What Cryptos Could 10X in the Next Bitcoin Bull Market?

According to you, the next bull market will be led by projects at the intersection of onchain and traditional finance. Can you explain what you mean by that? >> Yeah, absolutely. I I find this crypto winner so interesting because in previous crypto winners, we didn't know what would drag us out of it, right? In 2018, no one was talking about DeFi summer. It hadn't entered our mind yet. In 2014, no one was talking about Ethereum. In 2022, no one was hoping for an ETF. We couldn't see what was going to drag us out of the bare market. The really unique thing about right now is we could see it plain as day. As you mentioned, it's uh the intersection of onchain and traditional finance. And the reason we know that will drag us out of this bare market is that one, it's already happening, right? Stablecoin AUM is up significantly despite it being a bare market. Tokenized stocks are growing something like 600% a year despite it being a bare market. JP Morgan, Vanguard, Black Rockck, every major firm is hiring into this space despite it quote unquote being a crypto winner. So we already know people are positioning this way. And if you look underneath the surface and we could talk about this, you can see a few projects that are the green shoots of this bull market. You're looking Hyperlid, you know, up 100% plus uh on a year-to- date basis, printing significant revenue. Hyperlid is a great example of onchain and traditional finance, right? It's a a decentralized exchange increasingly serving real world assets like oil, silver, and the S&P 500. On the other end of the spectrum, you have a company like Robin Hood, which launches its own chain and immediately gets to scale. I think the world wants all assets to be tokenized. The world wants finance to move over blockchain. And any project that is focused on making that happen I think will do extraordinarily well over the next 12 to 24 months. >> Basically Robin Hood and Hyperlid are at the center of your focus for opposite reasons. So they sort of look at the problem from two different uh perspectives. >> That's exactly right. That's why I use those two examples because it's fun to see. We have a we have a shared goal which is all the world's assets, stocks, bonds, crypto assets, private funds, preIPO shares, futures options, etc. All of that wants to be on chain. And you can approach this from either side. You know, Hyperlid is native to the crypto ecosystem. Started trading pers on crypto assets, but that technology can be applied to traditional assets. And now more than 50% of their volume is traditional assets. I think that's a great example. There are other examples you can think of. Ono, which is a cryptonative service providing tokenized equities, right? That is crypto moving to finance. But my point on Robin Hood is you can move the other way. Robin Hood of course is a traditional brokerage. They've been crypto friendly from the start. Their CEO says all assets are going to be tokenized. They're positioning for that. But what you're seeing them now is really make that jump, right? Launching their own layer 2 blockchain, Robin Hood chain, integrating with Morpho and Ono and uh other sort of DeFi apps to really create this new uh onchain financial service. This is what you see in any technological revolution, right? You saw Amazon embrace online shopping and Walmart embrace online shopping and they sort of met in the middle. Um that's what I see happening here. They're going to be a lot of winners. It's not just going to be Robin Hood and Hyperlquid, but I think those are perfect examples of different ways you can approach this. You mentioned a few DeFi tokens such as uh Uniswap, such as Morpho, such as a as examples of um improving tokconomics. So basically, investors should look at that type of tokconomics uh when they're going to make their bets for the next bull market. uh can you explain a little bit better what you mean by that type of tokconomics? >> Yeah, absolutely. So, if you think back to like DeFi summer and maybe the last four or five years, the big criticism of crypto-based apps are yes, they can attract a lot of users. Yes, they can attract a lot of activity, but for a long time, none of that flowed through to the token holders. You can think of unis swap becoming in many cases as big as coinbase from a volume perspective. But the original setup of the unis swap token. There was no fee switch. There was no buyback and burn mechanism. There was no way for activity on unis swap to translate into a higher value for the uni token. Largely because under the previous regulatory regime that was effectively illegal. if you captured value, the SEC deemed you a security and sued you and that was a challenge. So, they didn't. But that's changing, right? Hyperlid is sort of this beacon showing you how it works. And the Hyperlid platform, 99% of the revenue generated goes to buying back the Hyperlquid token. That's why it's the best performing large cap crypto asset in the world over the last year. and everyone sees that the market is rewarding that. The interesting thing I was pointing out is some of these projects which previously didn't have value capture now do right unis swap increasingly capturing value returning it to the token. A eliminated the separation of equity and token increasingly focused on token value capture. Morpho also improving its tokconomics although it has a different view sort of of what to do with this. There are other examples you can look at chain link going from you know no revenue sort of acrruel directly to the token to improving that over time. I think investors will have a really unique opportunity to buy these assets at low valuations because the market hasn't rewritten them and reunderstood that they're now capturing a lot of value. They now look more like stocks. You can now value them on a price to earnings ratio. I think most of those assets are dramatically undervalued and I was trying to call that out in the in the piece. I was talking to Scott Melker a few weeks ago and when I asked him about this he said that according to him what matters the most in crypto as usual is just narratives and tokconomics uh don't play a big role in determining the price action of a token. So he's just saying that um Robinood is great for Ethereum because it creates a narrative that will eventually benefit the Ethereum token because of the narrative. But tokconomics according to him don't play a big role compared to narratives in crypto. What is your response to that comment? >> Uh you know Scott's a very smart guy. I agree with that comment for the mega caps of crypto. So I don't think tokconomics are the primary driver obviously of Bitcoin. I don't think they're the primary driver of Ethereum. I don't think they're the primary driver of Salana. Once you get into these apps where you're talking about valuations that are a billion or two billion or three billion, when you're not talking about monetary premium, I actually think tokconomics matter a great deal. I think Hyperlquid is a great example of that. I think Uniswap's response to improving tokconomics is another example of that. Um, so I agree with Scott for the large mega caps. I don't think those are tokconomic driven at the moment. Uh I disagree or I I I actually would bet that he agrees with me that for these smaller applications um tokconomics really do matter and there's going to be a focus on revenue and valuation in that space uh to a much bigger degree in the next bull market than there has been in the past. >> Yeah. You even mentioned that according to you a hyperlquid token could double in price and be still fairly valued. How how do you come to that conclusion? >> Yeah. Well, on a on a circulating supply, it's its market cap is relatively low, right? You can talk about it trading at a PE of of of 16 or 17. If it traded a PE of 30, would anyone blink, right? That's a that's a normal PE for a fast growing, not even that fast growing. I mean, that's just a normal PE for a price to earnings ratio for a fintech. And if you have a fast growing fintech like hyperlquid and one that has a huge amount of the market that it could still take that would be a very normal valuation. I think it's sort of been constrained uh by people's concerns sort of about previous DeFi tokens. So I do think you could double it and it it would still look relatively fairly valued compared to traditional fintech companies. Now, of course, people will note circulating supply is not the same as fully diluted supply. I think there's some nuance in there that needs to be worked out. Um, but broadly, you know, I absolutely think, you know, I think Hyperlid could be trading at 150. It could be trading uh somewhere around there before you would talk about it being fully valued. And talking about uh talking about Robin Hood. So the big thing about Robin Hood is that it's a platform with a huge amount of users that is suddenly allowing those users to trade the 247 uh stocks and traditional assets on chain. You were saying that other major platforms are looking at Robin Hood and sort of uh thinking about whether they should do the same. But what I was wondering is why haven't they already done it? what is still preventing them from doing the same because it's it sounds like so so simple in a way so obvious that this is something that should be done yeah uh the answer is just that companies are slow uh you know I come from the ETF industry and today everyone does ETFs right every asset manager has an ETF business and they know that it's the dominant force in growth of their business for the foreseeable able future. But the thing about ETFs were until like I don't know 2011 that wasn't true. ETFs had been around from n from 1993. Uh they had been growing for two decades. People inside the industry knew that this was the future. And yet large asset managers because they were stuck in their ways because they were stuck in sort of the innovator's dilemma couldn't get beyond their existing system to launch this new thing. I think the same thing is true here. The reason Robin Hood has been able to move so much faster than other made many other platforms is it's sort of built into their cultural DNA. For one, they've already been a disruptor. Right? When Robin Hood first came on the scene, they were the first people to stay. people will want to trade on their mobile phones. That was heresy at the time. No one believed anyone would want to trade on their mobile phones. And they entered the market, they were used to disrupting the status quo. They've also been sort of crypto friendly from the beginning. They were one of the first brokerages to add crypto. So, they in the right cultural situation to be first here. But I do think that now that they're having the success, now that it's translating into better stock performance for them, every major brokerage is going to have to ask themselves, should we do this? And they won't all do it at once. You know, some of them will be very conservative and take a very long time, but I bet over the next year, you're going to see some other major brokerages launching their own chains and trying to run this playbook back. >> Yeah. And you also said something that I found interesting which is that a lot of people make a mistake uh by focusing on market share instead of market size when they look at the potential of the crypto industry. So can you explain what you mean by that? >> Yeah. Well, we're still so early. I mean the the whole tokenized asset space is like $30 billion. There's $600 trillion dollar of assets in the world. So the market could 2000x, you know, in size. If the market's going to 20,000x, why are you worried about about market share? You know, Bitwise is a crypto asset manager, I share this stat all the time. Uh, Black Rockck came into our market and has a large ETF franchise. Am I mad about them winning market share? No, because my assets are up 15x since Black Rockck entered the market because they brought institutional credibility to the market. They expanded the market dramatically and were able to win our piece. So I I do think it's the case that this market is, you know, like 1% penetrated into its size, maybe maybe less than that. We're so early that uh people are misscaling this opportunity. It's it's a really large opportunity. I saw that um Chamath posted a post on X where he was uh sort of uh talking about what could derail the potential bull market that a lot of people are uh predicting for the near future in crypto and he pointed out two main problems uh for Bitcoin bulls. The first one is marginal liquidity would rather speculate in prediction markets and equity markets. Second is marginal energy to mine BTC is worth 10 20x if reallocated to serving AI tokens. So can you maybe address those two uh >> yeah points? >> Yeah, absolutely. Look, I think he's right on the first one. It's absolutely case that sort of the attention economy is reduced by what's happening in AI. They're attracted by what's happening in robotics. um they're more uh they're certainly distracted by all the other exciting things that are happening in the market and that wasn't true in crypto past. So that will make the bull market slower and more methodical for Bitcoin than it was historically. I think he's just right about that. The second piece about Bitcoin miners redirecting compute activity to the AI space I think doesn't matter at all. I'm not near-term concerned about Bitcoin security. Like I I I agree that we need to think about it long term, but the the uh the amount of hash rate is really significant. I think it's sufficiently secure. And of course, mining has a sort of self-correcting mechanism to adjust difficulty to account for the amount of compute going into that market. I don't think AI is going to suck up all the Bitcoin miners and all the compute activity in the world. I think Bitcoin will be just fine. So, he's he's right on 0.1 and that's one of the reasons this bull market will likely not have as much explosive upside as previous bull markets, but he's wrong on number two. It just it's it's like irrelevant. It's a cute statistical fact. Um, but it won't interrupt Bitcoin security, which is what he's getting at. When you say that you don't see the next bull market to be as explosive as previous ones, you mean just for Bitcoin or also those uh strong altcoin projects that um you you have been discussing? >> Great, great question. I mean just for Bitcoin, I think the altcoin like I think some of the applications in crypto are undervalued by a factor of of by multiples. I think you could see hundreds of percent returns in some of the uh strongest DeFi primitives, some of the new assets that are emerging. I think there's plenty of explosive growth in that space. Um it's just Bitcoin specifically and and look, I'm very optimistic about Bitcoin. I think it will generate a great riskadjusted return. Uh but it's a trillion dollar plus asset and it takes a lot of money to move a trillion dollar plus asset. I think it's just a slower, more methodical march upwards. But I do think Yeah. to your point these DeFi apps they're1 billion they're 2 billion they're $3 billion uh they could be 10 to20 billion and I wouldn't be shocked um so that's the kind of opportunity there's no guarantee but that's the scale of the opportunity that I see in that space time is running out for the clarity act uh I think that we have the deadline which is 7th of August and after that as far as I understand basically there is no chance that the the bill is going to pass in 2026. I was just watching an interview with Anthony Scaramucci. He was basically saying that if the bill doesn't pass then Democrats once they get back in power they will put another Gary Gensler in place and they will just uh start sort of rolling back the uh regulatory improvements that we saw in the last in the past months and therefore harm very much the industry. Are you not concerned about that scenario? >> I think there's there I have some degree of concern about that scenario, but maybe less than uh than Anthem. The the reason it's less is that I think the genie's out of the bottle, right? Black Rockck's largest ETF is now a crypto ETF. Goldman Sachs is hiring in tokenization. JP Morgan is hiring in the blockchain space. NASDAQ, NYSI, etc. are moving towards 247 tokenized markets. We'll still have two years under the current regulatory regime at a minimum, which is extraordinarily pro crypto, which is extraordinarily pro uh prediction markets, which is extraordinarily pro blockchain, I think the industry will be too big to kill uh two years from now. Um and so the the sort of Gary Gensler style Elizabeth Warren roll back just strikes me as extraordinarily unlikely. I think the analogy is to something like Uber. Uh Uber exists in a regulatory gray zone, but it got large enough that it could never be put back in the model, right? It it sort of escaped that degree of regulatory pressure. But make no mistake, the industry will do better if clarity passes. We should pass clarity. Uh if we do, I think it's the immediate shotgun start of a new bull market in crypto. And if we don't, I expect some volatility. But I don't think it's over for crypto because I think there's just too much momentum on stable coins and tokenization. You won't be able to pull those back in two years. They will have achieved escape velocity. >> And what are the chances that you put now on the passage of the Clarity Act at the moment? >> Yeah, I have really unhelpful comments which is um I don't know. Uh you know, I think Poly Market's at 40%. That probably feels about right. The thing about 40% is when people hear that they assume it's not going to happen. That's not what percent means. 40% means in four out of 10 cases it will happen. The best thing you can say for the Clarity Act is it has had a thousand chances to die and it hasn't died yet. Things that don't die and persist despite like a lot of existential threats often end up succeeding. So maybe I'm cautiously optimistic, but I don't think Poly Market has it wrong. I think it's like a 50-50 tossup and um and I guess we'll find out over the next handful of days. I was reading a little bit the posts by La Shin who is a very prominent journalist in the crypto industry. she was uh criticizing politicians from both sides for what is going on with the clarity act because she was basically saying that uh the reason why the clarity act is has still hasn't passed is partly the fault of the democrats in the previous administration who put the put gender there and start like punishing the industry in that way and the other hand on the other hand the Republicans are also to blame because Donald Trump played an incredibly extractive uh role in uh the crypto industry by launching his own crypto projects and profiting from them while other people were losing a lot of money. So uh what do what what is your take on this? >> I agree with Laura. I think that's a fair assessment of what happened. Uh my point on the Clarity Act is that it would benefit uh millions maybe hundreds of millions of people, right? What we should all want from the crypto industry is an industry that's innovative but also sound that provides new ideas but also consumer protections that has regulatory clarity instead of regulatory opacity. That is rules that are uh set known and understandable as opposed to vague and everchanging. So we should all be aligned on getting the Clarity Act through. That's the incredibly frustrating thing about watching this move through Washington is, you know, look, I think we should have strong ethics provisions affecting all politicians. But I don't think we should sacrifice the benefits of regulatory clarity and uh you know making innovation strong in the US and better protecting investors in the crypto industry on the alter of like small details about the ethics provisions. Uh so I agree with Laura. It's like a you know it's hard to be disappointed by Washington but this is pretty disappointing. I do I do still hold out hope that they will get it through. It would be better for people if it got through. The industry would be stronger, safer, and more innovative, and faster moving. There would be more job growth and less blowups. And in general, just to clarify your position, you think we are following a 4-year cycle pattern. >> Yeah, I think we we have uh I think that contributed to the pullback and I now think we're generally out of it. Bottoming is always a process. So, I'm not going to like plant a flag in the stand that says we won't necessarily go lower. I think that's possible, particularly if clarity fails. But, I think we end the year higher and I think next year is is a great bull market year for crypto. So, I do think we're in another bull market cycle. >> Thanks again for coming on our show. I hope to see you soon. >> Thanks for having me. This was a lot of fun.