I don't know what's the latest valuation. But that's pretty encouraging. And I know for a fact that Exoders is not the most popular wallet. Yeah, I think like, and apparently it's being used by the more OG community, like at least not the new user. It's all about Phantom, Metamask. Yeah. Yeah, so I had a friend trying actually Exodus, telling me, hey, what should I, like a friend like trying to do crypto stuff.

48:36And she was like, hey, what should I, should I download this Exodus wallet? I'm like, I've heard about it, but okay, do it. And then like, two weeks later the IPO right? 1.45 billion. I'm like okay interesting. And then she was actually trying to make a transaction on it but you needed ETH to do an ETH transaction or SOL to do like I mean if you're a consumer facing up I'm thinking if you are doing an IPO you're a consumer facing up you should never ask people to have a freaking asset to pay the gas fees right? But it's the case so I don't know it was kind of confusing to me I was like okay they can IPO even if they're just they're just taking care of like the UX that much I think it's the same as any other non-custodial wallet Exodos wallet is like a Metamask non-custodial wallet if I'm not wrong yeah so yeah I think that wallet continue to be a huge distribution channel yeah how do you express your bullishness on base when there's no base token our best way of getting exposure to base is aerodrome we published a thesis on it a few months ago we think that base is unlikely to have a token at least anytime soon and when you look at how the base ecosystem has been incentivizing the liquidity most of it is actually done via aerodrome which is why that base has been able to become the largest L2 by many by most fundamental metrics is they're channeling a lot of the incentive to build up the liquidity for all the assets for BASE via Aerodrome.

50:18So Aerodrome is the way we call the economic engine of BASE. Yeah. So to us, fundamentally, Aerodrome is the best way to get exposure to BASE. But empirically, obviously, virtual is the best performing BASE token by far. It doesn't even come close. Yeah. I mean, depends when you got in there, right? Yes. Actually, Aerodrome done very well at the early part of the year but recently it only done like a 3x I believe so not that crazy only yeah I mean when you compare with virtual everything looks pale right virtual done like a crazy like what 50 million to like 5 billion 100x in 4 months

51:02unfortunately that's where people are comparing of course because your money isn't based there's not many things you can buy right they can buy bitcoin if and then when you go down the token, the RC20, oh, you have virtual, you have aerodrome and that's not that many things a few months ago. How do you structure your portfolio in terms of layer ones? I mean, or main, you know, main large cap, Bitcoin, Sol, ETH and kind of project app bets to ensure there's proper risk management strategy? Yeah, so we go by sector and we do review and re-evaluate these sector theses consistently but right now we think that given the current market condition the best sector to allocate to are mainly just three layer one DeFi and AI so the other sector we are still paying attention but we think that right now the three sectors I mentioned just now deserve our capital the most.

52:07DeFi, layer 1 and AI. So layer 1 is a sector for you. Interesting. It's not like I have layer 1s and then I have some apps on the top of these layer 1s as a levered bet, right? Yeah, I think that empirically have not worked out that well. I think it's probably due to the stage of crypto. Like, even for Solana, you can see that only for very short amount of time, the Solana token can outperform Sol. True. And you need to nail the timing so well to really outperform Sol by investing in Solana project. Yeah. And their liquidity is just also not comparable. You look at the top project on Solana, their liquidity is just so far behind Sol.

52:52So we're going to talk about DeFi and AI, obviously. What's your main bet on layer 1s now? I think it continues to be Sol. Actually, besides Sol, the other one are not as obvious we we were quite bullish on NIR because we think that they have the potential to become the AI blockchain I think they are really working toward that direction and I think we have some early promising results but there's nothing that the consumer can interact with yet so I think that is something that we need some time to play out but not that much we are very selective when it comes to layer 1 because we think that there's only going to be very few winners.

53:35That matters. Yeah, I think SUI obviously have outperformed significantly in 2024. We miss it. I think that it's just something that unfortunately we didn't manage to pay enough attention to it before the prices went up. Absolutely crazy.

53:54Let's talk about DeFi. Yep. You were mega bullish on DeFi from July 2024 onward? Yes. Why? yeah again we also published a thesis on it i think it's a confluence of a few factors first of all people were really searching for real use case to invest in uh that was and when you look at it there's many different sector and area people have experimented on no other sector have as much staying power as defi people try metaverse nft gaming dao but none of them have make as much impact on the space beside DeFi. I mean, if you exclude layer 1 because layer 1 is a base layer. DeFi is still the use cases that make the most impact to the crypto space and continue to produce growth and revenue.

54:48So I think that that make it very compelling. The second factor is the interest rate cycle are changing. So yeah, we went from a significant interest rate increase to decrease of interest rate over the, since last year. and I think for the next few years, interest rate is going to continue to decrease as well. I mean, inflation dependent, but that's generally the expectation right now. Yeah, and I think that, you know, using the Gartner hype cycle analogy, we are right now on the path to enlightenment because we know what works, what doesn't work. So we are building from a much stronger foundation and when you look at, let's say, RFA as an example, most of their fundamental metrics is already above their 2021 all-time high.

55:32yeah and we are not even in like okay depends on how you view I don't think we are in a crazy phase of the bull market that we are like yeah like it's bull market but I wouldn't say we are in a very crazy phase but yet Aave has already exceeded its all-time high fundamental metrics yeah and you think this will be reflected on the price of the asset eventually eventually yes do you think that I have to challenge you a bit because DeFi is arguably very boring, right? Right. That's why a lot of people, I mean, for a lot of people in crypto who want always to chase the latest narrative, meme, coin, AI agent, DeFi is kind of this thing from last cycle.

56:10It kind of feels like. Yep. And it's not interesting. There's other things more interesting. Do you feel that you're biased towards DeFi because you did like, I don't know, 100 or 1000x return on DeFi last cycle? And therefore you have a bias of like, or how do you deal with like, you probably have a bias, right? because you did so well yeah so how do you deal with that thing especially knowing that i'm that's why i'm asking you the price of the for example ave needs to reflect the fundamentals yeah in theory yeah you say no it will happen right yeah but as we saw in crypto the fundamentals and there's more than just we're going to talk about that later actually there's more than just fundamentals that need to be at play for prices to go up yeah uh there might be some bias but i would say that we have actually kept it to a very minimal because uh the fund for a very long period of time for most part of 2023 to early mid 2024 is actually underweight defi defi was a very small percentage of our fund until second half 2024.

57:23So if you are biased, that means that we will always be owning a lot of the DeFi, but that's not the case. We identify the infection point where the valuation have just hit nonsensical rock bottom that is just doesn't make sense compared to everything else in the space. And that is where we start increasing our DeFi exposure significantly. So I think that kind of shows that we might have some bias because I may a lot of money in the past, but we are able to objectively evaluate that when it's not the best sector to invest in as well. Yeah. So, I think that's one thing that I think that kind of shows that our buyers are not as big as it shows.

58:04And I think second thing is, yes, it's a last cycle narrative. You know, people think it's boring. But when you look at the market participants, market participants are not all the same, right? There's always going to be the degen that want to chase a new narrative. They want to chase 100x, 1000x but there's also a very decent number of market participants they want to buy something of real value which is why Hyperliquid done so well I mean yes Hyperliquid is a combination of a perp dex and a dex with both perp and spot and a layer 1 but before the layer 1 launch it's mostly a perp dex and a spot dex and yeah it gives you more of the best performance in the past 6 months so I would argue Hyperliquid at least during the period where you have the best performance in terms of the DeFi element and the layer 1 element is probably 70 % DeFi 30 % layer 1 some people might disagree with me because they want the valuation ceiling to be higher but I would say that looking at a project 70 % is DeFi 30 % is layer 1 so you mentioned Aave before right fundamentals that are higher than previous all time high but price not you mentioned AeroDrome before to...

59:15How do you call that? Liquidity engine? Economic engine. Economic engine on base. Hyperliquid, obviously we have to talk about it. You said you didn't farm hype, right? No. That's the interesting one. Because obviously, I mean, it's their game and it's amazing for these traders who manage to make hundreds of thousands or millions or tens of millions of airdrop at launch. It's completely deserved. But the really interesting case is for people who didn't farm the hype token. Yeah. Both when it launched. Yeah. And which is what you did. And then what you also did was I kept buying, you said I kept buying hype on the way up.

1:00:02Yes. Which is what a lot of these guys actually also did. They got these massive airdrops. Actually I was thinking about that with Wiki. Yeah. He received like a really huge airdrop and he was like, I'm still buying bro. I'm still buying like I'm still buying I need to go buy more like and and it's really this kind of community of like literally

1:00:24autists who are like yeah it's so good yeah that I need to buy more so why did you buy at launch and kept buying on the way up we have been paying attention to the pub deck space for the longest time. And actually, you said on the last podcast, you said, perp dexes are going to 10x from here. Yes. But it was so, and I had like a few, I had, so my main bet was gains network. Like I was looking at the fees and all the fundamentals and nothing fucking happened, right? Yeah. And, and then, exactly, then there's this one. So, I think it's because people recognize that perp trading is one of the most profitable and largest business in crypto.

1:01:11I mean, in Binance, how much all the top crypto directives exchange make from all the pub trading. It's obviously probably one of the largest business in the space. And we are always hoping for a decentralized alternative to tackle this space so that power to the people, you get a real decentralized ownership so that the revenue of these exchanges doesn't just go to the owner, which is making a few people very rich, but there's probably be less than 10 of them becoming super rich and all of us are just paying a fee so but unfortunately none of the previous uh not on the other project until hyperliquid has been made be able to build that level of conviction and community to make people really believe in that dream until to this extent until hyperliquid happens so i think that when we see that we know that this business is have the the term is huge for this sector it's just which project can really make people believe that is have a real pathway to disrupt the central exchange.

1:02:11And I think when we see that Hyperliquid actually have so much believer and also a lot of the fundamental metrics, growing metrics to show for it, it kind of shows that, you know, there's a real chance that hype can disrupt the central exchange space. Yeah. So I think in that sense, yeah, you are looking at the ultimate upside. It's like 50 to 100 billion upside. Yeah. And also the layer one aspect of it. But that one, we actually discounted a little bit because it's still too early, it's hard to see how the ecosystem will play out. So for us, we're actually mostly underwriting the perp-dex thesis.

1:02:45So your perp-dex thesis for Hyperliquid is 50 to 100 billion bucks? The blue case, ultimate blue case. Just on the perp-dex size? So without taking into account any layer one or potential value ratio? That's very interesting. And also, I think crypto project is it can be you know not very scientific but there's always some mythical provenance on project will do a full fair launch to the community even though that you can argue VC bring a lot of good value there's a lot of good VC absolutely agree but if a project are able to just go against a trend going full fair launch it just gives such a provenance and the kind of social belief that's very hard to compete with that make people oh there's no VC that's going to dump on me.

1:03:35It doesn't matter what value they bring in. Obviously, the downside is, you know, the founder will have less capital to, at the beginning, to build a project. They have less institutional support. But if any project are able to go against the trend to forego all this thing, go for full fair launch, they will be able to attract so much, you know, community member. They'll just be, okay, I'm not going to get dumped on by any VC. And that is very powerful mental thinking that, you know, yeah, this is very powerful and even kind of deeper than that what we're talking about with the wiki was not only you know oh you know he's going to have vcs dumping on me I mean the vcs could come in later and then dump right but this is crypto ethos yep this is what we're all here for right yep and that's the that's what's so strong you're like oh like it feels so good that you pay you know wiki was like I need to go buy more and we need to go buy more and all the hyper liquid artists who made too much money with their airdrop still keep buying more.

1:04:40And it's not even about the money anymore. It's about the ethos and we finally have a dude, I mean a team of people who are doing things the right way, which is what we've been waiting for all this time. And we have just, we're basically going to vote with our money on like, that's what we're doing, right? When we invest, we vote with our money and we respect that so much that, I mean, where do I locate my money? I'm going to allocate to pretty much the one project in the space, right? And there's a few more probably in coming that are following the crypto ethos, which is the reason why we're here in this space.

1:05:15Yep, absolutely. Yeah. And I think one thing that really convinced people that it's the case, that the team really does care about the community, he's there to he's not just to look into cash out like 50, 100 million. He took the revenue that the protocol have accumulated to buy more hype all the time on the open market even right now right the hype assistant funds have bought like incredible amount from the launch to the beginning and actually i think that drove the a lot of the press action as well so right now the hype assistant fund is sitting on like two three hundred million of hype yeah i mean he was he was in your seat and you were saying if if i want to make money i just need to trade i don't need this money right and so when you're just listening something like that it's like I mean it was before the launch so we still had to see if it was going to play out but now everything basically plays out and you're like these guys are they just have the money already and they're in it for something way bigger than the money right so it's kind of a no brainer what's your so you said 50 to 100 billion bouquets just on the on the DeFi perp of Tasis yeah put on spot decks yeah not FDV right you mean FDV FDV okay okay but the hype FDV is not a concern for us because it's the supply will only come out to incentivize the growth of the protocol so it's not you know automatic unlock when investor vesting starts yeah it's a conditional unlock so to us we treat that very differently because like most of the supply is not going to investor or team it's actually going to incentivize the growth of the protocol so in a way that is like, you know, it's very different from like an automatic unlock.

1:07:01Yeah, from investors. Another one you haven't talked about much in the DeFi space but you're very bullish on is Athena. Yes. And the INA token. And for me, like, when I think, I had a guy last year on the podcast, they have an incredible protocol that makes so much money, right? Yeah. But my problem with it is the opposite of hyperliquid. Yeah, all these VCs getting in, like just two, three months before. And then like, I had some people that you know really well on the podcast who didn't tell me during the podcast, but told me afterwards, they were like outside of, they were like, I can't say, just before it launched, they were like, this is way too high valuation.

1:07:41And so it was the classic low flow, high FDD. I mean, then it got like punished by the market and right. So people could kind of get back in. But for me, it's still, I mean, you see the difference, right? You have Hyperliquid making so much money, but launched the right way. you have Athena making crazy money that launched not the right way and so tell me more about Athena yeah so I think Athena we we didn't invest in any of the private round at all you know we we bought a token for the open market like everyone else so I think that I agree with you you know obviously it's a trade-off right and I think that it makes sense for most projects to take the funding because you do need money to build to hire the best people to build a project you need money so so yeah that is still a very common path that most founders and I think one thing for Athena unfortunately is for the game plan to ultimately work you need decentralized exchange buy-in so and you know how all these people think because oh I am Binance I have to get in early else there's just no way you can get a deal done with them so I think it's almost like a necessary evil for Athena to raise from at least the central exchange to get their so that the central exchange are vested in the success of USD so which is why they can get their buy bid integration they can get a derribate integration I think there's a few other like BitGet they're actually working on the remaining top few as well so you need them to have a vested interest in your success so that they are willing to support you.

1:09:30That's how the world works. So I think it's a necessary rule. On the VC side, I think it's to give the exchange a signal that hey, we are a serious and legitimate project. So that the VC, the exchange are going to be willing to also buy into the idea. So I think that that is a very stronger merit than why it did not need to do a VC race. like a private race compared to most other projects out there. And yeah, the launch valuation, again, I'm not sure, or I don't know why the initial launch valuation was quite high. But yeah, I mean, market corrected. And then I think when it, at October, it came down to a very reasonable valuation.

1:10:15Yeah, and then that's where we, you know, get a lot more excited at that valuation. So yeah, I mean, ultimately investing is a competitive sport. So you have to be good at the game. So if you think the valuation is just too high and this is something you might want to award and wait for a better price. You might not get it but it's all about how you manage your investment process. So Aave, Aero, Ina and Hype. Yeah. I think that's the four most obvious ones. For DeFi. Yeah, for DeFi. The second vertical you like, I mean you said third one, basically layer one, but pretty much Solana, right? DeFi, we just talked about them.

1:10:53And now AI. why is crypto ai a must play for any investor in crypto yeah so i think there's a lot of fluff on the crypto ai part but what i found the most exciting thing is ai is still at a very early phase uh i mean are we gonna see agi this year i don't know like some seems like possible but crypto is the only space where people throw money on a very crazy idea for experimentation and I think that AI can actually accelerate faster with this kind of crazy idea like you know people are willing to throw millions of dollars to fund an idea on AI side on actually not just on AI on anything and AI actually benefit a lot from many different kind of experimentation to see you know what things work, what thing doesn't work.

1:11:50Beside the compute power, like, you know, what are, okay, we have a very good LRM, what is the best way to use them? And I think that, you know, if you look at a traditional company, they have been using it in a very predictable way of using these LRM, like, you know, AI chatbot, chatgbt, all this thing. But there's still a lot of things that we can explore to use such a powerful AI that they are not doing for, you know, probably it's illegal or it's not socially acceptable. Etc, etc, etc, etc. And the goals of government are paying a lot of attention to all these big AI companies because they are perceived as the next big sector that will disrupt the world.

1:12:26But when it comes to crypto, there's no restriction. You can experiment at anything. So I think that is why it's so powerful because you have with so many free experimentation of what you can use AI for and combine with money, tokenizing some of it, you're going to get some crazy outcome eventually. An AI agent is just like, you know, I don't even think, I think the AI agent in crypto right now have probably growing faster than the traditional AI agent. At least I have not used any AI agent on a non-crypto perspective. At least all the AI I use is still Chagibiti and all the stuff on the non-crypto side.

1:13:04But on the crypto side, you're starting to see a lot of different AI use cases. That's pretty interesting. I'm interviewing an AI agent in a couple of days. I'm going to KL. I'm going to interview Luna. okay so it's gonna be interesting nice it's gonna be interesting i don't know what to expect yeah and right now look at it ai xbt have 200 000 more than 200 000 for less than 350 350 like going crazy took me what six seven years to get to 180 000 and they have less than three months has 300 000 followers and have so much attention right now and no one can outtweet him because it's AI. Yeah. Yeah.

1:13:46Actually, one of the key one of the key theses of Kiao Wang from Alliance is social tokens, right? Social token was supposed to be like a big thing but it's very risky for a person to launch their own token but an AI agent will do it because they don't give a fuck. So like, the social token is actually kind of like being proven by the AI agents. Yep. I mean, these meme coins AI agents, right? It's a social token. Yes. Because they don't care. They just do, right? Worst case, it goes to shit, but they don't care. Just an AI, right? Yep. Whereas for us, it's different. Yep. How are you playing the AI narrative?

1:14:32You mentioned Virtuos before. Yeah, so... And Grass the other day you told me, right? Yes, correct. Yeah, Virtua is obviously the leading AI agent protocol. They are the one that kickstart the whole movement in terms of the infrastructure providing an AI agent infra for people to build on top. So that continue to be our top pick in the space. We also look at AIXBT, but we didn't do it because we are not too sure about the value accrual. I do know they are changing that but you know when we look at it there was just no obvious value accrual um so we think that virtual is a more you know a more more obvious one yeah so that is our main bet on the ai agent side what's your we also have a framework for for ai for virtual what's your framework on how big this can get how do you think about it i think it depends on how many successful ai agent that are developed using the virtual protocol if you're gonna get more and more successful AI agent like AIXBT that are developed building on top of the virtual protocol.

1:15:37I think 20-30 billion in the next one year is possible. So basically the same as PumpFun was how many of these Mimco and launch on PumpFun can launch on Binance, right? Get big, like 1 billion plus. How many of these AI agents can stand out? And actually I was seeing the last couple of days a lot of heard about that yeah people saying hey no AI agent broke through except AIXBT yeah and and and even this AIXBT is using a lot of technology that's outside of the virtuals yeah ecosystem they just use virtuals to bootstrap liquidity to be honest I'm not like super technical on all that stuff yeah but like how much do you think this is like further it's actually like something because you are betting on virtual as one of your two main plays for AI.

1:16:31How much do you look at that, right? So, I think some of it is true. A lot of the technology for the AI XPT is not, you know, from virtual. But I think that also doesn't overlook the fact that, you know, most of the AI technology are improving very rapidly. And virtual is also improving and changing very rapidly as well. Like, I believe that team have hired a lot of the new AI talent that just joined the team in the past few months. So they are going to make a lot of the improvement on the team. And sometimes, having a first mover advantage, if they can maintain the first mover advantage, it's just such a powerful thing that you capture the mindshare attention, all those things.

1:17:16So yeah, I think that makes virtual still very promising. yeah they kind of I mean they launched a few years ago right yeah but they kind of got all the attention almost overnight yes how is that possible and what does it say about the mental flexibility that you need to have as an investor and that the builders need to have as a builder right for example they're really good at that yeah that's how they can capitalize that much on that right because they're very flexible oh now we got the narrative we got kind of like right pace right time and we need the right execution. How much is mental flexibility important both as a builder and an investor in this space?

1:17:59I think it's very important, but that is where I think what separates the great and the average builder and investor is being able to have a good judgment to decide when to be flexible and when to stick to the causes. I don't think there's a scientific way to analyze it is really come down to the entrepreneur's instinct and judgment. Yeah. So being flexible at the right time, but also stay, stay through the course at the right time as well. How do you train judgment? I don't think there is a way, okay, there is a way to train it, but I don't have an answer to that. Yeah. I think, yeah, I think that's why Elon Musk is worth 300 billion and I'm not, right?

1:18:50I think you'll be fine why he's able to build 4 or 5 billion dollar company and why most other people cannot even build and there's a lot of people as smart as him if you measure by pure IQ education upbringing you know access to network but none of these people are able to build even one many of these people are not even able to build one billion dollar company let alone trillion right tesla is in the trillions and probably a bunch of other yes it's just yeah and also influencing the election at the same time this is look at how much impact i mean you can say it's negative or positive but none impact he has made is just insane one person i mean this is completely getting out of like this podcast but like just the fact of having so much further criticism on buying twitter this changed the whole freaking course of everything right and the dude already has multiple multi-billion and trillion companies to run at the same time but oh no i'm gonna buy that because i i noticed that there is something really wrong in the way these platforms work so i need to do something otherwise no one else yeah we'll do it yeah so i do that and now i become part of the i mean dodge department it's crazy and then there was a i mean it's not a meme it's actually a truth where he was saying he was playing the I forgot the game and he was like top uh Diablo yeah yeah exactly like you just like I mean actually it was the first few minutes on Joe Rogan he was just talking about that he was like yeah I'm actually yeah yeah I do that to relax I just play video games I play games to relax because I'm so focused I don't think about anything else yeah exactly which makes a bit of sense I was doing um the other day in Maltese I went to do some jet ski and I mean it's not is not extreme sport but like if you go really fast you need to focus on why you is dangerous right yeah i felt so good afterwards and i was like why do i feel so good because i don't think about any fucking thing else than just the jet ski right yeah so the whole thing makes a lot of sense i mean obviously if he says it probably makes a lot of sense right um that's but i think the descendants of the day like that's why he's worth 300 billion and I'm not

1:21:10grass yep what is grass to be honest I have not I've heard about it so many times but there's too many things to look at what is grass and why I'm not the best person to explain it but so one when you look at the valuable part of AI sector right now a big part of it is data why is because a lot of the public information that could be scrapped to be used to feed the train the LLM large language model has already been taken because they go through the entire public internet whatever useful information the Quora Reddit discussion the news like informative article all this thing they have digested used to train their model so almost all the model they have roughly the same access to this public information.

1:22:01So what makes Model B, LMB, better than LMC? They're moving to the private data phase right now. Do you have access to some private data that's not on the public domain that gives you a better understanding of the different information situation? And this is what Grass can provide. They use a very classic DP encrypted method. Everyone can install a browser extension. You can start using your bandwidth to script some of these, they call it live context retrieval. Some of the live data, it's not just stale data. And this data can be used for the AI, the LLM, to train their model better. And all these are new data, live data, like new videos, new YouTube videos, new whatever.

1:22:48And if you're doing it as a company, as an enterprise, a lot of these companies are actually restricting the API access right now because they don't want the commercial company to script details. But if you're as a retail, you know, yeah, you can click the YouTube video how many times you want, all this thing. So it's using a very classic crypto decentralized approach to collect all this data and, you know, and monetize this data. So from a fundamental perspective, it makes a lot of sense because without crypto as an incentive, a token, you know, it's very hard to have a group of few hundred thousand retail computers gathering all this data that are useful for AI to train their model on.

1:23:30It's just much more scalable, effective way of collecting all this data from a few hundred thousand different PC. And these data are valuable. The AI company are paying millions of dollars, like tens of millions of dollars for this AI data right now. You look at Reddate, you look at Quora, they all have a private data sales arrangement with the top AI company right now. So we talked about a few of the projects. I mean, the main project that you, I mean, the main kind of narratives, right, that you're, sectors that you're betting, a few projects by sector. We talked about judgment that is very hard to kind of train, but very important when making a decision.

1:24:10As an investor, the decision is, what do I invest in at what moment and with which size? Yeah. And before you mentioned this Swiss fund who said that the difference between the fund performance is 17x and it's 100 % due to that, right? Yeah. My judgment. And what do I take as a bet? Yeah. And what's the size at which moment? So I'm trying here to help people understand the few elements that you think about when you make a conviction play, right? Yep. What are the different elements that you need to see combined? Usually, that's what we call judgment, right? Yeah. But if you have to like speed judgment and saying, actually, I need to have these four or five or six elements more or less together where I have my aha moment saying, this is the next big one.

1:25:13I need to go in size. Yeah. What are these? I mean, I wrote a few here and then you can maybe I wrote fundamentals, mindshare, founder team, narrative. And then I also added macro context, bull market context. Where we're at, right? Yes, correct. Those are all correct. Those are all the factors that we look at. But the thing is, everyone will come to a different conclusion, even when looking at the same data and same information. Can you take an example? For example, Hyperliquid, they launch. what are the few key factors that you look at you say this is a no-brainer bet for us I wouldn't say it's a no-brainer but I think that what makes the risk-reward extremely compelling is I think the main concern for most people is oh there's a 1 billion worth of airdrop and people are going to sell the airdrop and historically most people do sell the airdrop but I think what most people don't realize is like those are why people sell most of these airdrop is because they don't really believe in the project um and you know they are farmed by these mercenary farmers for hyperliquid obviously it's hard to tell you know i think there are some mercenary farmers but apparently like you know it's getting very hard to farm the poise like at one like from 2024 all over like most of the people with a lot of poise are like they've been using hyperliquid since 2023 um so that reduced the the risk of you know all these mercenary farmers selling their airdrop and it's just when you talk to more people like obviously some of the biggest community members they actually buy more so this almost never happened for any other project with huge amount of airdrop people actually all rushing to sell the airdrop but this one you have enough anecdotal big community members who are quite wealthy they actually buy more token at launch so you know that it's a very different project and the airdrop is not an issue at like a 1 billion market cap.

1:27:10Yeah. So, I think that was a key factor that made us able to be comfortable that, you know, 1 billion market cap, new project, airdrop, but it's still presenting a very good risk-reward as an investment. Plus, it's, what was it, November 24, right? Yes. So, the thesis was, hey, the cycle is not over. We have all of 25. Did you look into the founder? or not that much I mean because there are not much out there I mean I did a podcast but like except that he's not much out there yeah actually your podcast I think was the best one to understand the founder because he is pretty you know focused on building I don't think he come out that much and I don't think he give out that much interview as well so yeah I think your podcast is the best source to understand the founder I think yeah the founder matters we know that he's a great builder we know that he was a very successful trader even before he built Hyperliquik so you know he's not there looking to make a quick buck.

1:28:10So, yeah, the founder is definitely top tier and, you know, there are so many PubDex I've tried and didn't really manage to take off. You know, Hyperliquid is the only one that really managed to take off to a very big extent. So, I think that already made a big difference. One thing that we talked about during last podcast together was, I don't remember the exact kind of term, but it was in the last cycle with the three Arrow guys, Dokun, SBF, They're out there so much talking that you have this confusion on followers and engagement with building capabilities and talent and all that stuff, right?

1:28:51And you use a word, a term for that. I don't know what it was, but we all kind of got tricked into that at some point. We're like, these guys, because they have massive following and massive engagement, they're the gods, right? This cycle, what I noticed was, and what I'm really using as to kind of judge one of these, actually, I wrote founder team, but one of these kind of elements is how much are they on Twitter? How much they tweet? And how low key is the founder? He's not, he's doxxed, he's there, but they're just locked in and they don't give a fuck about tweeting, right? but when they tweet there is really good engagement yes so that I was like the hyper liquid one I posted the picture of the podcast I'm like what the fuck is that crazy like the community you feel directly and another one Kaito AI right it feels like obviously a different very different project but it feels very similar 20 ,000 followers doesn't tweet much tweets more and more since like a month or two but very low key very humble just like and just locked in yep just and and previous citadel jeff was like this trader working for this trading firm so it's just there's a new pattern of like quality project yeah and by the way these are very profitable it's also a key thing right most crypto project not profitable yeah you can only do something really well with your token if you're profitable yeah you have more leverage yeah right uh and one thing that he said yesterday uh yuhu from kaito that they took example from Hyperliquid is what you mentioned before, the fact that it's really hard to farm points, to farm, to collect the points.

1:30:38He said Hyperliquid gave us a really good example that it's okay for us to make it hard to earn points. Yeah. And you have a combination of things where, I mean, for me, using the social media in a different way than last cycle might, I mean, actually looks like it's actually one of the key elements here. Yeah. No, absolutely. I think that actually, yeah, I think, yes, TwitterX is still the best platform for intellectual exchange when it comes to crypto and for ideas, information. But it's really about having the right amount of time spent there. If the founder is always tweeting, how much time he's actually dedicating the building.

1:31:20But if he just doesn't talk at all, but that also doesn't raise enough mindshare advantage. So there's the right amount of activities there that will be good. You told me the other day when we talked about, that we had to talk about US elections. The US election result with Trump acted as president changed everything for crypto. Yep. Why? I think that it's just because that we are going from an extremely hostile government administration from every aspect to potentially very positive treatment of the crypto. So I don't think that kind of structural change are fully digested by most non-US market participants and builders.

1:32:07Because it's very hard to imagine and these things that it's hard to price in because only people who have been through those process, been through those kind of negative and hostile treatment know how bad it is. If you've never been through it, you don't know how bad it is. So, imagine an industry that went from an industry that the government are actually actively trying to suppress to actively trying to promote. And we all know that, you know, if a government want to promote a certain industry, that always helps, you know, a lot of resources, you're getting so much access, you're not going to get, you know, blocked on certain initiatives and whatever.

1:32:49Yeah, we are going to get, you know, you're going to see adoption of crypto go up in almost every aspect institutional retail everywhere and you know the case of crypto as an asset class are just going to continue to grow because there's just a strong establishment endorsement right now of crypto as an asset class so that reduce the risk of many other you know be retail and institutional players in US to get involved in crypto and humans are very social animals like Mark Zuckerberg he went on Joe Rogan podcast he talked about oh you know all the previous censorship were just too crazy like you know it forced us to censor all the truth and I mean he probably felt that the whole way but he couldn't and he wouldn't dare to voice that out under the previous administration like why he chose this timing to do so because you're gonna get Trump as a president that say you know anti-wokeness and all this thing and yeah he finally felt that he's able to talk about all this thing yeah he has so many times to talk about all this thing he only do it now and which is just a human is just such a social animal that people only do it when it's actually socially acceptable yeah except one or two yeah except a few outliers mavericks yeah like which again like people can i mean hate on elon or whatever but i don't understand why like the guy is the one who just not only raise his voice but changes things and you have other people like Mark Zuckerberg who also worth I don't know 70, 80 billion dollars whatever probably could do something right but don't do it yep for me it's gonna be very hard to not judge the dude bro like really yeah I mean it's great people are like yeah it's great this is coming bro like really like I mean it's still better than nothing but yeah yeah no no yeah and I think that because US is still and likely will remain so the most powerful biggest country in the world by GDP is going to lead in many aspects and many other countries are going to follow whether openly or under the radar like to follow US lead in crypto so I think that that whole structural change will take time to play out so why the next 4 years which I still believe so 4 years of golden age I mean the price will go up and go down but in terms of actual industry builder this four year is a golden age.

1:35:17There has never been better time to build in crypto if you're trying to build a serious business serious project in crypto. This four year is a golden period. You called what just happened the impossible scenario. Why? Which scenario? So the other day we talked about that and you said man like everything that happened just now was kind of like the impossible scenario. it was not supposed to happen but it just all happened and now we have the kind of goal there oh yeah all year as well so yeah I think when you ask most industry participants one year ago did any of them imagine this is possible no one would say that so because it's just like so out of everyone's expectation you know like because crypto industry yes I mean there's been around for 7, 8 years 10 years it's still not a big industry you know compared to you know banking finance you know all the other energy industry in the US so no one would expect that crypto as an industry to be able to be so impactful in the US in the election and the politics and it happened and it all actually you know arguably it started from a handshake between Ryan Selges and Donald Trump they invite him you know there's some Donald Trump NFT thing and yeah And I know the Bitcoin Magazine CEO has been working with the Trump side for a while to build the relationship and build the bridge there.

1:36:50And that whole thing was less than a year ago. Donald Trump shaking hands with Ryan Selkis and then he attending Bitcoin Nashville, saying all the right things. It's less than a year, six months ago. Before that, the shift actually happened so fast. In the politics sense, it's extremely fast. I mean, he was smart doing that, but then he also felt the response on the other side, which is crazy donations and crazy superpowers from the crypto community. Nothing would happen without the crypto community being so responsive. Yes, of course. Yeah, but it's just that no one would have imagined this level of friendliness and support from a future US president.

1:37:34Yeah, and I think that they are quite serious. I mean, yes, Donald Trump is a businessman. He is a pretty opportunistic person when it comes to business. But I, you know, it's a public information. I think they were debanked from US as the entire family. A lot of their bank account was closed because, you know, of the indictment and all this thing. And not just Donald Trump, his family have their bank account closed. So they fully, I think anyone who went through that episode fully make you realize that this is why DeFi matters. Imagine that the former US president is on the receiving end of the banking restrictions yeah and it's happening more and more I mean even in UK you have like a very popular opposition party leader Nigel Farage he make a big hoo-ha drama that he got his bank account closed and he said that he was politically driven I mean Mark Andreessen on the drug end was so good where he talks about a choke point all that stuff but not only in the crypto context and the tech context but also political context right and like it's just eye-opening for a lot of people who didn't really understand even for me i understood like about the crypto side and maybe tech but i was like politically how screwed the whole thing is basically right and uh crypto is definitely one part of the answer for that yeah yeah absolutely yeah and i think i think one thing to add is like the impossible scenario is like not just like trump donald trump like putting a token promises that oh he's gonna and help the crypto community is that when you look at the actual personnel decision it's almost the best case play like all the important personnel that he appointed most are really pro-crypto and they did not do it just after Donald Trump is elected they've been saying that even before like Donald Trump is elected or like it was obviously pro-crypto like Scott Batson Harvard Lopnik you know the SEC chairman like you know he apparently was on the board of one crypto project, I think a reserve protocol.

1:39:42Yeah. Yeah, and it's basically kind of like a, what they call like a Silicon Valley takeover of government. Yes. Which is incredible for tech and crypto, right? Yeah. And it's also, I mean, obviously for us, we're very opportunistic. We were just thinking like, it's amazing for our bags. But like, if you're thinking about the US, we're not Americans, right? Yeah. How incredibly bullish this is for the US. Yeah. Because you have businessmen who understand capital allocation, value creation, who are going to take over a government that by definition, most governments are not deficient with capital, right?

1:40:19And are not incentivized to be. So it's pretty incredible. There was people saying, oh yeah, look, everyone is a billionaire now in the government. Yes. But yeah, you want people to be a freaking billionaire and have made so much money that they know how to manage money, right? To manage your taxes money, right? It's kind of logical. That was a bad argument, but it makes a bit sense. Or do you want an average Joe who just wants to not work too much? Or even if he works a lot like this, the entrepreneur who made billions of dollars is driven by something else than politics, right? Which that's what the fucking world needs to move forward, right?

1:41:02Yes, yes. I think context does matter obviously in a different situation where you have let's say a cronyism capture of the government by rich tycoon that is not a good thing but this is not the case it's not the case it's like they really felt like the country need to move in a different direction there are just so much things that are moving in the wrong direction they just felt the need to go and change it in fact I think for some important position they need to relinquish all their financial interests in the current company they manage they need to put it into blind trust all those things they're actually sacrificing a lot more money than financial gain they could have gotten if they're actually in the actual cabinet position I think Horvath Loatney he probably need to sell his ownership in Canto Fizzero to be able to serve as a commerce secretary yeah actually from a pure financial perspective you have less upside yeah you said that we have four years of golden golden years golden age golden age for builders yeah in crypto especially for US build us which makes a lot of sense but we are investors yep and in investing especially in crypto there is these cycles right yep how do you play because now if you listen to that you look at what's going to happen like man i need to be fully locked in for the next four years yes we probably will be right but we also need to understand that there's these cycles and kind of play them the right way yep at least not get destroyed like two three years ago right yep because no one wants that and it's too painful and we don't want that for the audience either.

1:42:37So how do you, first, do you think there is still a cycle to be played in crypto? I think over the years, I have learned to be a lot more, not make a very strong and high confidence forecast more than six months out. I think that anything more than six months away, no one can forecast with a high degree of confidence. So my view on whether there will be a cycle or not, it actually doesn't matter. as long as more than six months away. That's why I think. Because I think that there's just so much path dependency right now for the industry and for crypto. There's so many things that can happen that can make a cycle happen in one year, in six months, or we get a prolonged cycle.

1:43:17There's so many variables in place right now that you cannot even think that you would not even know this variable exists right now that can happen in six months. So any prediction with a strong level of confidence is just bullshit. I don't believe in it. But let's say, I think that yes, cycles can still happen because human nature, we still try to push things to extreme. So for example, just using the current information we have, I think there's a few things. One is the micro strategy. He's obviously doing a huge play, issuing more shares, issuing more bonds, issuing more preferred shares to buy more Bitcoin.

1:44:00I think you know we're probably going to need to spend too much time to explain the whole mechanism but essentially you can think of it as a leverage play on Bitcoin but he will not get liquidated so that's one good thing about his mechanism like you know his structure his whole approach in a way that he cannot get liquidated it's not like you know you have people doing leverage on exchange you can get liquidated so that's one good thing but if he push things to the extreme the best analogy is so for you that's not the best analogy but like he pulled forward the demand of Bitcoin so much let's say Bitcoin will hit 200k without MicroStrategy in 2 years but he make it happen in 1 year or 6 months so he pulled forward all the demand that will take more time to materialize so if we hit 200k in 6 months but that is probably not where Bitcoin should be if you go through a more organic approach it probably will take 2-3 years to get to 200k so that create the volatility the end cycle like if he go he buy bitcoin all the way up to 200 ,000 and then there is not sufficient demand to follow up at 200 ,000 we will come down from 200 ,000 to 150 or even 100 so that was a 50 % drop for bitcoin so that is still possible but it also might not happen like he it seems like he is not able to run this as much as he like to right you know he went from buying 5 billion of bitcoin a week to buying 100 million of bitcoin a week recently so there's just so much path dependency here and all these things is also very dependent on the macro condition does the inflation pick up the interest rate all those things so yeah i think that cycle can still happen uh and also very depend on a few things as well so one of these things is michael sayler yes the other one you said etf inflows yes that you track yes correct what does that tell you now i think now it's still a bit hard to tell because it's uh we just first week coming back from holidays, the year-end holidays.

1:45:58The flows are erratic. It seems to be, I would say, balanced. There are some months with two days with 900 million inflow, then you see some outflows. I would say it should continue to grow. I think last year, Bitcoin ETF was the most successful ETF launch in history. I think we are expecting the AUM to double again this year. I think the flows will be at least 1x to 2x of the last year from a net inflow perspective and in terms of AUM we should double do you still believe in the 4 years cycle I don't believe in a classic crypto 4 year cycle anymore why because the past 4 year cycle is mainly driven by the Bitcoin helping but with every subsequent helping especially the most recent one the marginal decrease in the supply are becoming less and less significant to the liquidity and the trading volume of Bitcoin.

1:46:58So it should not have that much impact to the Bitcoin price anymore. So logically, that classic crypto foyer cycle, even if it happens, it's probably you just coincide with the traditional business cycle, not the initial crypto foyer cycle. So what matters more?

1:47:19You mentioned liquidity cycle, right? Yes, I think that especially for Bitcoin, It has become a huge asset class that will be more and more influenced by the traditional market.

1:47:32With some idiosyncratic factor. Do you think that there is a big blow up this cycle? I'm not seeing it right now. I don't think we obviously constantly pay attention to this. I'm not seeing any of these right now. Not the obvious one. There are some small risks here and there, but not a major one. What are you thinking could be one of these? I think the one that I mentioned is just really Michael's strategy. Like, and I don't think it would be like a blow up. It's just like, he made Bitcoin price go up too fast and we retrace after he can't buy at the same pace. Yeah. So that's not a blow up in some sense.

1:48:14It's just like a price overcorrecting. Let's end this great conversation with the advices to newbies for the new crypto, for the newcomers in crypto who want to make it, who should they not listen to?

1:48:33I think this is really a first test of their skill. They need to be able to identify who they should not listen to and who they can listen to but still exercise their own judgment. That is one of the first skills you need to master to be good at crypto. Yeah, in terms of advice, I think really, I think that everyone needs to play to their own strength you know trading in the trenches might not be the best way to spend your time sometimes it can be building you know working closely with some project you know working full time in the space there's many ways to make it in crypto there's no one single approach like leverage trading meme coins whatever find the approach you are best at or like you don't even need to be an active trader like you can be a very good podcaster a very good influence and you can build a business.

1:49:25So there's many ways to make it in crypto. I think one key component of what you said, right? Use your own judgment. There's this concept of borrowing conviction. And it never fucking works. If I look at my own example, what I became really good at this cycle is I don't listen to anyone. I mean, I will listen here and there, I have my own thesis and almost each of my bets with my own thesis worked out really well except Gaines Network which did nothing which kind of went down 30 % but it had good fundamentals but it was shit play and Lido. Good fundamentals but shit play right? So I'm not even feeling better because they had good fundamentals I was just wrong right?

1:50:14But all the rest worked out really well the ones that didn't work out other that didn't work out well was a super i'm not gonna give his name i'm a bit mad at him but it's fine it's my own decision a super kind of famous twitter trader but everybody's like saying oh this is amazing like he gave me an entry on uh on a meme coin very early on okay and he was like oh yeah this uh thing is gonna go blah blah blah the kols will shill it but i didn't put much in but i was like mega rug like i put i put 10k in and i have like 19 bucks right so like this is like literally terrible right but i'm thinking what did happen i borrowed conviction of this dude i mean well maybe i got scammed i don't know right yeah that's another thing the games one i borrowed conviction from a guy who was very early in uh nexo very early in xrp yeah he was a mega luna whale had 250 mil went to zero but like he was very early and he was like he's the next luna so i put quite a lot in but i borrowed conviction i didn't even do a thesis for myself and it was shit right uh light lido i follow the djn spartan borrowed conviction right yeah we were also bullish on and so and then like so i just realized that someone and but this is probably coming through like the cycles right like don't borrow conviction if you're listening to someone you're not gonna make money it's not gonna work like it won't but obviously it's harder like you need to make your own research for me the podcast is an incredible way to make research right like I'm talking I have like the founder in the space I'm like for example I mean Jeff I was like this is next level Yahoo yesterday I was I mean I kind of knew it already I felt it through a few factors but like what they're building is next level like you can in the studio you're like wow so that's my research but like yeah the borrowed conviction is that it doesn't work.

1:52:08It doesn't work. Yep. Absolutely. You need to you need to build your own thesis. Sorry to say that. The the the the videos on YouTube promising you the next 100x or the next 1000x on AirAgent is not going to work. And let's just say even if you get lucky with this borrowed conviction once or twice or even a few times you're not going to be able to keep it if you are not able to get to a level to build your own conviction. no absolutely absolutely because you feel like you're special and you're actually not whereas if you build what we're talking about before you build your own conviction you don't borrow it when you get massively destroyed you're able to make it back though and then you kind of prove yourself it doesn't matter what you prove to other people no one cares about you anyway but like you prove to yourself hey i have the skills so i'm here for a reason i always said after last cycle where I got massively destroyed on Luna, I was like, people are like, you're crazy, you're going back in, all in, and I'm like, this is the ultimate test for me to see if I'm fucking dumb, if I deserve to play this game or not, right?

1:53:12That's it, right? Let's see. And like the ultimate test, okay, now I'm up a lot, but like the test is not that, is am I able to sell? Yes or not? Did I learn from not selling Luna, right? Did I learn? We'll see. So yeah, don't borrow conviction. how should the crypto newbies filter the signal from the noise? I think that most people are what they say are really determined by the position they are in so I think that's one way good way to filter like you know from his position like is it in his interest to say something like that or actually actually felt that way usually people say something that's beneficial to their position not because they honestly really think in that manner.

1:54:00That's such a good one. Basically read between the lines, right? Yes. The problem is you don't understand the game that is played when you're new. Yep. But like all the, for example, I have to say it because it pisses me off so much, but all this KOL game, right? Yep. Oh, yeah, they post a chart, but like they received 1 % of the supply for free. They're not trading. You think they're a trader, but they're not. Yep. The guy who is a great investor, great trader, is you and you're not doing all this shit online, right? You're not on YouTube with posting all these charts and you're not on Twitter doing all that stuff, right?

1:54:32And that's the hard thing. It's reading between the lines and there is very often or almost always a reason why someone posted something or why they did... I'm thinking about another example the other day. There's a guy who posted... There's this Pengu chart, right? and people who have Pudgy Penguin they got like a good airdrop and like you post about it right so I post about I do I post a lot about it and then there's this guy who did a chart where he shows he says hey look at the KOLs who are talking about Pengu at the bottom and regularly and at the top right and he posted the chart and with the profile picture of the different KOLs and I'm one of them and because my profile picture is orange it's very You see directly.

1:55:23So the first thing I see is I'm the only one who posted at the very top, right? Then I check the chart. I'm also one of the ones who posted at the very bottom. But then my process, which is exactly in line with what you're saying, my third process is this is all data. Like he's drawing a chart. But he could be thinking about I don't want to piss Kevin off. So I'm going to add no one is going to check this data, right? So I'm going to add these pictures at the top, but also at the bottom just to make sure Kevin is not pissed off, right? You always have to think about, is it the truth, which I don't even know myself where I posted, or is he like posting something for engagement, which a lot of people farm engagement, right?

1:56:12Or they're being paid to farm engagement, or that's because engagement and attention is money, right? Or do they want to not piss people off? So they have to be careful what they're saying, even on this podcast but to be careful sometimes what we're playing right so like this is a very hard game right to filter the signal from the noise because there is there is vested interest and all that stuff yep 100 % usually ask what's your biggest prediction for the next 12 months but you said you're thinking six month term so what's your biggest prediction for the next six months you want me to give a price prediction or whatever you want I mean if you want to give a surprise prediction take it people I don't I don't think it's as it's very productive prediction I think the the crypto adoption will happen even more like in a bigger scale than we expected we're gonna see more nation-state adopting crypto Bitcoin as a national reserve.

1:57:24Do you have some guesses on who it is or who it might be? Like big big countries or nation-states or like smaller ones like where there's Salvador and I think those with big sovereign wealth fund and yeah so Middle East yeah some part of Asia some part of Asia we're in. Sweet. Yeah. Thank you so much, Arthur. That was an amazing conversation as usual. Thank you so much for being like so humble, open and candid. Thanks for having me here. It's a pleasure as always. Thanks.