Arthur Hayes on the Logic of Going Big on ZEC: The Best Investors Must Engage in Mental Gymnastics

Original Title: Arthur Hayes: BTC Price Targets, Trading Advice, Bear Market and More
Original Source: CounterParty TV
Original Translation: Ethan, Odaily Planet Daily

Editor's Note: If you want to know how someone who truly "lives in the market" judges the current crypto world, Arthur Hayes is worth listening to.

Amidst the continued volatility in the crypto market, BTC fell below $100,000 and then dropped below $90,000 three days later, while ZEC set a new high against the trend under Hayes's "continuous long calls." On November 17, according to CoinGecko data, ZEC's market cap exceeded $11.7 billion, ranking 15th in the cryptocurrency market. At the time of writing, ZEC is now trading at $609.

In the evening of November 14, Hayes appeared on CounterParty TV hosted by Threadguy, a crypto community broadcaster, and once again shared his sharp judgments on the eve of the cycle transition:

• To capture the next breakout point, the only way is to be on the front line, close to the market;
• The current macro environment is very favorable for crypto;
• For those who are patient, have reserves, and can responsibly manage high leverage, it is now a great opportunity to allocate assets;
• Gold and Bitcoin should not be opposed, I hold both at the same time;
• Ultimately what I want is drama, to see someone cursing and someone cheering, that's when I know I've made the right bet.

In Hayes's view, emotion itself is an indicator, and trends that are considered "vulgar," questioned, and not recognized by the mainstream are often the starting point of a new cycle. From building BitMEX perpetual contracts to now fully betting on ZEC, HYPE, and the privacy narrative, his worldview remains sharp: to understand the market, one must delve into the front line and confront people's most genuine desires; those ridiculed small trends sometimes have a better chance of becoming huge Alpha than the so-called "mainstream narrative."

The following is the original interview content, translated by Odaily Planet Daily. For a smoother reading experience, the content has been slightly edited for brevity.

Opening

• Host: Your tweets always reveal an optimistic mood, and I think among most institutionalized and VC circles in the crypto field, you seem to be the most active in the liquidity market, the one closest to the real atmosphere of Crypto Twitter. How do you see this?

Arthur Hayes: Personally, I have always loved the "grassroots" atmosphere of the crypto industry. I have been in this field for twelve years, entering in 2013. Before that, I worked for five years at Citibank and Deutsche Bank. In total, my time in the crypto industry is almost more than double my entire professional career. This is my life, and I genuinely love this industry.

The grassroots atmosphere means being close to the market. To capture the next big thing, the only way is to be at the forefront, close to the market. Although I don't study NFTs or meme coins every day myself, if you don't stay sensitive to industry trends, you may end up passively following what traditional institutions define as "mainstream cryptocurrencies," such as Bitcoin, Ethereum, Solana, and the like, which often means being at least two years late.

• Host: Do you think there is a disconnect between the VC market in crypto and the on-chain liquidity market?

Arthur Hayes: No, this is not really a disconnect; it is more a natural outcome determined by incentive mechanisms. These venture capital funds follow a specific incentive model, which fundamentally shapes their investment logic and behavior. If they have to operate by raising funds from limited partners and charging management fees according to a set structure, their behavior will naturally lean in that direction.

This also explains why the returns of most crypto VCs in the long term cannot outperform Bitcoin and Ethereum. In fact, in the entire traditional venture capital industry, except for a few top funds like a16z and Sequoia Capital, the vast majority of funds actually struggle to achieve profitability, with their returns unable to surpass the S&P 500 or Nasdaq index. Investors pay high management fees, and the final returns may be worse off than simply buying a low-cost ETF, which can easily outperform 99% of VC funds on the market.

I once had a conversation with an investor from a family office, asking why they kept investing in funds with consistently mediocre performances. He eventually confessed that many times it was based on a "feeling." They enjoyed the attention of well-dressed bankers and the flattery experience, this emotional satisfaction often outweighed pure return considerations. It's human nature – everyone likes to feel valued and recognized.

So, rather than saying that the two markets are disconnected, it is more accurate to say that they precisely meet the psychological needs of that particular core audience, even if that does not always translate into excellent financial returns.

• Host: Many of our viewers are newcomers, most likely joining during the 2024 Solana and Meme coin craze. Before we dive deeper, could you please briefly introduce yourself?

Arthur Hayes: I entered the cryptocurrency space in 2013. Prior to that, I was an ETF market maker at Citibank and Deutsche Bank in Hong Kong. I later left the traditional financial industry and happened to read the Bitcoin whitepaper in the spring of 2013 when the price was around $200. I have always had a keen interest in topics like gold and monetary policy, so the whitepaper instantly resonated with me. As someone who studied financial history, I had an intuitive feeling that this technology might be as revolutionary as the printing press.

Looking back, I am grateful that I had enough savings at the time and didn't have to rush into another job. Instead, I had the opportunity to crash on a friend's couch and focus on building a Bitcoin-based financial business, which laid the foundation for the BitMEX story. I aimed to create a derivatives exchange that I, as a trader, would be willing to use. In 2014, I met my two co-founders, Ben Delo and Sam Reed, and together we founded BitMEX. In 2016, we launched perpetual contracts, and by 2018, BitMEX had become one of the world's largest cryptocurrency exchanges. We later faced legal challenges from the U.S. government, faced criminal risks at one point, but fortunately, we were pardoned.

Furthermore, I now primarily manage proprietary trading, operate Maelstrom, and engage in early-stage token investments and advisory work.

Macro Outlook

• Host: From your recent remarks, you seem very optimistic about the current cycle and future trends. I'm curious, how are you positioned now? Seeing Bitcoin at $98,000 this morning, what are your thoughts?

Arthur Hayes: The Maelstrom fund has now deployed about 98% of its funds, leaving only a small amount in cash. Many of our positions have a very low cost basis, so to be honest, short-term market fluctuations don't affect me much. I also don't care too much about them. We never use leverage, which allows me to have a more calm and objective view of the market. I understand that many people are currently holding leveraged long positions, and that feeling is truly agonizing. Not only do you need to get the direction right, but you also have to time it perfectly and continuously pay periodic funding rates. Many people have made mistakes at crucial moments because of this.

For example, if you were initially bullish, but the price didn't rise by 1-2% within 24 hours, you would start to panic. Seeing Bitcoin drop a few percentage points, even breaking the psychological barrier of $100,000, while you were leveraged up and burning money every day, you would easily lose patience and choose to cut your losses and close your position. I think this is actually the biggest problem most people face right now.

But how do I view it myself? I think the current macro environment is very favorable for crypto. I am still consistently buying, mainly adding to my ZEC position. (The reasons for buying ZEC will be mentioned later in the text.)

Of course, not all altcoins are on the rise. But if you have been holding HYPE and ZEC for the past 18 months, as a trader, your performance should be very good. Yes, I know that 99% of other tokens are falling, but then again, that's the current trading situation, market rotation is always present.

And I happen to really like the current market. For those who have the patience to wait, have a reserve of funds, and can control high leverage well, now is an excellent opportunity to responsibly allocate assets.

Because if you can recall November and December 2021, the stock market was at an all-time high, everyone was happy, and then think about what central banks around the world were saying? The Fed's stance was that it had to slow down economic growth and announced it would start raising rates in March 2022. If you can find the central bank's rate hike cycle chart, you will see that the rate hike cycle is clearly progressing to the upper right corner.

If you compare it to the present day, that rate hike cycle has obviously peaked. Yes, credit growth has almost stalled. We hit the peak and then started to decline. Now look at the present day, Fed officials are discussing the shortage of reserves in the system, suggesting they may have to restart quantitative easing or stop the balance sheet reduction. If you look up whether central banks around the world are in an easing or a rate-hiking cycle right now, it's very clear that the mainstream trend is cutting rates rather than raising them.

Listening to politicians' remarks, they are all talking about the impact of topics like AI and immigration, with the core message being, "I want welfare," but no one is even mentioning comprehensive tax increases. Occasionally, someone says they want to tax the top 0.01% of people because it sounds good politically, but in reality, it won't fill the fiscal hole. Politicians are all promising a "free lunch" and saying, "You don't need to pay for it," as long as you vote for them. So think about it, how can credit possibly shrink in the next 12 to 18 months? I don't think it will at all because the policy cycle is completely the opposite, which is completely different from the atmosphere during the 2021 market peak.

So the current market is a bit weak because we are in a transitional period—I think the key turning point is when the Federal Reserve and the People's Bank of China really start massive money printing. The U.S. is having a major election in 2026, and two weeks ago, the Republican Party performed poorly in key states like New York and Virginia. Trump is a smart person, he knows how to win. When the Republicans talk about "socialism," they are actually referring to AI, data centers, military production, and mortgage relief; on the Democratic side, "socialism" means climate change, social equity, free meals, and public transportation cards. The money is going in different directions, but money keeps being printed. And for those of us playing with cryptocurrency, liquidity is our lifeblood.

This system is essentially a reaction to currency overissuance. Look at the two major political parties of the world's largest economy now, both finding ways to say they will distribute money. The terminology may vary—whether it's called "socialism," "industrial policy," or "capitalism," it doesn't really matter. It's just different advertising slogans for different audiences. So we need to take a step back, ignore what they say, and see what they do. They always use rhetoric to blur the focus, but their only action is one: printing money. And they don't intend to pay with taxes but with an inflation tax, which, under the backdrop of global soaring debt levels over the past forty to fifty years, is considered the most politically acceptable way to escape.

• Host: So what is the failure condition of your bullish view?

Arthur Hayes: I remember in the 1920s, around 1929 or 1930, the Secretary of the Treasury, Andrew Mellon, who was a well-known banker. At that time, he was discussing how the Hoover administration should deal with the initial challenges of the Great Depression. I can't remember his exact words, but the essence was that all the economic landmines should be triggered, letting those who borrowed excessively and spent recklessly pay the price, allowing the system to completely reset, bad debt to be cleared, so the country can get back on track.

Actually, his original words were even better, but I'm just paraphrasing. So his point was roughly that you borrowed a ton of money. But what you did or built did not generate enough income, proving that you should go bankrupt, and the government should not bail you out.

If you look at the massive credit contraction in the early 1930s, it directly triggered the Great Depression, as recorded in history books. But that Mellon, who dared to say "you shouldn't be saved," later vanished from the political scene, and Hoover lost terribly in the next election. Such an approach is simply not popular. So now, if you look all over the world, which politician dares to say "if you mess up borrowing and investing, the government won't save you"? None. Except for Argentina's Milei, but he has too little influence and can't make a splash in the G7.

No one dares to implement genuine austerity policies now because too many people will lose their jobs, and too many wealthy people will see their assets shrink. Whether in a democratic or non-democratic country, such policies cannot pass through the ballot box or party internally.

• Host: Why do native crypto users feel like we are trading in the world's worst market? (Stocks, gold are at all-time highs, everything is crazy) If you hold ZEC or other coins, you may have been miserable for the past three months. How do you explain the poor performance of the crypto market now?

Arthur Hayes: You just mentioned "the past three months, the past six months," which is a key time point. If you bought Bitcoin in January 2025, you may now be either breaking even or slightly in the red; if you bought some altcoins, you may be even more in the red. However, if you extend the time horizon to buying Bitcoin two years ago, you are definitely in profit. For example, those who entered the market on April 9th, 10th, or 11th this year may have already seen a 30% to 40% increase. So, if you recently entered the market or just opened a leveraged position, I can understand your losses.

But looking back at Bitcoin's history, it is the highest-return asset in human history. Where is the problem? If you only recently learned about it today and expect it to immediately rise to meet your expectations, the market will not even pay attention to you. I think this is fundamentally due to human impatience, combined with the overuse of leverage, while ignoring the fact that some assets need time to outperform others.

As long as given enough time, coupled with the backdrop of global central banks constantly printing money, Bitcoin will definitely prove itself to be the best asset, and some carefully selected altcoins may even outperform. But if you randomly pick a three-month period to judge success or failure, it really has no difference from gambling.

• Host: Somewhat ironic but also interesting is that the inventor of perpetual contracts does not use leverage himself.

Arthur Hayes: That's because I actually don't focus on trading. Leverage itself is not wrong, but if you want to do leveraged trading, you basically can't expect to get a good night's sleep — your phone must be with you at all times, alarms set, and be ready to monitor the market at any time. You have to understand changes in position sizes, unravel the time series, and grasp the trading habits of different time periods, such as who is leading during the Asian session, how funds flow during the European and American sessions... These details are all basic skills of a leveraged trader.

If you can't be fully committed around the clock, then I advise you not to touch leverage. This business requires 365 days x 24 hours of focus to possibly make money. If you only think about casually opening a position after work to earn some pocket money, you will definitely fall into a pit. I reiterate, leverage tools are not guilty, the issue lies in the trader's level of focus.

• Host: How do you view Bitcoin catching up with gold's market? Do you think others perceive the risk level of gold and Bitcoin differently? How do you see it now? For those who still believe that Bitcoin will make up for the gains, how do you think it will develop?

Arthur Hayes: So, a large portion of my holdings is in gold. More precisely, in my non-crypto investment portfolio, almost 100% consists of physical gold and silver mining stocks. My overall view of the market is this: Bitcoin is the average person's hedge against currency devaluation. Any American can hold a large amount of Bitcoin, and no one can find out.

But central bank governors face a different level of problem. If you are the central bank governor of the U.S., you have to ensure that the currency used by your country's depositors can withstand inflation, which is precisely what U.S. government policy brings about. For the past ten thousand years, whether it be a sovereign nation or an individual, the asset used to address this situation has always been gold.

So if I were a key decision-maker or represented a government that needed to guard against asset freezes by the U.S. government or inflation from excessive national debt issuance, I would choose gold. Because this is a solution I am familiar with, and civilizations have been using this solution for thousands of years. I would not choose Bitcoin—after all, gold has been tested for ten thousand years, while Bitcoin has only been around for 15 years. If I were a decision-maker at the national level, I would definitely choose the solution that has been validated for ten thousand years.

Furthermore, from an operational standpoint: we have vaults, armed guards, and know how to custody gold. I don't need to learn the new things like private key management and crypto custody. I have legitimate armed protection to safeguard assets with guns and bunkers, so why bother with Bitcoin? Therefore, the flow of gold is mainly linked to the demands of sovereign nations. For example, when the U.S. freezes Russian assets, other countries might think, "It could be my turn next," so they repatriate gold back to their own countries, protected by their own military.

Even if I may hold Bitcoin in my personal account and believe in it, from a national standpoint, I would never use it as a reserve. So, my investment logic is: to hold something that nations will use to hedge fiat devaluation (gold and silver) and to hold something that ordinary people will eagerly buy (Bitcoin and select cryptocurrencies).

The trends of these two will be correlated, but the volatility will be different, fundamentally showcasing the same logic in different buyer groups. So, I bet on both sides. I think gold and Bitcoin shouldn't be pitted against each other. When you see the U.S. printing money like crazy in February 2022, who are the biggest buyers of gold? Central banks worldwide. Do you think geopolitical conflicts and ideological confrontations will decrease? If they will, allocate to gold because that's what nations will do at the state level. Do you think global inflation will persist? If it will, buy Bitcoin as it is the tool for ordinary people to self-rescue in the digital age. I am prepared to make money in both races, which is why I say gold is not an either-or issue, although the proportion of cryptocurrency in my personal holdings is indeed higher than that of gold. This is why I think the two are not mutually exclusive but rather a logic of allocation in two different tracks.

Privacy Coin

• Host: Was it Naval who got you so fascinated with ZEC? What's the story behind it? I remember you mentioning that BitMEX was the first exchange to list ZEC. Did you list it right after its launch, or did you later design your own derivative product?

Arthur Hayes: Actually, we were the first to launch a futures contract. Around 2016, ZEC was one of the hottest coins. Zooko was promoting it everywhere, and everyone was enthusiastic about privacy technology, advocating for "bringing privacy to Bitcoin" and similar statements. I delved into ZEC at that time, but they chose a slower token distribution model.

Essentially, it used a mining mechanism similar to Bitcoin, requiring mining to generate coins, just seven years after Bitcoin's inception. So even before any circulating tokens, we launched ZEC futures contracts.

In the fall of 2016, we were the only platform where one could trade it, and the futures trading was frenzied at that time. Later, the mainnet went live at the end of 2016, and the price skyrocketed to around $3000 per coin on Poloniex (the first exchange to trade spot). This was because there was essentially no supply initially as mining had just started. As mining inflation and supply increased, the price naturally and rationally retraced.

My biggest concern with ZEC at that time was the trusted setup. We had to trust that those people actually destroyed the keys, and they even staged a performance art piece: live-streaming throwing the laptop with the keys into the trash. Another point of controversy was the 20% mining tax allocated to the founding team, but these things are contentious — after all, the team needs to eat. The most crucial question was: most early circulating coins didn't even utilize the privacy features, so how was this different from Bitcoin? Instead, being born seven years later, it had weaker network effects, resembling a low-quality copy.

So I didn't pay much attention to ZEC for a long time. It wasn't until dinner with Naval one evening, just after I did an interview about privacy coins. The reporter asked me, "What do you think about ZEC's overnight 100% surge?" My response was, "Oh, that's interesting, but I haven't been following closely." Later, I found out that Naval's tweet had driven the sentiment, but I didn't think much of it.

At dinner with around 40 people, Naval and I started talking. I casually congratulated him on the ZEC surge, and he said, "It's my second-largest holding, and I believe it's the last thing in the crypto space that could still go up a thousand times." I immediately got intrigued, and he then systematically refuted my doubts about ZEC from 2016. I asked, "What about Monero? Doesn't it have stronger privacy security?" But he pointed out that in the AI era with pervasive personal data leaks and ubiquitous government surveillance, even Monero transactions had been successfully traced by the police in Japan. I vaguely remembered hearing about this news and noted it for further verification. He said, "If my view is correct, coupled with people's renewed focus on privacy, this thing could surge. " I knew he was a top-tier investor with a stellar track record. Recently, I've been following the logic of "invest first, research later" a la Soros, so I decided to build a position, one sizable enough to make me care but not regret losing 50%.

During dinner, I informed the brokers to buy ZEC. Interestingly, out of the 8 brokers, 6 refused, which only made me more eager to buy. In the end, I did acquire my initial position. The next day when I got home, I validated Naval's points one by one: 1. They solved the trusted setup issue through the Halo2 encryption upgrade; 2. The Japanese police indeed traced Monero to solve a case; 3. The 20% mining tax was canceled two years ago.

I realized that the privacy narrative is making a comeback. Now, the core cryptocurrency players are all complaining that Bitcoin has been hijacked by institutions, everyone is focused on what Larry Fink is saying, how Jamie Dimon views it, and what regulations the SEC and CFTC are introducing. The cryptocurrency bills in Congress, how banks' asset management is allocating ETFs...this is not what we originally sought in Bitcoin. We need to truly address privacy issues, something that belongs to the ordinary people.

So, I began accumulating a large position, and the subsequent trend clearly indicated the issue: Bitcoin dropped from around $110,000 when I started buying to below $100,000, while ZEC continued to surge. I enjoy this kind of asset's vitality, the love-hate relationship people have with ZEC online. Ultimately, what I want is drama; I want to see some people cursing while others cheer. That's when I know I've made the right bet. The worst thing is to invest in a coin that no one discusses; holding onto lifeless assets can be anxiety-inducing, seeing your funds trapped there depreciating, it's better to invest elsewhere.

ZEC has attention, so it's worth betting on, and I will gradually increase my position, fully agreeing with Naval's vision. I believe it can reach 20% of Bitcoin's market cap, I have set a target price and investment plan, and I have nearly completed my accumulation. If it retraces to around $400, I might buy more, but it's holding strong at around $500 now.

I have been experimenting with my Zashi wallet paired with a Keystone hardware wallet for a long time, ensuring I understand the technical details thoroughly. I am ready to make a big move.

• Host: Some say the next five to ten years in the crypto space will be about adding a privacy layer to existing systems, making everything "ZK," with privacy becoming the new norm and primary focus. Do you agree? Do you think the next 5-10 years will be the "privacy decade" of crypto?

Arthur Hayes: Absolutely, because we are indeed facing superintelligent AI. Whether it's true AGI or whatever you want to call it doesn't really matter. Essentially, what we have is a highly intelligent simulation computer, a predictive engine—and the government will inevitably use it to control every aspect of our digital lives. Frankly, we are all complicit because we love these smartphones with social media. It's essentially the largest voluntary data surrender operation in history: we willingly hand over all photos, location records, chat content just to stay connected. We crave this sense of community and computational power, with the cost being the complete abandonment of privacy.

If you want to de-anonymize cryptocurrency transactions, whether for taxation or fund monitoring purposes, it's a piece of cake. Unless ZK technology is in place to protect, all data that can verify your identity—not just proving who "Arthur Hayes" is, but also verifying if it's a real person or a machine—will remain in various systems. In this new digital world, proving "who you are" is crucial, yet we are continuously giving away more data.

My personal identity information is scattered across tens of thousands of systems; this is terrible. Now, some are discussing using zero-knowledge proofs for identity verification (ZKYC), and I believe safeguarding human identity and data on the internet will become increasingly critical. Those looking to run AI without wanting their information exposed on the global data web will certainly seek encryption solutions.

User behavior will increasingly rely on zero-knowledge proof technology. I fully endorse this trend. As people realize that combining powerful prediction engines (such as large language models) with governments trying to tax, control you, and peek into your thoughts through online actions will have very dire consequences, this realization will spread. People will start to resist; they will cry out, "I want privacy." Perhaps this is precisely the opportunity for cryptocurrencies like ZEC. I firmly believe this will spark a movement—more and more people are awakening.

Strategy

• Host: How do you balance this long-tail vision with short-term trading? With a fund size like yours, how do you split these two strategies?

Arthur Hayes: I think it's like what Stanley Druckenmiller said, the best investors should be able to hold two contradictory ideas in their mind at the same time. Once again, it's all about believing in the long-term vision of things but also focusing on short-term gains. For Maelstrom, I want to increase the Bitcoin position as much as possible. Everything we do is to earn a return, to use for bonuses, and to buy more Bitcoin.

So for me, it's about buying low, selling high HYPE, making a profit, then waiting for it to drop back to buy again, while also having a long-term bullish view on its potential and the execution power of the Jeff team. As an investor, I already have a substantial Bitcoin position compared to most people; as a trader, my job is to actively capture short-term opportunities on this base.

If you tell me you're just an artist or have another main profession, and you believe it can increase by 126 times, then how about holding it for 6-12 months through the volatility? Just hold it. But as an active investor, I will look for short-term opportunities. If I think there will be a downtrend, facing competition and valuation compression, then I will sell, wait for the next entry point. If it proves that it can outperform competitors, like when I saw Jeff, I said I appreciate what they're doing, filling a gap, but it takes time to validate success or failure. I still believe HYPE may go up 126 times, or it may not, but I will wait and see; I have time.

• Host: As the inventor of the perpetual contract, you did not personally participate in the construction of protocols like Hyperliquid. Does it feel a bit strange to watch them develop?

Arthur Hayes: No, it doesn't. It's all good because it gives me time to ski and work out without having to manage a team or deal with drama (CZ, you go ahead, I've completed my mission). Now there are young people full of energy, and I am happy for them. I hope to see Hyperliquid make CME worthless. If that really happens, I will be very happy, and I don't need to profit from it.

This is just a "screw them, take them down" kind of feeling. I know many stories about them. I hope to see Hyperliquid or any other protocol give these traditional exchanges an ultimatum: either adopt perpetual contracts or perish. If one day CME turns all its products into perpetual contracts, it would prove that the perpetual contract model we invented is successful enough to become a core product on global major exchanges. If Jeff's 11-person team (I had dinner with some of their team members a few days ago, confirming it's 11 people) can take down all major global stock exchanges, that would be awesome, and I am happy for them.

• Host: That's too exaggerated, only 11 people? How big was BitMEX's team at its peak?

Arthur Hayes: It must have been around 250 people, all day talking about team building. But to be honest, looking back now and talking to the people at Hyperliquid later, we all thought: well, let's stick with a small team. When you have too many people, things get messy—you deal with HR disputes today, coordinate who doesn't get along tomorrow, and the next day you have to figure out how to let go of the unfit ones.

To be honest, if the team really got big, as the CEO, I would spend my whole day dealing with HR issues, rather than focusing on how to make money. Although not as large as CZ's three to four thousand people, 250 people are still too many. I advocate for small teams.

• Host: Some people believe that in the future, there will be more hype, more pump and dumps, more tokens like Uniswap, where you can make one to two million dollars a day, and then the project team will reinvest this income back to token holders, rather than relying on idle governance. What do you think? Do you think we will see more projects like this?

Arthur Hayes: I think we will. Because from every cycle I've experienced, the crypto market has always been moving in this direction, but it always sounds good in theory, and the reality falls short. Look at the UNI chart, from $35-40 to $3-4. Then look at dYdX, they initially talked about permissionless listings, and in 2021, the market cap surged to two to three trillion, and now it's basically dead. And they made money, but token holders didn't see a penny.

On the other hand, most of the meme coins released in 2023 and 2024 were projects with high FDV and low circulating supply, lacking product-market fit, users, income, or even if there was income, it was not shared with token holders. The market will punish such projects, and now retail investors are unwilling to buy. So, you must run a good project and treat your token holders well. Ultimately, projects like Hyperliquid have demonstrated that you don't need VCs; you just need a strong tech team and to share wealth with token holders to succeed.

Why should we spend money to buy tokens to help you pump, but you use regulation, governance, and DAO voting as excuses not to share the money. When I talk to some project founders, I tell them to learn from Hyperliquid and look at their charts. You can also choose to go downhill all the way like Berachain. Who do you want to be? Smokey or Jeff? They both made money, but one is liked by people, and the other hides in the corner.

So now the market has also validated what a successful token model looks like. Uniswap decided to distribute fees, and the token price went up. Although my position is not large and I'm at a loss, this is a trend. And this trend, finally, after the three rounds of the meme coin cycle, has entered a clear phase: the table has been set up, either you share the money or go to zero. The choice is yours.

• Host: Many old OGs have gone to Twitter to say: This is the worst cycle ever, with no comparison. Solana has risen from $8 at the end of 2023 to its current position in this cycle. What is your view on this cycle's performance? Especially compared to previous product cycles?

Arthur Hayes: Each cycle has its own theme, and there will always be those who made money in the last cycle mocking the current venture capital projects, saying they are not "serious enough" and that this is just a child's game.

But fundamentally, they are just venting their frustration because this cycle is not their playing field. So, I don't pay much attention to these comments.

I have always firmly believed in one thing: everything is reflected in the price. In crypto, the most important thing is the "price" itself. The market allows everyone to trade around these assets, and that is the essence of crypto.

It is inherently volatile, and that's not a bad thing. The early stages of technological change are always "crude." Just look at early movies when actors started speaking; people from the Charlie Chaplin era thought it was terrible; when TV came out, women wearing miniskirts were also called "crude"; the same with the early days of the internet. So, if you tell me that Meme coins are "crude" or that NFTs are "junk" art, OK, then I will go buy Meme coins.

Because these "vulgar" things precisely represent the beginning of the next cycle. The next generation of "Guggenheim" is hidden in these things. So, whenever I hear a bunch of people say "this won't work" or "this isn't mature," I know that buying it is the right move. It's a clear market signal.

• Host: But how do you personally stay "relevant"? You've already made a lot of money, you're not lounging in an ivory tower, yet you can still maintain a frontline sensitivity. How do you do it?

Arthur Hayes: By interacting with people, especially those who are truly interested in this field.

I like to walk around exhibition booths at conferences, see what everyone is selling, see what young people are up to. If you only stay in the upper-class circles, relying on private banks to recommend you government bonds, Bitcoin ETFs, you can make money, but you will also gradually age and stagnate.

If Bitcoin doesn't move, it's as good as zero. The same goes for people. If you don't move, don't stay active, you will calcify and die.

I want to live a little longer in this universe, so I must keep moving. Whether it's exercising or interacting with people, you must constantly be in motion. If you refuse to step into the frontline, don't even read young people's tweets, don't want to go to exhibitions, don't want to quietly listen to what others have to say, in the end, you can only sit in a chair drinking whisky, listen to others recommend financial products, then slowly get fat, age, and die. So, this is how I stay "relevant."

Of course, there are many people more sensitive than me, but I genuinely love the market. So even if you just want to know the future of crypto, you have to go and see for yourself, even if just as a bystander.

Message

• Host: What advice do you have for young people who want to turn their luck in the crypto world? If you were in their shoes now, what would you do? What to focus on, how to adjust your mindset, what kind of strategies to make, to get to where you are now?

Arthur Hayes: Time and compounding. These are the two most powerful forces in the universe.

Think about it, since 1913, the Federal Reserve has targeted 2% inflation, and just this inflation has devalued the dollar by 99%. So even if it's just a small return, as long as it compounds, it can accumulate massive wealth.

Put aside the fantasy of high-leverage gambling. Of course, you can feel that impulse, but more importantly, understand the mathematical principle of compounding, and then wait patiently. If you really want to go down the "high risk, high return" path, such as leveraged trading, then you have to become a year-round, round-the-clock professional trader, familiar with market microstructure, understand trading products, and master market liquidity patterns.

If you are not willing to commit that much, then just buy spot assets without leverage. Allocate a portion of your monthly income, buy the cryptocurrencies you believe in, and then forget about it; avoid frequent trading.

Because unless you are willing to dedicate the time to become a trader who can handle high-volatility assets and perpetual contracts, that kind of "gambling for a comeback" will only leave you bankrupt.

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