Arthur Hayes: His heavy bet on ZEC was prompted by a wise person; the best investors have to think outside the box.

This article is from: CounterParty TV

Compiled by Odaily Planet Daily ( @OdailyChina ); Translated by Ethan ( @ethanzhang_web3)

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.

In the past few days of continued volatility in the crypto market, BTC fell below $100,000 and then further dropped below $90,000 three days later, while ZEC bucked the trend and reached a new high, driven by Hayes's continuous buy recommendations. On November 17th, CoinGecko data showed that ZEC's market capitalization surpassed $11.7 billion, rising to 15th place in cryptocurrency market capitalization. As of press time, ZEC is currently trading at $609.

On the evening of November 14th, Hayes appeared on CounterParty TV, hosted by crypto community streamer Threadguy, and once again offered his characteristically sharp predictions on the eve of a cycle transition:

• The only way to capture the next breakout point is to go deep into the front lines and get close to the market.
• The current macroeconomic environment is very favorable for cryptography;
• For those who have the patience, financial reserves, and the ability to manage high leverage, now is an excellent opportunity to allocate assets responsibly.
• Gold and Bitcoin shouldn't be seen as opposing forces; I hold both.
• Ultimately, what I want is drama, to see some people cursing and others cheering, only then can I say that I made the right bet.

In Hayes' view, sentiment itself is an indicator, and those trends considered "vulgar," questioned, and not accepted by the mainstream are often the starting point of a new cycle. From creating BitMEX perpetual contracts to now betting heavily on ZEC, HYPE, and the privacy narrative, his worldview has always remained sharp: to understand the market, one must delve into the front lines and confront people's most genuine desires; those small trends that are ridiculed sometimes have a greater chance of becoming huge alpha than the so-called "orthodox narrative."

The following is the original interview transcript, compiled by Odaily Planet Daily. Some content has been abridged for easier reading.

Opening

• Host: Your tweets always convey optimism, and I feel that among most institutional and VC figures in the crypto space, you seem to be the most active in the liquidity market and the closest to the true atmosphere of Crypto Twitter. What are your thoughts?

Arthur Hayes: I've always really loved the "grassroots" atmosphere of the crypto industry. I've been in this for twelve years, since 2013, and before that I worked at Citibank and Deutsche Bank for five years. That's almost twice the length of my entire career in crypto. This is my life, and I genuinely love this industry.

A grassroots atmosphere means being close to the market. The only way to capture the next breakout point is to immerse yourself in the front lines and get close to the market . Although I don't study NFTs or Meme coins every day, if you don't stay sensitive to industry dynamics, you may end up passively following the "orthodox cryptocurrencies" touted by traditional institutions, such as Bitcoin, Ethereum, and Solana, and these strategies are often at least two years too late.

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

Arthur Hayes: No, it's not a true disconnect, but rather an inevitable consequence of the incentive mechanisms. These venture capital funds follow a specific incentive model that fundamentally shapes their investment logic and behavior. If they have to operate by raising capital from limited partners and collecting management fees according to a predetermined structure, then their behavior will naturally tilt in that direction.

This explains why most crypto VCs consistently underperform Bitcoin and Ethereum. In fact, across the traditional venture capital industry, aside from a few top funds like a16z and Sequoia Capital, the vast majority of funds struggle to be profitable, with returns failing to even surpass the S&P 500 or Nasdaq indices. Investors pay exorbitant management fees, yet their final returns may be lower than simply buying a low-cost ETF, which would easily outperform 99% of VC funds in the market.

I once spoke with an investor from a family office and asked him why he continued to invest in funds with mediocre long-term performance. He eventually confessed that it was often based on a "feeling." They enjoyed the experience of being fawned over and flattered by bankers in suits; this emotional satisfaction often outweighed considerations of pure returns. It's human nature; everyone likes to be valued and recognized.

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

• Host: Many of our viewers are newcomers, having joined around 2024 during the Solana and Meme coin craze. But before we continue, could you briefly introduce yourself?

Arthur Hayes：我是在2013 年进入加密货币领域的。在那之前，我在香港的花旗银行和德意志银行担任ETF 做市商。后来我离开传统金融行业，恰好在2013 年春天读到了比特币白皮书，那时比特币价格大约在200 美元左右。我一直对黄金、货币政策这类话题有浓厚兴趣，所以那份白皮书一下子震撼到了我，作为一名研究过金融史的人，我直觉感到这项技术可能会像印刷术一样，具有颠覆时代的意义。

Looking back, I'm grateful I had enough savings at the time to not be in a rush to find another job. Instead, I had the opportunity to stay on a friend's couch and calmly try to build a Bitcoin-based financial business, which is the starting point of the BitMEX story. I wanted to create a derivatives exchange that I, as a trader, would also be willing to use. In 2014, I met two co-founders, Ben Delo and Sam Reed, and we founded BitMEX together. In 2016, we launched perpetual contracts, and by 2018, BitMEX had become one of the world's largest cryptocurrency exchanges. Later, we faced legal challenges from the US government and were at risk of criminal charges, but fortunately, we were pardoned .

In addition, I now primarily manage my own funds for trading, while also being responsible for the operation of Maelstrom and participating in early token investments and advisory work.

Macro layout

• Host: Judging from your recent statements, you seem very optimistic about the current cycle and future trends. I'm curious, how are you positioning yourself now? And what are your thoughts on Bitcoin reaching $98,000 this morning?

Arthur Hayes: Maelstrom Fund has probably invested about 98% of its funds, keeping only a small amount of cash. And many of our positions have very low costs, so frankly, short-term market fluctuations don't affect me much. I don't really care about them. We never use leverage, which allows me to view the market more calmly and objectively. I understand that many people are currently holding long leveraged positions; that feeling is truly agonizing. You not only have to be right about the direction, but also have to time your moves perfectly, and constantly pay cyclical funding fees. Many people make wrong decisions at crucial moments because of this.

For example, if you were initially bullish, but the price didn't rise by even 1-2% within 24 hours, you start to panic. Seeing Bitcoin drop a few points, even falling below the psychological threshold of $100,000, and you're heavily leveraged and burning through cash every day, it's easy to lose patience and choose to cut your losses and close your positions. I think this is actually the biggest problem most people face right now.

But what's my own perspective? I think the current macroeconomic environment is very favorable for crypto . I'm still buying, mainly adding to my ZEC position. (The reasons for buying ZEC will be mentioned later.)

Of course, not all altcoins are rising. But if you've held HYPE and ZEC over the past 18 months, your returns as a trader should be quite good. Yes, I know the other 99% of tokens are falling, but that's the current trading situation; market rotation is always present.

And I happen to really like this market right now. For those who have the patience to wait, have sufficient funds, and can manage high leverage, now is an excellent opportunity to allocate assets responsibly.

Because if you recall November and December of 2021, when our stock market was at an all-time high and everyone was happy, then think about what central banks around the world were saying? The Federal Reserve was saying it had to slow economic growth and announced it would begin raising interest rates in March 2022. If you could find a chart of central bank interest rate hike cycles, you'd see that the cycle clearly moves towards the upper right.

If you compare it to the present, that rate hike cycle has clearly peaked. That's right, credit growth has almost stagnated. We experienced a peak, and then it started to decline. Now, Federal Reserve officials are discussing the insufficient reserves in the system, and the possibility of restarting quantitative easing or stopping balance sheet reduction. If you check whether central banks around the world are currently in an easing or rate hike cycle, it's clear that the mainstream trend is now rate cuts rather than rate hikes.

Listening to politicians' rhetoric, all they talk about is the impact of AI and immigration, the core message being: "I want to provide welfare," but nobody mentions a comprehensive tax increase. Occasionally, someone suggests raising taxes on the top 0.01%, because that sounds good politically, but it won't actually fill the fiscal hole. Politicians are promising a "free lunch," saying "you don't have to pay," as long as you vote. So think about it, how could credit possibly contract in the next 12 to 18 months? I don't think so, because the policy cycle is completely reversed, and this is completely different from the atmosphere at the market peak in 2021.

So the market is a bit weak right now because we're in a transition period—I think the key turning point is when the Federal Reserve and the People's Bank of China really start printing money on a massive scale. The US election is in 2026, and two weeks ago the Republicans had a tough time in key states like New York and Virginia. Trump is a smart man; he knows how to win. The Republicans' "socialism" is actually about AI, data centers, military production, and mortgage relief; the Democrats' "socialism" is about climate change, social equity, free meals, and public transport cards. The money is going in different directions, but it's constantly being printed. And for those of us in the cryptocurrency world, liquidity is our lifeline.

This system is essentially a response to excessive money printing. Look at the two major political parties in the world's largest economies; they're both using different names to say they want to print money. Different names—"socialism," "industrial policy," "capitalism"—it doesn't matter; the essence is the same. They're just advertising slogans for different audiences. So we need to take a step back and look at what they do, not what they say. They keep using rhetoric to obscure the focus, but their action is singular: printing money. And they don't intend to pay for it with tax increases, but with an inflation tax—the most politically acceptable way to extricate themselves from the global debt crisis of the past four or five decades.

• Host: So what are the conditions under which your bullish view fails?

Arthur Hayes: I remember in the 1920s, around 1929 or 1930, the Secretary of the Treasury, Andrew Mellon, a well-known banker, was discussing how the Hoover administration should deal with the early stages of the Great Depression. I don't remember his exact words, but the gist was that we needed to deflate the economic system, make those who over-borrowed and squandered money pay the price, thoroughly clean up the system, and clear out the bad debts so that the country could get back on track.

Actually, the original words were better, but I'm just paraphrasing. So, roughly, he meant that you've taken out a lot of loans, but what you've done or built hasn't generated enough income, which proves you should go bankrupt and the government shouldn't bail you out.

Look at the massive credit crunch of the early 1930s, which directly triggered the Great Depression—it's all recorded in history books. But Mellen, who dared to say "we shouldn't bail you out," later disappeared from the political scene, and Hoover suffered a crushing defeat in the next election. This approach was completely unpopular. So now, if you search the whole world, which politician dares to say, "You've messed up lending and investment, the government won't bail you out"? None. Except for Millais in Argentina, but his influence is too small to make a ripple within the G7.

No one dares to implement genuine austerity measures right now because too many people would lose their jobs, and too many wealthy people would see their assets shrink. Whether in a democratic country or not, such a policy would not pass the ballot box or within a party.

• Host: Why do crypto natives feel we're trading in the worst market in the world? (Stocks, gold are hitting new highs, everything's gone crazy.) If you held ZEC or other coins, you've probably lost a lot of money over the past three months. How do you explain the current poor performance of the crypto market?

Arthur Hayes: You just mentioned that the "past three months" and "past six months" timeframes are crucial. If you bought Bitcoin in January 2025, you might be breaking even or even incurring a small loss now; if you bought some altcoins, you might have lost even more. But if you extend the timeframe to two years ago when you bought Bitcoin, you would definitely be making a profit. For example, those who entered the market around April 9th, 10th, and 11th of this year might have already seen their holdings rise by 30% or 40%. So, if you only recently entered the market or just opened a leveraged position, I can understand if you're losing money.

But looking at Bitcoin's history, it boasts the highest cumulative return among all assets in human history. So where does the problem lie? If you've only just learned about it today and expect it to immediately rise as you anticipate, the market simply won't listen to you. I think this is essentially due to human impatience, coupled with excessive leverage, while ignoring the fact that some assets need time to outperform others.

Given enough time, coupled with the backdrop of global central banks continuously printing money, Bitcoin will undoubtedly prove itself to be the best asset, and some carefully selected altcoins may even outperform. However, judging success or failure based on a random three-month period is no different from gambling.

• Host: It's a bit ironic, but also quite interesting, that the inventor of perpetual contracts himself doesn't use leverage anymore.

Arthur Hayes: Because I don't actually focus on trading. Leverage itself isn't wrong, but if you want to do leveraged trading, you can basically forget about getting a full night's sleep—you have to have your phone with you at all times, set your alarm, and be ready to monitor the market at any moment. You need to understand changes in open interest, comprehend time series, and grasp the trading habits of different time periods, such as who is dominating the Asian session and how funds flow in the European and American sessions... These details are the basic skills of leveraged traders.

If you can't commit 24/7, I advise you to stay away from leverage. This industry requires 24/7 focus to make money. If you're just thinking of casually opening a position after get off work to earn some pocket money, you're bound to fall into a trap. To reiterate, leverage itself isn't the problem; the issue lies in the trader's focus.

• Host: What's your take on Bitcoin catching up with gold? Do you think others perceive gold and Bitcoin as having different risk levels? What's your current perspective? For those who still firmly believe Bitcoin will catch up, how do you foresee the future development?

Arthur Hayes: So a large portion of my holdings is gold. To be precise, almost 100% of my non-cryptocurrency portfolio consists of stocks in physical gold and silver mining companies. My overall view of the market is that Bitcoin is the answer for ordinary people to hedge against currency devaluation. Any American can hold a large amount of Bitcoin, and nobody has been able to find out.

But central bank governors face a different kind of problem. If you're the governor of the US central bank, you have to ensure that the currency held by your country's depositors can withstand inflation, which is precisely what US government policies have created. For the past ten thousand years, gold has been the asset used by both sovereign nations and individuals to cope with this situation.

Therefore, if I were a key decision-maker, or representing a government, and needed to guard against inflation caused by the freezing of US government assets or excessive issuance of national debt, I would choose gold. This is because it's a solution I'm familiar with, and various civilizations have used it for thousands of years. I wouldn't choose Bitcoin—after all, gold has stood the test of time for ten thousand years, while Bitcoin is only 15 years old. If I were a decision-maker at the national level, I would definitely choose the solution that has been proven over ten thousand years.

Moreover, from an operational perspective: we have vaults, armed guards, and know how to safeguard our gold. I don't need to learn new things like private key management and cryptographic custody. I have legitimate military protection; I can protect my assets with guns and bunkers, so why bother with Bitcoin? Therefore, the flow of gold is mainly linked to the needs of sovereign states. For example, if the US freezes Russian assets, other countries will think, "Maybe it'll be my turn someday," and thus transport their gold back to their own countries to be protected by their own armies.

Even if I personally hold Bitcoin in my account and am bullish on it, I would never use it as a reserve from a national perspective. Therefore, my investment logic is: to hold both things that the country would use to hedge against fiat currency devaluation (gold and silver) and things that ordinary people would scramble to buy (Bitcoin and select cryptocurrencies).

These two trends are correlated, but their fluctuations differ; essentially, they represent the same logic applied to different buyer groups. Therefore, I'm betting on both. I don't think gold and Bitcoin should be seen as opposing forces. Look at February 2022 when the US was printing money like crazy—who were the biggest buyers of gold? Central banks around the world. Do you think geopolitical conflicts and ideological clashes will decrease? If so, allocate to gold, because countries will do so. Do you think global inflation will continue? If so, buy Bitcoin; it's a tool for ordinary people to save themselves in the digital age. I plan to profit from both, which is why I say gold isn't an either-or choice, although my personal holdings do have a higher proportion of cryptocurrency than gold. This is why I believe they are not mutually exclusive, but rather two separate investment strategies.

Privacy Coin

• Host: Was it Naval that made you so fascinated with ZEC? What exactly happened? I remember you mentioned that BitMEX was the first exchange to list ZEC. Were you the first to list it when ZEC was first launched, or did you design your own contract product later?

Arthur Hayes: Actually, we were the first to launch futures contracts. Around 2016, ZEC was one of the hottest cryptocurrencies. Zooko was giving speeches everywhere, and everyone was enthusiastic about privacy technology, shouting things like "We need to make Bitcoin private." I looked into ZEC at the time, but they opted for a slower token distribution model.

Essentially, it uses a mining mechanism similar to Bitcoin, requiring mining to generate tokens, but it started seven years later than Bitcoin. Therefore, we launched ZEC futures contracts even before there were any circulating tokens.

In the fall of 2016, we were the only platform where it could be traded, and contract trading was incredibly active at the time. Later, the mainnet launched at the end of 2016, and the price soared to around $3,000 per coin on Poloniex (the first platform to trade spot). This was because there was virtually no supply initially—mining had just begun. As mining inflation and supply increased, the price naturally and rationally declined.

My biggest concern about ZEC at the time was the trusted setup. We had to believe that those people really destroyed the keys; they even staged a performance art piece: live-streaming themselves throwing the laptop containing the keys into the trash. Another point of contention was that 20% of the mining tax would be allocated to the founding team, but that's a voluntary arrangement, since the team needs to make a living. The most crucial question was: most of the early circulating tokens didn't have any privacy features, so what was the difference between this and Bitcoin? In fact, because it was born seven years later, its network effect was weaker, making it seem like a poorly made copy.

So I didn't pay attention to ZEC for a long time after that. Until one evening before having dinner with Naval, I happened to be doing an interview about privacy coins. The reporter asked me, "What do you think of ZEC's overnight surge of 100%?" My initial reaction was, "Oh, that's interesting, but I haven't been paying much attention." Later I found out that Naval's tweet had stirred up the emotions, but I didn't take it seriously.

There were about 40 people at dinner, and I chatted with Naval. I casually congratulated him on the rise of ZEC, and he replied, "This is my second-largest holding, and I think it's the last thing in the crypto space that can increase a thousandfold." I immediately perked up, and he went on to refute my doubts about ZEC from 2016, one by one. I asked, "What about Monero? Isn't its privacy and security stronger?" But he pointed out that in the context of widespread personal data leaks and ubiquitous government surveillance in the AI era, even Monero transactions in Japan were successfully traced by the police. I vaguely remembered this news and kept it in mind for future verification. He said, "If my view is correct, coupled with people's renewed focus on privacy, this thing could skyrocket." I know he's a top investor with a brilliant track record. Recently, I've been following Soros's "invest first, research later" logic, so I decided to build a position, a position large enough to make me care, but small enough that I wouldn't be heartbroken if I lost 50%.

During dinner, I notified the brokers to buy ZEC. Interestingly, 6 out of 8 brokers refused, which only made me more eager to buy. In the end, I still managed to buy my first position. The next day, after returning home, I verified Naval's points one by one: 1. They solved the trusted setup problem through the Halo2 encryption upgrade; 2. The Japanese police did indeed solve the case by tracing the origins of Monero; 3. The 20% mining tax was abolished two years ago.

I've realized the privacy narrative is making a comeback. Right now, grassroots cryptocurrency players are complaining that Bitcoin has been hijacked by institutions; everyone's constantly watching what Larry Fink says, what Jamie Dimon thinks, and what regulations the SEC and CFTC issue. The crypto bills being discussed in Congress, how banks allocate ETFs… this isn't the Bitcoin we originally sought. We need something that truly addresses privacy, something for ordinary people.

于是我开始大举建仓，之后走势很说明问题：比特币从我开始买入时的约11 万美元跌到10 万以下，ZEC 却持续暴涨。我喜欢这种标的的活力，网络上人们对ZEC 的爱恨交织。归根结底我要的是戏剧性，要看到有人痛骂有人欢呼，这才说明我押对了注。最怕投资没人讨论的币种，拿着死气沉沉的资产会让人焦虑，资金被困在那里贬值，还不如投别的。

ZEC has garnered attention, making it worth betting on, and I will gradually increase my position. I fully agree with Naval's vision. I believe it can reach 20% of Bitcoin's market capitalization. I have already set a target price and investment plan, and I have basically completed my position building. If it pulls back to around $400, I might add more, but it's holding very well around $500 right now.

I've spent a long time figuring out how to use the Zashi wallet with the Keystone hardware wallet, making sure I fully understand the technical details. Now I'm ready to get started.

• Host: Some say that the next five to ten years in the crypto space will be about adding a privacy layer to existing systems, essentially "ZKinging" everything, and privacy will become the new normal and a primary focus. Do you agree? Do you think the next 5-10 years will be the "privacy decade" for crypto?

Arthur Hayes: Absolutely, because we are indeed facing super-intelligent AI. Whether it's true AGI or what you prefer to call it doesn't really matter. Essentially, we possess a highly intelligent analog computer, a predictive engine—and governments will inevitably use it to control every aspect of our digital lives. Frankly, we are all accomplices because we love these smartphones with social media so much. It's practically the largest voluntary data surrender in history: we've willingly handed over all our photos, location logs, and chat logs just to stay connected. We crave this sense of community and computing power at the cost of completely abandoning our privacy.

Deanonymizing and tracking cryptocurrency transactions, whether for taxation or monitoring fund flows, would be incredibly easy. Unless protected by ZK technology, all data that verifies your identity—not just who "Arthur Hayes" is, but whether it's a real person or a machine—remains in various systems. Proving "who you are" is crucial in this new digital world, yet we are constantly handing over more and more data.

My personal identification information is scattered across tens of thousands of systems, which is terrible. There's discussion about using zero-knowledge proofs for identity verification (ZKYC), and I think protecting human identities and data on the internet will become increasingly critical. Those who want to run AI but don't want their information exposed on a global data network will definitely pursue encryption solutions.

User behavior will increasingly rely on zero-knowledge proof technology. I completely agree with this trend. This awareness will spread as people realize the terrible consequences of combining powerful prediction engines (such as large language models) with governments that attempt to tax, control, and spy on their thoughts through online speech. People will start to rebel and cry out, "I want privacy!" Perhaps this is precisely the opportunity for cryptocurrencies like ZEC. I firmly believe this will form a movement—more and more people are waking up.

Strategy

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

Arthur Hayes: I think it's like what Stanley Druckenmiller said: the best investors are those who can hold two conflicting ideas in their minds at the same time. Again, believe in the long-term prospects of anything, but also focus on short-term gains. For Maelstrom, I want to increase our Bitcoin position as much as possible. Everything we do is to earn returns to pay out bonuses and buy more Bitcoin.

So for me, the strategy is to buy low and sell high on HYPE, profit, and then wait for it to drop before buying again, while remaining optimistic about its long-term potential and the execution capabilities of Jeff's team. Compared to most people, as an investor, I already have a substantial Bitcoin holding; and as a trader, my job is to proactively capture short-term opportunities based on that.

If you tell me you're just an artist or have another main job, and you believe it can rise 126 times, what does it matter if it fluctuates for 6-12 months? Just hold it. But I'm an active investor, and I'll focus on short-term opportunities. If I think there will be a period of weakness, facing competition and valuation compression, then I'll sell and wait for the next entry point. If it proves itself to beat the competition, like when I met Jeff and said I admired what they did, filling a gap, but that takes time to prove successful. I still believe HYPE might rise 126 times, or it might not, but I'll wait and see; I have plenty of time.

• Host: As the inventor of perpetual contracts, you didn't personally participate in the development of protocols like Hyperliquid. Doesn't it feel a little strange to watch them develop?

Arthur Hayes: No, it's great because I can have time to ski and work out without managing a team or dealing with clutter (CZ, you go ahead and do your thing, I've done my job). There are energetic young people now, and I'm happy for them. I'd love to see Hyperliquid make CME worthless. If that happens, I'll be very happy; I don't need to profit from it.

It's just a "fuck them, kill them" feeling. I know a lot of their stories. I hope to see Hyperliquid or any other protocol give these traditional exchanges a choice: adopt perpetual contracts or die. If one day CME turns all its products into perpetual contracts, it will prove that the perpetual contract model we invented is successful enough to have become a core product on major global exchanges. If Jeff's 11-person team (I met some of their team members at dinner the other day and confirmed it's 11 people) can take down all the major stock exchanges in the world, that would be awesome, and I'd be happy for them.

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

Arthur Hayes: There must have been 250 people, and we were talking about team building all the time. But to be honest, when I think back to when I talked to people at Hyperliquid about this, we all felt: forget it, let's keep small teams. With too many people, things get chaotic—today you're dealing with HR disputes, tomorrow you're mediating who doesn't like whom, and the day after you're figuring out how to fire the unsuitable people.

To put it bluntly, if we really grow the team too big, as CEO, I'll be spending all my time on personnel issues instead of focusing on how to make money. While we don't have three or four thousand people like CZ, 250 is still too many. I'm in favor of small teams.

• Host: Some people believe that in the future there will be more hype, more pump-and-dump schemes, and more tokens like Uniswap that can earn one or two million dollars a day, with the project teams then returning that revenue to token holders instead of relying on governance for idle funds. What do you think? Do you think we will see more projects like this?

Arthur Hayes: I think so. Because from every cycle I've experienced, the crypto market has consistently moved in that direction, but it's always been all talk and no action. Look at UNI's chart, it fell from $35-40 to $3-4. And look at dYdX, they talked about permissionless listing, their market cap soared to two or three hundred billion in 2021, and now they're basically dead. And they made money, but token holders didn't see a penny.

Returning to the point, most altcoins launched in 2023 and 2024 were high FDV (Funds-to-Value) projects with low circulating supply. They lacked product-market fit, had no users, and no revenue, or if they did generate revenue, they didn't share it with token holders. The market will punish them, and now retail investors are unwilling to buy them. Therefore, you must have a good project and treat token holders well. Ultimately, projects like Hyperliquid demonstrated that success doesn't require venture capital; all you need is a top-notch technical team and sharing wealth with token holders.

Why should we pay to buy tokens and help you pump the price, while you use regulation, governance, and DAO voting as excuses not to share the profits? When I talk to some project founders, I say, "Learn from Hyperliquid, look at their charts." You can also choose to plummet like Berachain. Who do you want to be? Smokey or Jeff? They both made money, but one is popular, the other is hiding in a corner.

So now the market has validated what a successful token model looks like. Uniswap decided to distribute fees, and the token price went up. Although my position wasn't large, and I even lost a little, this is a trend. And this trend, after three altcoin cycles, has finally entered a clear phase: the cards are laid out, you either get paid or go to zero. You are free to choose.

• Host: Many veteran OGs are taking to Twitter to say: This is the worst cycle ever, there's no comparison. Solana's price has risen from $8 at the end of 2023 to its current level. What's your opinion on the performance of this cycle, especially compared to previous product cycles?

Arthur Hayes: Each round has its own theme, and there will always be people who made money in the previous round who will ridicule the venture capital projects in this round, saying that they are not "serious" enough, or that they are just children's games.

But essentially, they were just venting their frustration because this round wasn't their home turf anymore. So I don't really care about that.

I've always firmly believed in one thing: everything is reflected in price. In crypto, the most important thing is "price" itself. The market allows people to trade around these assets, and that's the very reason crypto exists.

It's inherently volatile, which isn't necessarily a bad thing. Early technological changes are always perceived as "crude." Think about it: when early films first introduced actors speaking, people in Chaplin's era thought it was terrible; when television first appeared and women wore miniskirts, it was considered "crude"; the same was true when the internet first emerged. So, if you tell me Memecoin is "crude" and NFTs are "garbage" art, OK, then I'll buy Memecoin.

Because these "vulgar" things precisely represent the beginning of the next cycle. The next "Guggenheim" is hidden in these things. So, whenever I hear a bunch of people saying "This won't work" or "This isn't mature enough," I know I should buy it. This is a very clear market signal.

• Host: But how do you manage to stay relevant? You've already made a lot of money, and instead of resting in your ivory tower, you've maintained a keen awareness of current events. How do you do that?

Arthur Hayes: Connect with people, especially those who are genuinely interested in this field.

I enjoy visiting conferences and browsing the booths to see what everyone is selling and what young people are doing. If you only stay in the upper class and rely on private banks to recommend government bonds or Bitcoin ETFs, you can make money, but you will gradually grow old and stagnant.

If Bitcoin doesn't move, it's equivalent to going to zero. The same applies to people. If you don't move, if you don't stay active, you'll calcify and die.

If I want to live longer in this universe, I must stay active. Whether it's exercising or interacting with people, you have to keep moving. If you refuse to get out into the field, don't even read young people's posts, are unwilling to go to trade shows, and are unwilling to quietly listen to what others have to say, in the end you'll only be sitting in a chair drinking whiskey, listening to others recommend financial products, and then slowly getting fat, aging, and dying. So this is how I stay "relevant."

Of course, there are many people who are more perceptive than I am, but I genuinely love the market. So even if you just want to know about the future of crypto, you should go and see for yourself, even if it's just as an observer.

Message

• Host: What advice do you have for young people who want to make a comeback in the cryptocurrency world? If you were them, what would you do? What should you focus on, how should you adjust your mindset, and what strategies should you develop to get to where you are now?

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

Consider this: the Federal Reserve has been targeting 2% inflation since 1913, and this mere inflation has caused the dollar to depreciate by 99%. Therefore, even small gains, as long as they can be compounded, can accumulate into enormous wealth.

Put aside those fantasies of high-leverage gambling. You can certainly feel the urge, but more importantly, understand the math behind compound interest and then wait patiently. If you really want to go down the "high-risk, high-reward" path, such as leveraged trading, then you need to become a professional trader working 24/7, familiar with market microstructures, understand trading products, and master market liquidity rules.

If you're not willing to invest that much, then buy spot without leverage. Take a portion of your monthly income, buy the crypto assets you like, and then forget about them; don't trade frequently.

Because unless you're willing to invest the time to become a trader capable of handling highly volatile assets and perpetual contracts, that kind of "gambling to turn your fortunes around" will only bankrupt you.

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