Dragonfly Partner: BTC is a Generational Asset, Bullish on ETH and SOL

Original Link: If You Want To Get Rich, Hold Bitcoin

Compiled by: CryptoLeo (@LeoAndCrypto)

Editor's Note: As the cryptocurrency industry once again hits a low point and many early OGs choose to exit, Dragonfly Capital partner Haseeb Qureshi recently discussed the current state of crypto and his evolving understanding of the industry in an interview. From talent flow and Silicon Valley culture to industry recency bias, the growth narratives of ETH and SOL, and the explosive potential of Hyperliquid, Haseeb also explained the significance of sticking to being a crypto "Settler" in an era dominated by AI. This is an article that bolsters conviction. Given the conversational nature of the dialogue, this piece adopts a first-person narrative. Odaily has compiled and translated the interview content as follows:

Some Crypto OGs Are Leaving. It's Normal. I Remain a Settler!

I feel tired, very tired. A lot has happened recently, both market downturns and internal company issues.

A while ago, I was chatting with friends, and they unanimously believed that being a VC is a very decent job. Most VCs just pick good investments, wait, and enjoy leisure time. But that's not the reality, at least not at Dragonfly. We work harder than they do.

Someone just told me that I respond very quickly compared to other VCs. I'm constantly on the phone discussing work matters, always doing things. That's how we operate at Dragonfly. That's the secret to why we profit in many investments – because we work harder than others. Not everyone can do this, especially over many years.

Many people are currently exiting, like Kyle Samani leaving Multicoin, and many other OGs are leaving the crypto space.

But don't overstate this. People always exit crypto. This week alone, I've had 4 or 5 different people tell me how they feel, saying the current market sentiment is worse than after the FTX collapse. I think this is purely recency bias. The decline is happening now, so it feels worse. (Odaily Note: Recency bias is a cognitive bias where people overweigh recent events when making decisions or forming impressions, neglecting long-term data or historical patterns.)

Why do I say this? After the FTX collapse, far more people exited crypto. They lost a lot, and the metaverse, chain games, etc., they pursued, didn't materialize, so they left.

It seems like the idea of people leaving crypto is unique. Every time prices drop, people exit. Also, there's a normal tenure in one's career. For instance, if someone has been in a field for 10 years, it's normal for them to leave. Especially for people like Kyle, a very successful VC who has made who knows how much. For him, money isn't the issue; proving his worth is. Multicoin was one of FTX's largest investors. When FTX collapsed and SOL dropped from over $200 to $8, everyone thought Multicoin was wrong. They weathered the storm and proved themselves one of the best investors in the field – a career pinnacle. Kyle's exit doesn't mean he's completely disillusioned with crypto.

Another point: There's a big difference between pioneers and settlers. It's a human law. Those who strive westward to find California and explore new worlds aren't typically the ones who end up building the towns. Similarly, in a startup, the psychological state of the first 10 employees is completely different from the 50th, 100th, or 1000th. The ones who joined Google early and built from scratch are different from those who later managed Google Shopping or Google Drive. They are entirely different types of Builders.

Back to recency bias. As an investor, the most insidious bias is status quo bias. People tend to believe the current state will persist because if it weren't resilient, it wouldn't be the status quo. But the tech industry is full of change, especially with AI making everyone think, "Wow, anything could change."

Years ago, people were talking about the "Great Stagnation." Peter Thiel wrote a famous essay about abundant innovation in the digital/software world and stagnant innovation in the physical/real world. Now, we see progress in lifespan extension, CRISPR-Cas9 gene editing, AI, drones, quantum tech, and nuclear reactors. Suddenly, there's forward momentum, which is very beneficial for society.

For investors, the most common failure mode is still not believing the status quo will really change much.

The Silicon Valley Model is Unique. It Enables Cross-Company Trust and Transfer.

It's hard to describe what I learned in Silicon Valley. It's more like an operational style, a unique way of thinking found there. Many cities worldwide say, "We want to be the next Silicon Valley," and I laugh every time I hear that.

I think the Silicon Valley model has only been replicated in two places: China and Israel. Few other places have figured out how to build this model.

The most important aspect of the Silicon Valley model is celebrating failure. In Silicon Valley, failure is normal; it doesn't ruin your reputation. You can stage a comeback. This is nearly impossible elsewhere. Other places might say "failure is okay," but they treat you like a Loser. If you leave a big company to start a venture and fail, people will question why you left Deutsche Bank, SK Telecom, or a good job to start a company. Failure becomes a lifelong stain. That kind of mentality is wrong.

Another key in Silicon Valley is extremely high trust. This is rare elsewhere. Even though America is litigious, people in Silicon Valley rarely sue each other. It's an extreme melting pot of ideas; people inevitably borrow from others. But everyone is more willing to move fast and share. Even if an idea gets borrowed occasionally, it's fine. Everyone should work towards the same goal, focus on building the whole, and not get overly hung up on details. If you have an idea, act fast, trust others, trust the right direction, and trust that the people around you won't harm you.

There's a very strong kinship within Silicon Valley that people often overlook. In California, non-compete agreements are unenforceable, allowing talent to flow freely. It's the opposite elsewhere, where non-compete clauses lock people into companies. Many companies don't want trade secrets leaked or information transferred. Silicon Valley takes a holistic view: "This is good for all companies. Even if someone takes knowledge from my company and moves it elsewhere, potentially harming us, the incredibly efficient information transfer is good for society."

Because of this, knowledge flows extremely fast in Silicon Valley. Almost all AI Labs are here. Everyone "leaks" and exchanges information, resulting in all top AI Labs being at a similar level, with most models being free. This is impossible elsewhere. This is the true power of Silicon Valley: sharing, not hoarding.

Crypto is Tech. We Need to Learn "Long-Term Greed" from Capital Flow.

Crypto is fundamentally technology. Bitcoin is software people run on computers; everything we build is software.

Its operation isn't necessarily identical to software companies. There are obvious differences between Microsoft, Bitcoin, Ethereum, or Aave. But we can learn a vast amount from the tech industry about characteristics of efficient teams, how technology gets adopted, and what growth curves and retention curves need to look like for sustainability. These directly apply to crypto.

But crypto also involves money, society, and governance. To truly understand crypto comprehensively, people need to learn a lot from these other fields too.

It's not just a tech issue. We went through the internet bubble and its burst, both tied to excessive expectations and finance, involving fund and capital flows. We also know crypto is closely tied to funds and capital. If you don't understand the financial elements, you can't see the big picture.

Tech provides incredibly rich information, but not all crypto participants share this view, especially pure traders who might lack this perspective.

Bankless co-founder David Hoffman once wrote a profound sentence in an article: "The point of crypto isn't to make you rich; it's to make you free."

There's nothing wrong with wanting to make money. Everyone does; I do too. Freedom and liberation certainly include the freedom to make money and the freedom to act in one's self-interest. No industry or market has ever asked people to act against their interests.

When problems arise in crypto, people often blame greed. Binance got greedy, Wintermute got greedy, entrepreneurs got greedy, VCs got greedy. Someone's greed is why prices dropped. This view is too superficial. No market asks people not to be greedy. As long as you're creating value, building the right thing, and doing it sustainably, it's fine.

Former Goldman Sachs partner Gus Levy famously said, "We're greedy, but we're long-term greedy." In contrast, short-term greed is actually very stupid, like King Midas in the story. Drug trafficking is a short-term greedy move, but not viable long-term. Pure traders aren't wrong, and long-term holders aren't wrong either. Let's see who lasts to the end.

Crypto's Exponential Growth is Why I Ultimately Chose and Stuck with the Industry

I went full-time into crypto in 2017, the heyday of ICOs. I started venture capital in early 2018, when the ICO bubble began to burst.

When I started investing, things were bleak. 2018 was probably the worst sentiment I've seen in crypto, worse than FTX. With FTX, at least there was a reason: SBF deceived everyone, causing the industry's decline. But in 2018, there was nothing to blame. Bitcoin dropped from $19,000 to $4,000. Ethereum plunged below $100. We all had a strong feeling we were deluding ourselves; everything in crypto was a collective hallucination.

But I had a strong conviction that led me to choose and stick with the crypto industry and become a VC.

From 2018 until the COVID outbreak in 2020, everything was calm. There was no recovery in crypto; it was in the dark. But we could see the beginnings of DeFi, with Maker DAO and Compound starting to take shape. Their momentum wasn't huge, but they were slowly influencing the industry.

At the time, I believed in crypto's exponential growth, believing something far grander and more important was coming than what we were seeing. The technology would eventually impact far more than 100,000 people (the number using blockchains then was under 100,000).

You have to believe the industry's scale will grow exponentially. Back then, telling someone I thought the US government would buy Bitcoin seemed like a fairy tale. After FTX, we genuinely worried the US might ban crypto.

So, after all this, having lived through countless dark moments in this industry, I often look inward and ask myself why I believe in it. I used to be a Texas Hold'em player. The most important thing I learned from poker is strategy. You can't guarantee winning every hand, but you need a winning strategy that can beat your opponents. In my view, my strategy is to believe in crypto's exponential growth and to realize that the scale of crypto 10 years from now will far exceed today's, just as 10 years ago, crypto was far larger than when Bitcoin was first born in 2008.

This is why I believe it's crucial to trust the power of exponential growth and view current events from a macro perspective, rather than being limited to the surface of any specific moment.

Bitcoin is Also Generational Wealth. That's Another Reason I Believe in Bitcoin.

Furthermore, I still support crypto and Bitcoin now because of institutional and governmental entry. Very few institutions truly hold crypto. We manage substantial assets, mainly from institutional partners who gain exposure through us, but this represents less than 1% of their portfolio. Institutional and asset management adoption of crypto is still early – Morgan Stanley only recently started allowing recommendations of digital assets to high-net-worth clients. Vanguard Group only recently approved Bitcoin ETFs.

Another thing to understand is that crypto is highly generational. Remember the FIT21 Act, the predecessor to the Clarity Act? It initially passed the House. If you look at Congress after Trump's second election, you'd see the biggest predictor of voting for that bill was age.

The older generation doesn't know what crypto is; they only hear about it in the news. Their children are the ones using it. It's a generational transfer. Baby Boomers are aging and passing BTC to the next generation.

When I was in college, the concept of Bitcoin was still quite novel. Kids entering college now don't remember a time before Bitcoin. It's been 18 years.

It's very hard to change people's first impressions of things, especially when they themselves refuse to try. You can see this clearly in the US Congress. These lawmakers don't really understand what crypto is. They've heard about it, read reports, and their children have told them about it. That's the extent of crypto's exposure in Congress.

Gold Supply Could Still Increase; Bitcoin is Forever Independent and Irreplaceable

Speaking of Bitcoin and gold, people have a deep attachment to gold. "Gold has thousands of years of history; you can never replace it. It has Lindy effect." Thinking of my mother, my grandmother – their fondness for gold is unwavering. But for young people, what they consider valuable has long been digitized. Why would a stone painstakingly mined from somewhere on Earth be more valuable than something digital?

Regarding mining: SpaceX has clearly stated one way they intend to profit is by mining rare minerals from asteroids. Post-IPO, asteroid mining seems even closer. If you can get an asteroid containing gold, Earth's gold supply could potentially double. There isn't that much gold in the world. All the gold in the world could fit in a cube smaller than a football field. If gold were truly discovered on an asteroid, it would completely reshape the global gold market, and the impact would be permanent.

You won't find Bitcoin on an asteroid. Bitcoin is software. I think for a software civilization, it makes sense for our money to also be software-based.

Personally, I've had some investments at various times, but most of my assets are self-held. Sometimes I sell some for taxes or other reasons, but mostly my personal finances are straightforward. I invest significantly in all our funds. As a GP, I must put my own money into all our future funds. I also personally hold some crypto, ETFs – that's about it.

For me personally, while I hold Bitcoin, I don't invest in it because it's not a risk asset. I believe Bitcoin's core is decentralization. It relies entirely on consensus, not just PoW consensus, but a social agreement that Bitcoin will be the way we measure non-sovereign wealth in the future. This might be inevitable.

People complain about Bitcoin's declines because its performance varies. But the reality is that Bitcoin and crypto are generally very versatile. They change form, correlating with different assets at different times: sometimes with gold, sometimes with the Nasdaq, sometimes with nothing. It just does its own thing, switching between these different states.

Looking at Bitcoin's history clearly shows its performance isn't always consistent. So, there are two competing views:

One view is it should behave like gold; when gold rises, Bitcoin rises.

Another view is it's an asset correlated with nothing.

If Bitcoin behaves like gold, why buy Bitcoin? Just hold gold.

Reality is, if you just compare Bitcoin to gold/Nasdaq, their charts are very close. Correlation was very high until around 10/11. After 10/11, the correlation disappeared. Historically, Bitcoin performs differently from any other asset. In some periods it mimics others, but most often it's clearly unique. Bitcoin is an independent asset with its own cycles.

I think for the next 10 years, people will constantly complain and question, "Why isn't Bitcoin rising more?" This won't stop until Bitcoin's adoption curve truly saturates, which will take a very long time.

I know many people who entered crypto at the same time as me but didn't make money. How can you enter this industry during a crypto/ Bitcoin low and still not make money? The answer is simple: you just didn't stay in the market. If you persist in the market, you make money.

In a way, this is one advantage of being a VC. VC forces you to stay in. It forces you to hold; you can't sell venture investments. For many of our partners, even if they think "crypto is garbage," they have to hold our funds. The only thing preventing them from making a mistake is being locked up.

The beauty of VC is that it overcomes many of humanity's worst instincts. A massive advantage you can get in this market is never being forced to sell. I think this is why VC is such a direct and simple way for investors to gain exposure to crypto compared to direct investment.

I'm Still Bullish on ETH and SOL. The Market is Pricing Them on a "Growth Narrative."

Many people are losing a bit of faith in ETH and SOL. They say on social media, "This