Timing Cycle Tops, AI Narrative Trade, and Bitcoin's Nation-State Adoption | Qiao Wang

Last cycle, everyone in the industry was dreaming really big, like crypto was going to disrupt everything, every sector on the planet. And this cycle, the entire narrative has flipped AI from crypto, and everyone has gone full nihilistic. So everyone is like jaded. And so that, like, that's why everyone's talking about the top, because everyone's jaded, everyone's playing meme coins and shit.

Do you think there are powerful products that come out of this? Or is it all— I mean, because it feels like the products right now is just shitposting. It's shitpost and then, and then buy my token, shitpost, buy my token, shitpost, buy my token. Are there products that come out of this or is the product humor and entertainment?

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All right, everyone, welcome back to Empire. We got rugged by Santiago. He is, I think, maybe in fundraising meetings for Inversion, or I don't know what he's doing these days, but we have a—

I got rugged twice by him.

Yes, classic.

I went on this podcast twice and I was expecting him and both times he didn't show up.

This is me just trying to replace Santi with you, Chow. That's, that's what's happening here. I'm kidding. I love you, Santi. But you should join us next time Chow joins. But Chow, how you doing, man?

Good, good.

Happy $100K day.

Happy 100K day.

Yeah. How are we feeling?

Nothing.

I know. Isn't that funny? It's— my dad texted me last night. He's like, 100K, like, woo! You know, and it's— I felt like a real— I thought the day that Bitcoin hit 100K, I'd be like, I don't know, I'm not a bottle service kind of guy, but if I ever was a bottle service kind of guy, it's like, you know, going to a club or a really nice dinner. I feel like nothing, I think, because it's so expected at this point. Like, it's so built into my mental model of where Bitcoin is going and has been for so many years at this point. So I think the same will be true when Bitcoin hits a million, or Bitcoin hits— you know, I think today if it passed gold, it would be around $850K. Today it's like, oh my God, if Bitcoin was at a million! But by the time Bitcoin hits a million, it's going to be so baked into your mental model that it actually won't seem that crazy.

Yeah, exactly. I feel exactly the same.

What is— by the way, I think most people know you, but I did see that— who is it? Kaito has their list of the best shit posters and it's all— yeah, you're the—

yeah, yapper. You're the only—

you're the only VC remaining. So kudos to you.

Thank you. I feel good.

Why do you spend so much time on Twitter?

Uh, honestly, like, when I tweet, I don't, I don't think when I tweet. I just, uh, whatever comes to mind, I'll tweet it out. It's like, uh, it's almost like a journal. So like, I'm, I'm like, I'm back-to-back meetings in the morning, like from, from 9:00 AM to 1:00 PM, and it's kind of stressful. And between meetings, I just come back to Twitter and shitpost.

Yeah. So I was at this, um, New York Times DealBook Summit yesterday where Jerome Powell said that thing about Bitcoin. And, um, but they— I mean, it's crazy lineup. It was like Bezos, Sam Altman, Jerome Powell, Prince Harry, who is like a total snoozefest, um, Bill Clinton, uh, like crazy speaker line. Honestly, the best speaker of all of them was this woman Alex Cooper, who runs a podcast called Call Her Daddy. And it's like, I mean, she, she just got signed by SiriusXM for $125 million. She's got— I mean, it was like the one podcast Kamala went on, you know, like basically, she's like the Joe Rogan for women, basically. Massive empire. She had by far the best talk at this DealBook Summit. And she said the same thing. Andrew Ross Sorkin was interviewing her and was like, how do you think about like— I mean, you're talking, you're posting about like sex, you're posting about like, like mental health. Like, how do you think about what to post? She's like, once you start thinking about what to post, you're, you're losing the game. She's like, you just—

she's—

because I guess she learned from basically Portnoy. Portnoy was— Dave Portnoy was the one who found her. She's like, the main thing I learned from Dave Portnoy is you can push the limits way farther than people think on, on social. Um, I think you've done a good job with that.

Just got to be authentic and just say whatever. Don't overthink.

Yeah. So, um, What is, what is surprising you these days? You said Bitcoin. So Bitcoin, I would say hitting $100K did not surprise either of us. What is surprising you these days?

I'm surprised that Solana is only still at $250. It should be like, at this point, it should be at like $500 or more.

And did you see, did you see Dan Tapiero's extremely bullish Solana take?

Oh, he is. I thought he was ETH Maxi.

Look at this.

I saw it. So Raul posted, yeah, SOL literally couldn't be a more bullish long-term chart. When it breaks higher, it's going to accelerate. And Dan Tapiero, who is a great, great macro trader and investor, he said, crazily, it looks like $2,000 to $3,000. So tell me more about that. Sorry, I interrupted you. Tell me more about why that is your biggest surprise so far.

Um, I mean, it's really just in relation to, to ETH. Like, um, for a lot of pretty objective metrics, Solana has already flipped ETH. I'm sure you're, you're aware of that. And yet the, the market cap is still only a one-third of ETH. Um, I like— at this point, I would expect that Solana to be close to ETH. But maybe ETH has this inflow from ETF. Okay, so, okay, the other thing that surprised me a little bit is actually the ETH ETF inflow, because over the last week or so, the inflow of ETH as a percentage of the market cap is already higher than the inflow for BTC ETFs.

So say that, say that again.

So I looked at the data this morning. So over the last 1 or 2 weeks, the inflow of ETH ETFs is higher than the inflow of BTC ETFs adjusted by market cap. Hmm, interesting. So that, I mean, it's not, uh, it's not that surprising, but it's like, because the whole, the entire narrative right now is, uh, you know, the election, that's going to be really good for Bitcoin because there's there is a fairly high probability of Bitcoin reserve. And then, you know, everyone is buying Bitcoin, but the ETH ETF inflow is actually higher adjusted by market cap.

Hmm, that's interesting. So what does that tell you? What does that tell you about what— tell me, I'd love to hear. I mean, I know your thoughts on SOL because you're excited about SOL, but tell me your thoughts on just ETH in general right now.

I mean, ETH was always going to come back, like, if the asset was always going to come back up as a result of Bitcoin going up. I think the two things that are— that has been pushing ETH up over the last few weeks, one is the ETH ETF. I feel like the buyers are mainly like macro hedge, like traditional hedge funds. That would be my guess. I don't know, I don't have any data points, but that would be your, your take on that is because it—

if you're crypto native, you're not buying ETH right now.

If you're a crypto native, you're not buying an ETH ETF, and you are probably not buying ETH either because the ETH is already pretty over-owned by crypto natives. So there's no net purchase if ETH among the crypto natives.

Interesting. Yeah. I mean, anecdotally, the new retail coming in, you know, I don't know how many texts you've gotten or— but I don't know how old you are. I would assume the younger you are, the more texts you actually get from friends, like the closer you are to, you know, maybe like college or something, the more texts. So if you're a 23-year-old who just graduated and all of your friends know that you're in crypto, I bet you get 100 texts. You know, if you're like 30, maybe you get 50 texts. Text if you're like, I don't know, 15.

Yeah, I don't have friends anymore. Like, I got like 5.

I wasn't trying to say you have no friends, but, uh, you know, I do think there's a thing as you get older, maybe your friend groups shrink.

Yeah.

Um, but actually, anecdotally, most of my friends who don't own crypto and are texting me now said, is it, uh, basically it's Bitcoin, SOL, XRP, and meme coins. Those are the four.

So they don't—

they don't talk about ETH, they don't talk about any of the other 2017 coins. There's no like, you know, Hedera or Algorand or IOTA, which by the way are all ripping right now. There is no— there's definitely no like, you know, they've never even heard of Arbitrum or Optimism or Aptos or SUI or any of those. There's no DeFi, there's no— they've never heard of Uniswap or Arbitrum, like Aave or Compound or anything like that. But they have heard of the meme coins. They have basically, you know, a couple, actually a few of my friends said, I want exposure to meme coins. Is SOL or XRP better? So there's not even an understanding that like SOL and XRP are not meme coins. And then there's this meme coin. It's, they just want, it's like Bitcoin or the meme coins. And I think people are grouping SOL and XRP as just like number go up tokens.

But what I realized a couple months ago was that Solana mindshare is definitely stronger among young people. Like, by young, I mean like early 20s, mid-20s maybe, than ETH. ETH is more like, uh, 30s, and Bitcoin's like 40s. Like, there's definitely some sort of, uh, generational divide between the, the top 3 assets.

Yeah, I mean, one interesting experiment that, um, so I don't have TikTok, but Mike told me to re-download Actually, I've never had TikTok, but Mike told me to download TikTok and Mike, Mike does— Mike doesn't have it either. But he said, if you want to understand the markets right now, he said, get off, get off Twitter and get on TikTok. And I'm sharing one of Mike's posts right now. But all of these posts are like this. If you go on TikTok and you search crypto, it's XRP, it's Algorand, it's Hedera, it's these dino coins. But also there's like, there's zero ETH content. There's probably 5% Solana content, probably 30% Bitcoin content, and like 60% XRP content.

Yeah.

So what else is surprising you?

Well, I guess the fact that they're talking about Bitcoin Reserve, it's kind of— I mean, this was going to happen at some point, but I didn't expect it this time. Like the fact that You know, the, the most powerful nation in the world is seriously talking about starting a Bitcoin reserve, and then the states are actually trying to front-run it. Yeah, yesterday I saw Florida talking about or something, and then for sure—

oh, Brazil was, uh, yeah, Brazil was talking about it. I think you saw Putin this week say that, you know, they like Bitcoin.

Putin— Russia probably already has Bitcoin. Yeah, like democracies, they need to pass a bill and shit, but the autocracies are— they're probably already front-running, um, the US.

Yeah, I mean, I think the first group that will really start to adopt this is, um, is, are the basically the BRICS nations. Um, the— it was really interesting. So most of the conferences I go to are obviously crypto conferences. I'm sure, like, I'm sure like you, um, but this New York Times, like, Dealbook Summit was a really interesting, I think, look into the zeitgeist of the general— not the general public, but like what the— what like the Fortune 500 kind of executive is thinking about today. And one of the big topics was, was like the BRICS nations against the US. And there was a lot of talk about, you know, tariffs. And, you know, I think, I think like tariffs were basically in every single conversation. But the BRICS nations got brought up a lot and the kind of sentiment in the room was like, look, these BRICS nations, which is— who's BRICS? It's Brazil, Russia, India, China, South Africa. What's the— South Africa. And then I think there's not— I think there's Iran, Egypt, Ethiopia and the UAE. I think there's like technically 9. But yeah, the, you know, obviously BRI CS are the 5 big ones. I think the sentiment is like they are going to go farther and farther and farther away from us and eventually entirely be entirely removed from the US dollar. And I think the way that they do that is by moving on to the Bitcoin standard. That would be— I think they will be the first ones to adopt this.

The BRICS, in terms of GDP per capita adjusted by purchasing power, not per capita, sorry, GDP adjusted by purchasing power is already bigger than the G7. That is a crazy stat.

Really? Are you sure about that?

I saw that stat, uh, recently. Wow.

Yeah, here it is. Okay, as of 2024, BRICS countries collectively account for approximately 35% of the world's GDP in terms of purchasing power. Parity compared to the G7's 30%. Interesting. Yeah. Look at this. BRICS expanded their share of global merchandise exports from 10% to 23% over the first two decades of the, the 20— the '20s. I don't know what we call this. The 2000s. Excuse me. Meanwhile, the G7 share fell significantly from 45% to 29%. That's, that's, that's an interesting stat.

Hmm.

What do you think?

There is a game theoretical race to like for every country to adopt Bitcoin.

All right. So let's talk about this. So Polymarket says 26% odds that Trump creates a national Bitcoin reserve in his first 100 days. You long or short this?

I have no idea. I have no idea. There's a— there's definitely a lot of optimism for, for Trump to sign some sort of executive order on day one. I don't know what's the probability of that, but people are talking about it.

So let me get your take on— I think I saw you tweet and then delete the tweet, which was some— something about the timing of the cycles. Um, and so I don't know if you want to share share your thoughts on that. But I mean, I tweeted this, obviously, obviously Bitcoin rips through $100K the day after I tweet this. But I said, gut says we're at a local top, not a cycle top. XRP nearing all-time highs. NFTs pumping. Bitcoin up 2x in 60 days. Enron launching a token. People saying hype. Hyperliquid is the next Axie. I just bought XRP meme coins. Good to remember that 20 to 30% drawdowns are common in bull markets. Give me your thoughts on like I guess just general market sentiment and market timing right now and how you're thinking about things.

Um, do you, do you, do you think there is a consensus that around the top at the inauguration, January 20th? Do you see it?

No. Okay, so here, here's the, here's the consensus. Okay, so the evolution of, I think, the consensus trade this cycle and the cycle top over the last year was basically— I think people are kind of following Chris Burniske into this mindset that like cycles repeat and the top will be October 2024. If you ask like probably 10 crypto natives, they would, they would have said cycle tops October 2024. Now it feels post-Trump. It feels like the mentality is, hey, Trump is going to do the same thing that the Bitcoin ETFs did, which pulls a lot of the growth forward in the cycle. And actually, uh, cycle probably tops— I mean, I was with 3 big fund managers last night at the Super— at the Superstate event. And, um, you know, all, all, all 3 of them agree. All 3 of them say, hey, look, cycle probably tops April, May, and then it's like sell in May, go away. And then, and then summertime is slow. Maybe if you want to like buy one last dip, you buy in the summer. We get one last leg higher, and then that's the top. And in the same way that like, I mean, 2021, it was like when the first top in what, March or April, and then bear, you know, pull back, big pullback. And then the last like exhaustion was like the meta excuse me, metaverse hype. That was when NFTs really went crazy. And then, and then that was the real top. So I think that's probably people's mentality right now. There's a count there. There's a counter, which is— so I think that's my mental model too, actually, as well as like, probably the first top is in like April, May, and then the— and then like, we get one last leg higher, and then, and then the cycle's over. Um, the counter would just be there are so many crypto natives now that everybody is thinking this way, and it feels like everyone's looking for a top right now. Every— you know, you remember in the last cycle, no one's talking about tops. No one's talking like, oh, when's the top? When's the top? When's the top? Yeah. So I don't know, what do you think?

I mean, so there, there is also a sentiment change, uh, from last cycle to this one. Last cycle, everyone Everyone in the industry was dreaming really big, like crypto was going to disrupt everything, every sector on the planet. And this cycle, the entire narrative has flipped AI from crypto and everyone has gone full nihilistic. So everyone is like jaded. And so that's why everyone's talking about the top, because everyone's jaded, everyone's playing meme coins and shit. But if I had to guess, the 3 big fund managers that you spoke with, Um, they all agree with each other, but in the end they're gonna try to front-run each other. So, so the top will probably happen before, uh, yeah, April, April, May, that would be my guess. So maybe in March. So, so here, okay, here's my base case. Um, we're gonna, we're gonna have a local top in late December, early Jan, because from my perspective, there is a consensus around January 20th as, as a local top. So the market's going to front run that, um, and then, uh, we, we dump for a month or two and then the final pump in March, maybe.

Because, because everybody is thinking, hey, May is the top. Oh well, I don't want to be the sucker who waits till the top. Everyone else is going to front run me. Let me try to front run them. That pushes it into April, March.

Yeah, even you remember last cycle? Last cycle, um, we topped in November 2021, but the 4-year cycle dictated that we would have topped in January, February the year after, and then the cycle topped actually topped 2 months before the 4-year pattern.

Okay, here's, here's, here's a question for you. What is the catalyst, though?

Because the catalyst in the last—

if you go back to 2021, you had rates, you had rate changes, you had the equities market, you had some things happening in the equities market. You had— let's see, you had Luna, you had Luna blowing up, you had the lenders blowing up, which causes FTX or which causes Three Arrows to blow up, which causes more lenders to blow up, which causes, you know, FTX to blow up. Like there was this like cascading effect, which I think you could liken it to in 2017. You know, the cascade that pulls prices down 80%, not 30%, was, was the, was the ICOs who all raised in ETH, and then they, they didn't have stablecoins to convert into, so they just sat on a bunch of ETH. And then as ETH went down more, they had to sell more ETH. And it was just this like really negative cascade from the, from the ICOs who had to sell off ETH. What is the cascading effect that happens here? Like, what is the, what is the, what is the trick, the needle that burst the bubble, you know?

The, the needle doesn't have to be anything. It could just be the, the market, uh, going too euphoric and people are, are taking money off the table. It could just very, very well be that. Last cycle we actually had a real catalyst. Uh, I think the catalyst last cycle was, uh, Jerome Powell, right, right, uh, hiking the rates in, in November 2021. That was the catalyst. And everything that happened afterwards, all the deleveraging, the FTX blowing up, these were symptoms, not the cause of the, um, of the bear market. So these were results of, um, the market crashing, which was in turn a result of, uh, rate hikes. But this cycle, there doesn't need to be any real catalyst, concrete catalyst. It could just be that the market is overheated and then people need to take money off the table.

Yeah, but taking money off the table doesn't doesn't drive prices down 80%. Taking money off the table drives prices down 20% or 30%.

Well, if we get a parabolic, uh, you know, top, then that can go down a lot, like more. Yeah, I don't think we'll see 80% down this, this time because we, we do have a lot more, um, institutional adoption than last time. So people might, like, we might, like, we may once again form a round top, around the top, and around the bottom. and the peak to trough is— might be way less than 80%, maybe like 30, 40, 50%. I have no idea.

Yeah, I don't, I don't, I don't see that happen. It's never—

that's never happened before.

Around the top, like the last time was the first top was actually around the top, and the first bottom, like if you look at last time, um, the, the one in, in May, April, May 2021, All right, let's look at this.

Ah, this one. I see what you're saying.

Yeah, so the— and, and then the summer was a rounded bottom, um, 2021. 2021, I was actually pretty surprised that we had a rounded top and rounded bottom. And I think that if that, if that happened last time, it's more likely to happen this time.

Yeah. You're saying prices just kind of sat— I'm not sharing my screen. You're saying prices just sat around here for like, you know, all of February, March, April and May. Yeah. Yeah. Hmm. Okay.

But yeah, and like, we're we're doing astrology here. Like, I have no idea what's gonna happen. Wait and see what— like, so first of all, I don't believe in 4-year cycles anymore. I think the most important things to, to watch for is— I think there's two, two important things to watch for. One is sentiment. Uh, is the market going to become really euphoric?

Yeah.

And that's super objective— subjective. And then the other thing is central bank liquidity, economic cycle. And I'm not an expert in that either. I'm just going to watch like Druckenmiller's interviews and shit like that.

Yeah, that's all you have to do. All you got to do is just copy trade Druck.

Yeah, yeah, exactly.

All right, maybe take me— let's talk, let's talk non-astrology. So there are two— I've seen, I've seen Imran, obviously your co-founder, tweeting a lot about AI agents. You mentioned before the podcast, you're like, look, I'm not that deep into the AI agents. I would say you are deeper than most and nobody's actually that deep. Maybe if you're like running virtuals or something like that, but it does feel like that is the topic du jour right now. That is the narrative. It feels like crypto is kind of in love with agents right now and the agent sentiment feels like it's at an all-time high, not just in crypto, by the way, like even outside of crypto, agents feel really hot. So you've seen, you've seen GOAT, you've seen social media influencers like Luna, you've seen venture funds like AI16Z, You've seen launchpads like Virtualls. You've seen trading. What's the name? Spectral. I've seen Imran tweeting about Slopfather. I don't know if they're like a port co of or in the—

Yeah, they're in the Discord.

Yeah. So I don't know. ETH Global. I saw some data from ETH Global. They had a big hackathon at DevCon, 713 projects submitted, and AI agents were the number one thing that people were building. So give me your take on just like, yeah, AI agents in general. I'm curious to get your thoughts.

I think 90% of it is a narrative trade. Like, the price going up doesn't mean there's necessarily something real happening. I think there's probably a few teams that are very good that are building AI agents. So Imran, for example, talked to the founder of AI16Z He said he's pretty good. Uh, he also thinks that Jeffy is pretty good. Jeffy is the guy behind, uh, Cerebro. Um, but I don't have firsthand information. And, and regardless, I think to build a really good product like this takes— this is going to take a lot more time than just a few months. So like, real products might actually happen like 2 years from now. Right now for me, it's mainly a narrative trade.

What do you think? Just generally, I mean, we talked, I think maybe 2 years ago we were talking about AI agents and that was your, that was your, or maybe a year ago, that was your take on like big crypto adoption would come from, from these AI agents. Is this what, like what you're seeing now, this is like the first like flirting with starting to be your, your thesis from, you know, a year or 2 ago?

No, not at all. 2 years ago I didn't, I didn't expect this to happen at all. Now that I think about it, so here's one potential thesis. So, you know, we've been experimenting with social tokens for many years, right? Like starting with, what's it called, Big Cloud. Remember Big Cloud from back in the day? And then there's Friend.Tech, and then there's a couple other experiments, like, but Friend.Tech and Big Cloud were the most prominent experiments, and they sort of both failed. Um, in hindsight, I think one of the big reasons, uh, that social tokens failed is because, uh, real people like you and I, we don't actually want a token associated, associated with our name. Like, we don't want an official social token. Like, you don't want an official token called Yano that you endorse and then you make your, like, followers, like, lose money. I don't want that either.

Someone, someone, someone created that actually on Pump. They put, like, my name and my face on a meme coin. I was like, don't, don't buy this. Yeah, right.

Yeah. And then yesterday, um, the, the Haktoa girl, she rugged the entire community. Like, yeah, like most legit people don't want a token. And I think that was the biggest impediments to this experiment. Now, AI agents don't care. Yeah, I just don't care if there's an official social token associated with them. Right. So like, it might just so happens that the entire, the whole social token experiment actually takes off with AI creators rather than human creators. So that's my thesis today.

Yeah, that's interesting. Do you think that, do you think these become in the next year or two? I mean, several years out, literally impossible to predict. That is also astrology, I would say. But in the next year or two, Do you think there are powerful products that come out of this, or is it all— I mean, because it feels like the products right now is just shitposting. It's shitpost and then, and then buy my token. Shitpost, buy my token. Shitpost, buy my token. Are there products that come out of this, or is the product humor and entertainment?

It's so hard to say. Like, right now the trend is, is, uh, is entertainment, but there might be other sorts of, uh, products 2 years from now.

Like Slop—

Slopfather Is it's daily news and it's kind of funny news.

Yeah. I mean, Mike's been sending me it too. He's— I think— I mean, it's gotten pretty impressive, honestly.

It's so— so if you think it's impressive today, like in 6 to 12 months, it's going to be even better.

So who— okay, so tell me about this team. Who is this? Who's creating Slopfather and like, how do they do it?

It's a 3— kids that are not very well known, but they're super autistic and into AI, and they ship this.

I actually think this product would be better if, if it was like 25 to 50% less degenerate. I actually think if it was like, yeah, 50% less, I would actually see this as like a potential Blockworks competitor down the line.

Okay. Yeah, I'll pass along your feedback.

I'd love to talk to these guys. That's interesting. Anything else in the AI agent world that you think is cool? I saw one called DAO Genie.

Okay.

That was basically— it's— do you remember Rune when he was talking about like the new vision for Maker? He's like, look, there's all this bureaucracy in DAO governance. What I think DAO Genie tries to do is it's like kind of cutting through the bureaucracy of DAO governance with AI agents that have just learned everything. Uh, no, not this one. Maybe it's this one. Um, where they basically learned every single thing about the DAO and about the, the delegates and about the governance members and about what people want. And, uh, it reads the Slack channels of the teams and things like that, and then it can, it can actually help make decisions inside the DAO. I thought that was kind of cool.

I, I'm open to any idea at this point, like Yeah, the thing is the surface is so large, like AI is very programmable and crypto is very programmable, and you mix those two together, there's going to be something interesting. So I'm open-minded, but for now, like, I don't— I don't— I'm not that deep in it. And in order to get deep, you have to be like— you have to spend a lot of time with a specific project, which I don't have the time for. Yeah, yeah, right now it's mainly a narrative trade.

Yeah, yeah, that's true.

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Let's pivot a little bit. Let's talk airdrops. So I, I'd say the, the airdrop of the year, it feels like, is the Hyperliquid airdrop. What are your thoughts? Because you guys have a lot of folks who are launching tokens in 2025? Like, what kind of guidance are you giving people right now?

The guidance, um, or general thoughts just on Hyperliquid and the token? And yeah, so when people say an airdrop goes well, what they really mean is the price goes up.

The price goes up.

Yeah, the real question is, why did the Hyperliquid token price go up and the other airdrops didn't? Uh, I was actually a little bit surprised that Hyperliquid token went up that much within such a short period of time.

Oh my God, Hyperliquid's at $13.

And I'm surprised because, uh, the centralized exchanges have not listed, uh, the token. It's only traded on Hyperliquid itself, right? And perhaps that's the reason why the price went up. Because when, when like this token— like imagine this token was listed on Binance, you probably wouldn't start at a valuation of, or FDV of like $2 billion. You would have started at like maybe $20 or something. And when you start at $20, there's only one way, it's, it's down. But Hyperliquid started at like $2 billion and it has, it has a number of narratives behind it. Like it's, it's first of all a layer 1 So that already puts the TAM at like, like 10 times, 100 times more. And then it actually has a lot of usage, has a great product. Like every Perp trader tells me that it is the best decentralized Perp product in the space. So the combination of these things is probably why the price went up.

Yeah. Do you think there's a— so people tell me this, I don't trade Perps, but people tell me I was at this dinner with a bunch of traders on Tuesday night and they're all massive hype bag holders and stuff like that. And they were saying, they're like, they're like, it's just a 10 times better product. And I was like, well, why is that? They're like, one, Jeff came from the high-frequency world, but two, it's a centralized product. It's like a completely centralized product. And that's just the trade-off they've made. They said, look, we, we can't build a 10 out of 10, you know, 10x better product in a super decentralized way. Let's build a pretty centralized product. And clearly people want that and they're okay with that. So I think— I actually think one of the bigger takeaways from Hyperliquid is not anything to do with the airdrop. It's about moving the app layer to more centralized products. And I think keeping the protocols decentralized, which has always made more sense to me, it's like, I don't think you need an application to be decentralized. This is— until you start moving Oftentimes there's like, you launch the app, then you kind of launch the protocol as well. But like, when people just start with an app, like, I think it can just be a centralized app. I think we're moving towards that world.

Right. There is a regulatory risk though. Like, how do you defend against the— like, there's no KYC, right, when you use Hyperledger?

No KYC. Yeah.

Oh, but speaking of, like, you mentioned that the team comes from a high-frequency trading background. And I was thinking, I don't know if this is true, but maybe they are one of the key market makers for HYPER, the HYPER token itself. Maybe that could be a reason why the price doesn't go down, because the alternative, like all the airdrops or token launches we've seen so far, is token gets listed on Binance and then there's like like traditional market makers. And I don't actually know how they price the token, but they generally— the combination of the exchange and the market maker, they tend to put the price at a very high valuation, right? So that is really problematic for the token price. So maybe the Hyperliquid team, they have their own internal market maker, and then they purposely price the token at a fairly low valuation.

You are just speculating on this, right?

I'm totally speculating. Yeah. Like, obviously this would be a little bit problematic from a regulatory point of view as well, but I'm totally speculating. I have no idea.

Yeah. So what do you think about the— I mean, is your— I think the general sentiment is that the regulation will change and that things will get more flexible. Are you seeing founders get more excited about just Or maybe not excited, but comfortable with launching tokens in the US?

Oh yeah, everyone is preparing for a token launch now.

Yeah.

Yeah. In Q1? Yeah.

Yeah.

And everyone is coming back to the US or at least thinking about it.

Yeah. If you were advising someone, said, look, I, Zhao, I can, I can build my company anywhere in the world. You tell me where to go. I'm going to— I'll go there. Where would you recommend they build?

Number 1 is New York. Number 2 is SF, Bay Area. There's no number. There's no third best.

I agree. To me, there's not even a second best. To me, it's New York or bust. Like, if you're a founder building a crypto company, like, unless actually, unless it has something to do with AI, then you maybe go to San Francisco. Anything else, go put that company in New York. There's no second best. Like, I hear crypto founders building in, like, I don't know, these random, I don't know, random cities. I'm like, you're just at such a disadvantage.

Yeah, yeah, exactly. The reason why I put SF in number 2, like, SF, Bay Area has pros and cons. The pro is, like, the entire culture of building. Like, that's great. Like, you have the peer pressure, the—

yeah, it's cool. It's cool to build things on the weekends, right?

Exactly. The con is they, uh, I think they're kind of, uh, like the groupthink is, can, can sometimes hurt because like last 2 years they've, the, the entire narrative in, in, in the Bay Area has flipped AI from crypto. And so the crypto founders in, in SF in the last couple of years, they felt like the peer pressure, they felt like, uh, like what the hell am I doing in crypto when everyone, when all my friends are building AI. And so a lot of them— so if I looked at our, the startups that we backed that gave up on crypto sometime in the last couple of years, they're universally based in, in the Bay Area.

Yeah, right.

I realized what the problem was is the groupthink. It's peer pressure.

Yeah, yeah, I agree with that. What is the most interesting, uh, app or product or company inside of this cohort of Alliance right now?

I can't share the details yet, but there's a couple of prediction markets that I'm really excited about. They're very different from Polymarket, and they try to solve problems like misinformation and academic fraud. So a market-driven approach to solve fraud and misinformation. It's very early, but I'm very excited about those ideas.

Where, what, what chains are they building on?

I don't know if they've decided yet. I don't really mind if they build on Solana or Base, like as long as they're building on a chain that has, that already has some.

Are those the two options in your mind? It's Solana or Base?

Those will be the top two for like, again, like where you build is case by case, but I think for most cases Solana and Base would be my top choices.

What are 3, 4, 5?

Um, like, if they say they build on Blast or Arbitrum or Optimism, I wouldn't mind. Or if they say, um, Sui or Aptos. It depends on the product that you're building. If your product is crypto-native, then you probably want to be on a chain where that has already a lot of users. But if you build a product that abstracts away the underlying blockchain, then you can build on any high-throughput chain.

Yeah. Yeah. What is the Is there anything that just from your seat running Alliance—

Number 3 is Tron, because there's a lot of stablecoin startups and they are building on Tron because Tron is where all the stablecoins is happening.

Interesting.

That's why Tron is number 3.

Interesting.

Even if they're building in the US?

Sure.

Yeah. Yeah.

What—

is there anything from your seat in just like running Alliance that feels very obvious to you that doesn't feel as obvious to the rest of the industry?

Industry? Yes, uh, there was one, and that was related to the US election. I thought it was really obvious to me that, uh, you know, one of the two candidates is going to be very pro-crypto. And I, and I, I thought it was obvious to me that the election was going to determine the fate of US crypto, and apparently it wasn't. And I thought it was obvious to me because I had hard data showing that in the last couple of years, the percentage of high-quality crypto startups that are US-based went from 80% to 20%. That was a crazy change within a span of only 2 years.

We went from 80% of the startups in, in Alliance were in the US to 20%.

That's right.

Wow.

And the other thing that wasn't— that I thought was clear to me, that wasn't clear to anyone else, that, that, that wasn't clear to most people in crypto, and certainly not anyone outside of crypto, is when Mark Andreessen went on Joe Rogan and mentioned that the whole, you know, debanking thing. I was like, do people really not know this?

Yeah, that— I mean, that was, that was fascinating to me too. That was like Whoa, the general— even like Elon tweeting about it, I was like, wait, you didn't know this? You didn't know this was happening? Yeah, yeah, but I think it's actually a good reminder that, um, thing crypto is about— crypto Twitter is about as early to things as you can possibly get because it does skew more, uh, Conspiratorial is the wrong word actually here, but it is very— it basically questions anything that has to do with that comes from like an— with quotes around this word— authoritative source. It questions anything. It's got this like natural defensive shield to it. And so it's very early to trends and it— oh, and it's— and people there are hyper online, like about as online as you could get. So it's those two combos. Make you essentially as early as humanly possible to anything that will eventually be a big trend online, I would say. And I think you forget how long the lag time can be being on crypto Twitter. Like the lag time here was, it was about 2.5 years, I would say. Like it was, I remember people tweeting, I remember like even, even who Brian Quintenz from Andreessen Horowitz posted like early 2022 saying, hey, a lot of our founders are starting to get debanked. That's like, that's like, that's not some random like anon on crypto Twitter. That's like the head of policy at Andreessen. And then it takes 2.5 years for that to become like in the public sphere.

So yeah, yeah, it's pretty weird how information flows. They took so long.

Yeah, I don't know. You know, in a way, information flows like hyper quickly, but it also takes— it takes a really long time to permeate the, the last like leg of information, which is going to the mainstream sources. Yeah, like I would say debanking hasn't even reached the mainstream sources yet. It's like there's like the hyper online crowd which is like 7— it's like this and that information flows like almost in real time here. But then there's like the last leg, which is like getting to the general online public, like Elon posting on D-Bank and stuff like that. And then there's like the last line, which is getting thinner and thinner and thinner in terms of like how thick the distribution is, which is mainstream.

Yeah. And also this ties back to the earlier discussion around the cycle top. Like, if you feel euphoric on crypto Twitter, you're probably still a few months away.

Yeah, you're a few months. Yeah, that's well said. Yeah. Will you, uh, will you sell all of your crypto when you think the top is in?

No, no.

Will you sell 10%? Will you sell 90%? Will you sell your shitcoins but hold on to Bitcoin? Like, how do you think about that?

I'll definitely sell all the shitcoins, but my shitcoin holdings is a small percentage of compared to Bitcoin. Like, I was actually thinking about this this morning, and I— it was really stressful because, like, what if I feel really strongly about the top? And, you know, it's just so hard to sell Bitcoin. Like, I've held this shit for, like, so many years. It's really hard to sell something that you've held for so many years. Uh, and on the other hand, I feel kind of overexposed to Bitcoin, so You feel overexposed?

You feel overexposed to Bitcoin?

I feel very overexposed to Bitcoin.

What else would you buy?

Um, like, if Bitcoin is really euphoric, I would, uh, I would probably hold some cash, raise some cash.

Ah, yeah.

But yeah, so like, I, I actually think that Bitcoin is in a supercycle. Like famous last words, but Bitcoin is in a supercycle. Crypto is not. The alts are gonna, um, I think in— I feel like in the medium to long term, alts will underperform Bitcoin because right now we're really— we're seriously talking about Bitcoin National Reserve.

Yeah, that was the other big topic from this conversation last night, um, was I think the consensus is most folks are incredibly bullish on Bitcoin and not bullish on really anything else, I would say, right now. And there's this idea that this could be the first cycle that we are— there's a strong divergence between Bitcoin's outperformance and the rest of alts running.

Yeah, I mean, we have to be specific with our time horizon, right? Like, within the next, uh, 2 to 3 months, if Bitcoin keeps going up, then alts will outperform. Bitcoin at this stage of the cycle. But medium to long term, meaning time horizon of 1 or 2 years to 5, 10 years, I could totally see Bitcoin dominance go way up.

Yeah, I mean, to me it feels inevitable that we get a strategic Bitcoin reserve. And I think once you get that, like, Bitcoin just goes parabolic, I would say.

Yeah.

I just don't know when that is. Yeah. Good chat, man. Good chat. Anything, anything else you're thinking through? Oh, I'm curious to get— yeah, do you have any takes on why Hedera and IOTA and, you know, Algorand?

I think the answer is just that the normies, they come to— they're coming back and they're using centralized exchanges to trade the coins. And then our centralized exchanges, there aren't that many. Their options are limited, and just so happens that Hedera and IOTA is one of them. And then they also feel some sort of brand familiarity with those coins, like these coins pumped in the past, why can't it pump again? So they buy the same coins. So it's really like a combination of brand familiarity and the lack of options, which turns out to be a good thing.

Yeah. Yeah. My take is you close your app and then you come back to it and there's a massive cohort of people who bought things in 2017 and they've just closed their apps and now they come back and they look at their phone and they say, holy shit, my Hedera is up a lot. And they say, let me buy some more Hedera and let me tell my friends about Hedera.

Yeah. Yeah. These are the OG meme coins.

Simple as that. Um, cool.

Cha, anything else we missed?

Um, I think, I think it's just important to stay relaxed. Well, it's, it's hard to stay relaxed, but try to stay, uh, um, I don't know, unemotional. Yeah, during the next few months, because it's gonna, it's gonna get stressful.

Yeah, we have, uh, it's funny, we have our monthly all-hands. We've like a all hands every month at Blockworks, and that's, that's like the topic of the month that Mike and I are talking about is like, just keep, keep calm. FOMO is— we have this saying at Blockworks, it's be the line. So in bear markets, you want to be the line, and like, you're not actually as bad as your metrics might say, because— but in the bull markets, you're not actually as good as the mark— as the metrics say. So you just want to like, just steady, be the line. And that relates to like how you think about your company and how good you are right now. But also, really, I mean, like everybody's— I mean, we have record month at Blockworks in November, record quarter at Blockworks, all-time high in revenue, all-time, all-time high everything. And like, I'm sure all the companies are seeing that right now.

If you are—

but like, it's not— you want to, you want to calm your ego a little bit, but it also means calm your mental state. Like, don't, don't have FOMO around every coin that's not going up. Yeah, yeah, it feels like— I feel like in these markets, all the coins you hold are not going up. And all the coins your friends hold are going up a lot, but just remember that's not the case.

Spot on.

Yeah. So, uh, when's your next cohort?

Uh, February. So February, I'm swamped in interviews right now.

Nice, nice. Where are users coming from, US or all over?

All over now, and quite a few in from, uh, SF folks, so they're coming back. Nice.

Cool. Ciao. Pleasure, man. Always enjoy chatting.

Likewise.

Hey everyone, thanks for watching today's episode. Just wanted to quickly thank today's title sponsor, SKALE. SKALE really is one of the best chain experiences out there today, and I've used so many different chains. There's a reason they are gaining so much adoption in both gaming and AI use cases. Hit the link in the show notes to explore the Skale ecosystem.