Arthur Hayes: Heavily betting on ZEC was a revelation from a wise person; the best investors must engage in internal conflict

This article is from: CounterParty TV
Compiled by｜Odaily Planet Daily Ethan

Editor’s Note: If you want to know how a true "market participant" assesses the current crypto world, Arthur Hayes is worth listening to.

In the past few days of continued turbulence in the crypto market, BTC fell from below 100,000 to once again drop below 90,000 dollars three days later, while ZEC, driven by Hayes's "series of calls," reached a new high against the trend. On November 17, CoinGecko data showed that ZEC's market capitalization exceeded 11.7 billion dollars, rising to the 15th position in the cryptocurrency market. As of the time of writing, ZEC is currently priced at 609 dollars.

On the evening of November 14, Hayes appeared on CounterParty TV hosted by crypto community streamer Threadguy, delivering his consistently sharp insights once again on the eve of a cycle transition:

• To capture the next breakout point, the only way is to get deep into the front line and stay close to the market;
• The current macro environment is very favorable for crypto;
• For those who are patient, have capital reserves, and can manage high leverage well, now is an excellent opportunity to allocate assets responsibly;
• Gold and Bitcoin should not be seen as opposites; I hold both;
• Ultimately, what I want is drama; I want to see people cursing and others cheering, which indicates that I have placed the right bet.

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

The following is the original interview content, translated by Odaily Planet Daily, with some content omitted for smoother reading.

Opening

• Host: Your tweets always reveal an optimistic sentiment, and I feel that among most institutional and VC circles in the crypto space, you seem to be the most active in the liquidity market, closest to the real atmosphere of Crypto Twitter. What do you think?

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

The grassroots atmosphere means you must stay close to the market. To capture the next breakout point, the only way is to get deep into the front line and stay 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" mentioned by traditional institutions, such as Bitcoin, Ethereum, and Solana, and these strategies are often at least two years late.

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

Arthur Hayes: No, this is not a real disconnect, but rather a necessary result determined by incentive mechanisms. These venture capital funds follow a specific incentive model, which fundamentally shapes their investment logic and behavior. If they must operate by raising funds from limited partners and charging management fees according to a predetermined structure, their behavior will naturally lean in that direction.

This also explains why most crypto VCs have long-term returns that lag behind Bitcoin and Ethereum. In fact, in the entire traditional venture capital industry, apart from a few top funds like a16z and Sequoia Capital, the vast majority of funds actually struggle to achieve profitability, and their returns often fail to surpass the S&P 500 index or the Nasdaq index. Investors pay high management fees, but the final returns may not even match those of a low-cost ETF, which can 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 those funds with long-term mediocre performance. He eventually admitted that many times it was out of a "feeling." They enjoy the experience of being courted and flattered by suited bankers, and this emotional satisfaction often outweighs pure return considerations. Human nature dictates that everyone likes to feel valued and recognized.

So rather than saying the two markets are disconnected, it is more accurate to say they cater to 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, probably entering during the Solana and meme coin craze in 2024. But before we continue, could you briefly introduce yourself?

Arthur Hayes: I entered the cryptocurrency space in 2013. Before that, I was an ETF market maker at Citibank and Deutsche Bank in Hong Kong. Later, I left the traditional finance industry and happened to read the Bitcoin white paper in the spring of 2013 when Bitcoin was around 200 dollars. I have always had a strong interest in topics like gold and monetary policy, so that white paper shocked me. As someone who has studied financial history, I intuitively felt that this technology could be as revolutionary as the printing press.

Looking back, I am very grateful that I had enough savings at the time, so I didn't have to rush to find another job. Instead, I had the opportunity to crash on a friend's couch and take the time to 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 want to use. In 2014, I met my 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 largest cryptocurrency exchanges in the world. After that, we faced legal challenges from the U.S. government and were once at risk of criminal charges, but fortunately, we were pardoned.

In addition, I now mainly manage my own funds for trading and operate Maelstrom, participating in early token investments and advisory work.

Macro Layout

• Host: From your recent statements, you seem very optimistic about the current cycle and future trends. I'm curious, how are you positioning yourself now? Seeing Bitcoin at 98,000 dollars this morning, what do you think?

Arthur Hayes: The Maelstrom fund has now invested about 98% of its capital, leaving only a little cash. Moreover, many of our positions have low costs, so to be honest, short-term market fluctuations don't affect me much. I don't really care about that. 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, and that feeling can be really torturous. You not only have to get the direction right, but also the timing, and you have to keep paying periodic funding rates. Many people make wrong decisions at critical moments because of this.

For example, you might be bullish, but if the price doesn't rise by 1-2% within 24 hours, you start to panic. Seeing Bitcoin drop a few points, even below the psychological threshold of 100,000 dollars, while you're holding leverage and burning money every day, it's easy to lose patience and choose to cut losses. I think this is actually the biggest problem most people face right now.

But how do I see it? I think the current macro environment is very favorable for crypto. I am still continuously buying, mainly increasing my position in ZEC. (The reasons for buying ZEC will be mentioned later)

Of course, not all altcoins are rising. But if you have held HYPE and ZEC for the past 18 months, as a trader, your returns should be quite good. Yes, I know that 99% of other tokens are falling, but that’s just the current trading situation; market rotations always exist.

And I actually really like the current market. For those who are patient, have capital reserves, and can manage high leverage well, now is an excellent opportunity to allocate assets responsibly.

Because if you can recall November and December 2021, when our stock market was at historical highs and everyone was very happy, then think about what central banks around the world were saying? The Federal Reserve's stance was that it had to slow down economic growth and announced interest rate hikes starting in March 2022. If you can find the interest rate hike cycle chart from central banks, you will see that the cycle is clearly moving up to the right.

If you compare it to now, that interest rate hike cycle has clearly peaked. Yes, credit growth has nearly stagnated. We experienced a peak and then started to decline. Looking at now, Federal Reserve officials are discussing that there isn't enough reserve in the system, and they might have to restart quantitative easing or stop balance sheet reduction. If you check whether central banks around the world are in a loosening or tightening cycle, it is clear that the mainstream trend is now to lower interest rates rather than raise them.

Listening to politicians' speeches, they all talk about the impacts of AI, immigration, and other issues, with the core message being: "I want to distribute benefits," but no one mentions comprehensive tax increases. Occasionally, someone might say to tax the top 0.01%, because that sounds good politically, but it doesn't actually fill the fiscal gap. Politicians are promising "free lunches" and saying "you don't have to pay," as long as you vote in support. So think about it, in the next 12 to 18 months, how could credit possibly contract? I don't see it happening at all, because the policy cycle is completely opposite, which is totally different from the atmosphere at the market peak in 2021.

So the current market is a bit weak because we are in a transitional period------I think the key turning point will be when the Federal Reserve and the People's Bank of China truly start large-scale money printing. The U.S. has elections in 2026, and two weeks ago, the Republican Party performed poorly in several key states like New York and Virginia. Trump is a smart person; he knows how to win. The "socialism" that the Republican Party talks about is actually AI, data centers, military production, and mortgage relief; the "socialism" from the Democrats is climate change, social equity, free meals, and public transport cards. The direction of money is different, but money is always being printed. And for us in cryptocurrency, liquidity is our lifeblood.

This system is essentially a reaction to excessive money printing. You see the two major parties in the world's largest economy are all finding ways to say they want to spend money. The terminology may differ------whether it's called "socialism," "industrial policy," or "capitalism," it doesn't matter what you call it; the essence is the same. It's just advertising slogans aimed at different audiences. So we need to take a step back; don't focus on what they say, but rather on what they do. They have always used rhetoric to obscure the focus, but their actions are singular: printing money. And they do not intend to pay for it through tax increases but rather through inflation tax, which is politically the most acceptable way to relieve the situation under the global debt burden of the past four to five decades.

• Host: So what would invalidate your bullish view?

Arthur Hayes: I remember in the 1920s, around 1929 or 1930, Treasury Secretary Andrew Mellon, a famous banker, was discussing how the Hoover administration should respond to the early challenges of the Great Depression. I can't recall his exact words, but the gist was to let the economic time bombs explode, to make those who over-leveraged and squandered pay the price, and to clear the system completely; bad debts should be cleared so that the country can get back on track.

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

You see, the massive credit contraction in the early 1930s directly triggered the Great Depression, and it's recorded in history books. But that Mellon, who dared to say "no bailouts," later disappeared from the political scene, and Hoover lost badly in the next election. Such handling was simply unpopular. So now, if you search the world, which politician dares to say, "You messed up your leveraged investments, and the government won't bail you out"? None. Except for Milei in Argentina, but his influence is too small to make waves in the G7.

Now, no one dares to implement real tightening policies because too many people would lose their jobs, and too many wealthy people's assets would shrink. Whether it's a democratic country or not, such policies won't pass at the ballot box or within the party.

• Host: Why do crypto-native users feel like we are trading in the worst market ever? (Stocks and gold are at new highs, everything is crazy) If you held ZEC or other coins, you might have lost a lot in the past three months. How do you explain the current poor performance of the crypto market?

Arthur Hayes: You just mentioned "the past three months, the past six months," which is a crucial timeframe. If you bought Bitcoin in January 2025, you might be breaking even or even slightly losing now; if you bought certain 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 in profit. For example, those who entered the market on April 9, 10, or 11 this year might have seen gains of 30% or 40% by now. So if you just entered recently or just opened a leveraged position, I can understand why you're losing money.

But looking at Bitcoin's history, it is the asset with the highest cumulative returns in human history. Where does the problem lie? If you only learned about it today and expect it to rise immediately according to your expectations, the market simply won't pay attention to you. I think this is essentially a manifestation of human impatience, coupled with excessive leverage, while ignoring the fact that some assets need time to outperform others.

As long as you give it enough time, combined with the backdrop of central banks around the world continuously printing money, Bitcoin will definitely prove itself to be the best asset, and some carefully selected altcoins may even perform better. But if you randomly take a three-month period to judge success or failure, that really is no different from gambling.

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

Arthur Hayes: Because I actually don't focus on trading. Leverage itself is not wrong, but if you want to trade with leverage, you basically can't expect to sleep soundly------you have to keep your phone close, set alarms, and be ready to monitor the market at all times. You need to understand changes in position sizes, comprehend time series, and master trading habits during different time periods, such as who dominates the Asian market and how funds flow in the European and American markets… These details are the basic skills of leveraged traders.

If you can't commit to being fully engaged all the time, then I advise you not to touch leverage. This industry requires 365 days × 24 hours of focus to make money. If you're just thinking about casually building a position after work to make some pocket money, you'll definitely fall into a pit. To reiterate, leverage tools are not to blame; the issue lies with the trader's level of focus.

• Host: What do you think about Bitcoin catching up to gold? Do you think the risk levels of gold and Bitcoin are perceived differently by others? What do you think now? For those who still firmly believe Bitcoin will catch up, how do you think it will develop?

Arthur Hayes: So a large part of my holdings is in gold. To be precise, almost 100% of my non-crypto investment portfolio consists of physical gold and silver mining stocks. 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 no one can trace it.

But central bank governors face a different level of issues. If you are the governor of the U.S. central bank, you must ensure that the currency used by domestic savers can withstand inflation, which is precisely caused by U.S. government policies. For the past ten thousand years, whether for sovereign nations or individuals, the asset used to cope with this situation has been gold.

So if I were a core decision-maker or representing a government needing to guard against inflation caused by U.S. government asset freezes or excessive issuance of treasury bonds, I would choose gold. Because this is a solution I am familiar with, and civilizations have used this solution for thousands of years. I would not choose Bitcoin------after all, gold has been tested for ten thousand years, while Bitcoin is only 15 years old. If I were a national-level decision-maker, I would definitely choose the solution that has been validated for ten thousand years.

Moreover, from an operational perspective: we have vaults, armed guards, and know how to store gold. I don't need to learn the new things about private key management and crypto custody. I have legal force protection to safeguard assets with guns and bunkers, so why would I bother with Bitcoin? Therefore, the flow of gold is mainly linked to sovereign demand. For example, when the U.S. froze Russian assets, other countries would think, "Maybe one day it will be my turn," and thus bring gold back to their own countries, protected by their own military.

Even if I personally might hold Bitcoin and believe in it, from a national standpoint, I would never use it as a reserve. So my investment logic is: I need to hold things that the state will use to hedge against fiat currency devaluation (gold and silver), and I also need to hold things that ordinary people will rush to buy (Bitcoin and selected cryptocurrencies).

The movements of these two will have correlations, but the volatility will differ, essentially reflecting the same logic in different buyer groups. So I bet on both sides. I think we should not see gold and Bitcoin as opposites. You see, when the U.S. was crazily printing money in February 2022, who were the biggest buyers of gold? Central banks. Do you think geopolitical conflicts and ideological oppositions will decrease? If they do, then allocate gold, because the state will do so. Do you think global inflation will persist? If so, then buy Bitcoin, which is a tool for ordinary people to save themselves in the digital age. I plan to make money in both arenas, which is why I say gold is not a binary choice, although the proportion of cryptocurrencies in my personal holdings is indeed higher than that of gold. This is why I believe the two are not mutually exclusive but rather represent two allocation logics.

Privacy Coins

• Host: Is it Naval who has made you so fascinated with ZEC? What's the story? I remember you mentioned that BitMEX was the first exchange to list ZEC; did you launch it right when ZEC was released, or did you later design the contract products yourself?

Arthur Hayes: Actually, we were the first to launch futures contracts. Around 2016, ZEC was one of the hottest coins. Zooko was promoting it everywhere, and everyone was enthusiastic about privacy technology, shouting things like "Bitcoin needs to have privacy." I did in-depth research on ZEC at that time, but they chose a slower token distribution model.

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

In the fall of 2016, we were the only platform that could trade it, and contract trading was very crazy at that time. Later, the mainnet went live at the end of 2016, and the price soared to about 3,000 dollars on Poloniex (the first platform to trade spot). This was because there was virtually no supply at the beginning------mining had just started. As mining inflation and supply increased, the price naturally rationally fell back.

My biggest concern about ZEC at that 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 the disposal of a laptop containing the keys. Another point of contention was that 20% of the mining tax would be allocated to the founding team, but this is a voluntary arrangement; after all, the team needs to eat. The most critical doubt was that most of the early circulating tokens did not have privacy features, so what was the difference between this and Bitcoin? Instead, because it was born seven years later, the network effect was weaker, resembling a low-quality copy.

So I didn't pay much attention to ZEC for a long time. Until one evening when I was having dinner with Naval, I had just done an interview about privacy coins. The reporter asked me, "What do you think about ZEC's overnight surge of 100%?" My initial reaction was, "Oh, that's interesting, but I haven't paid much attention." Later, I found out it was Naval's tweet that drove the sentiment, but I didn't take it seriously.

At dinner, there were about 40 people, and I started chatting with Naval. I casually congratulated him on ZEC's rise, and he said, "This is my second-largest holding; I believe it is the last thing in crypto that can rise a thousandfold." I immediately got excited, and he went on to refute my doubts about ZEC from 2016 one by one. I asked, "What about Monero? Its privacy security is stronger, right?" But he pointed out that in the era of AI, where personal data is fully exposed and government surveillance is everywhere, even Monero transactions have been successfully traced by the police in Japan. I had vaguely heard this news and noted it down for further verification. He said, "If my viewpoint holds, combined with people revaluing privacy, this thing could skyrocket." I knew he was a top investor with an impressive track record. Recently, I have been following Soros's logic of "invest first, research later," so I decided to build a position, making it large enough to care about but small enough that a 50% loss wouldn't hurt.

During dinner, I notified my brokers to buy ZEC. Interestingly, 6 out of 8 brokers refused, which made me want to buy even more. In the end, I still managed to buy my first position. The next day, I went home and verified Naval's points one by one: 1. They solved the trusted setup issue through the Halo2 encryption upgrade; 2. Japanese police indeed traced Monero transactions; 3. The 20% mining tax was canceled two years ago.

I realized that the privacy narrative was reviving. Now, the underlying cryptocurrency players are all complaining that Bitcoin has been hijacked by institutions, and everyone is constantly watching what Larry Fink says, how Jamie Dimon views it, and what new regulations the SEC and CFTC are introducing. The crypto bills being discussed in Congress, how banks allocate ETF… this is not the Bitcoin we originally pursued. We need something that truly addresses privacy issues and belongs to ordinary people.

So I began to build a position aggressively, and the subsequent trend was very telling: Bitcoin dropped from around 110,000 dollars when I started buying to below 100,000, while ZEC continued to soar. I like the vitality of such assets, and the love-hate relationship people have with ZEC online. Ultimately, what I want is drama; I want to see people cursing and others cheering, which indicates that I have placed the right bet. The most feared investment is in assets that no one discusses; holding lifeless assets can cause anxiety, as funds are trapped there losing value, making it better to invest elsewhere.

ZEC has attention, so it is 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, and I have set target prices and investment plans, currently nearly completed my position. If it pulls back to the 400-dollar range, I might add more, but right now around 500 dollars is quite strong.

I have been exploring with the Zashi wallet and Keystone hardware wallet for a long time to ensure I understand the technical details; I am ready to make a big move.

• Host: Some say that in the next five to ten years, the crypto space will add a privacy layer to the existing system, making everything "ZK-fied," and privacy will become the new norm and 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 is truly AGI or whatever you want to call it, it doesn't 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. To be honest, each of us is an accomplice because we love these smart phones with social media so much. This is essentially the largest voluntary data submission campaign in history: we actively give up all our photos, location records, and chat content just to stay connected. We crave this sense of community and computational power at the cost of completely giving up privacy.

If you want to do de-anonymized tracking of cryptocurrency transactions, whether for taxation or monitoring fund flows, it will be easy as pie. Unless there is ZK technology protection, all data that can verify your identity------not only proving who "Arthur Hayes" is but also verifying whether it's a real person or a machine------will remain in various systems. In this new digital world, proving "who you are" is very important, but we are constantly giving up more data.

My personal identity information is scattered across tens of thousands of systems, which is terrible. Now, there are discussions about using zero-knowledge proofs for identity verification (ZKYC), and I believe that protecting human identity and data on the internet will become increasingly critical. Those who want to run AI but do not want their information exposed in the global data network will definitely pursue encrypted solutions.

User behavior will increasingly rely on zero-knowledge proof technology. I fully agree with this trend. When people realize the terrifying consequences of combining powerful predictive engines (like large language models) with governments that attempt to tax, control you, and spy on your thoughts through online behavior, this awareness will spread. People will start to resist and shout, "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 awakening.

Strategy

• Host: How do you balance this long-tail vision with short-term trading? With your scale of funds, how do you split these two strategies?

Arthur Hayes: I think it's like what Stanley Druckenmiller said, the best investors can hold two contradictory ideas in their minds simultaneously. Again, you must believe in the long-term vision of anything, but also pay attention to short-term benefits. For Maelstrom, I want to increase Bitcoin positions as much as possible. Everything we do is to earn returns, which are used for bonuses and to buy more Bitcoin.

So for me, I can buy low and sell high on HYPE, take profits, and then wait for it to drop back before buying again, while maintaining a long-term positive outlook on its potential and the execution of the Jeff team. Compared to most people, I, as an investor, already have a considerable Bitcoin base; as a trader, my job is to actively capture short-term opportunities based on this foundation.

If you tell me you are just an artist or have another main job, and you believe it can rise 126 times, then what does it matter if it fluctuates over 6-12 months? Just hold it. But I am an active investor, and I will pay attention to short-term opportunities. If I think there will be a weak period and need to face competition and valuation compression, I will sell and wait for the next entry point. If it proves itself capable of beating competitors, like when I met Jeff, I said I admired what they were doing, filling a gap, but it needs time to validate success or failure. I still believe HYPE could rise 126 times, or it might not, but I will wait and see; I have time.

• Host: As the inventor of perpetual contracts, do you find it a bit strange not to be personally involved in the construction of protocols like Hyperliquid, watching them develop?

Arthur Hayes: No, it's great because I have time to ski and work out, without having to manage a team or deal with petty issues (CZ, you go ahead, I've completed my mission). Now there are young people full of energy, and I am happy for them. I want to see Hyperliquid make CME worthless. If that really happens, I would be very happy; I don't need to profit from it.

It's just a feeling of "screw them, take them down." I know many stories about them. I want to see Hyperliquid or any other protocol give these traditional exchanges a choice: either adopt perpetual contracts or die. If one day CME turns all its products into perpetual contracts, that would prove that the perpetual contract model we invented is successful enough to become a core product on major global exchanges. If Jeff's 11-person team (I met someone from their team a few days ago and confirmed it was 11 people) can take down all major securities exchanges globally, that would be cool; I am happy for them.

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

Arthur Hayes: It must have been around 250 people, always talking about team building. But to be honest, looking back, I later talked to people from Hyperliquid about this, and we all felt: forget it, let's keep the team small. When there are too many people, things get chaotic------today you handle HR disputes, tomorrow you coordinate who dislikes whom, and the day after you have to figure out how to fire someone unsuitable.

In short, if you really want to grow the team, as CEO, I would spend all day on personnel issues instead of focusing on how to make money. Although it's not as large as CZ's three or four thousand people, 250 is still too many. I advocate for small teams.

• Host: Some believe there will be more hype, more pump-and-dump schemes, and more tokens like Uniswap that can earn a million or two a day, and then the project parties will flow these revenues back to token holders instead of relying on governance to spin in circles. What do you think? Do you think we will see more such projects?

Arthur Hayes: I believe we will. Because from every cycle I have experienced, the crypto market has always been moving in this direction, but in the past, it was often said nicely, and when it came to actual implementation, it fell through. Look at the UNI chart, dropping from 35-40 dollars to 3-4 dollars. Then look at dYdX; they initially talked about permissionless listing, and in 2021 their market cap surged to two or three hundred billion, but now they are basically dead. And they made money, but token holders saw none of it.

Going back to the altcoins issued in 2023 and 2024, most of them are high FDV and low circulation projects, lacking product-market fit, users, or revenue, or even if they have revenue, they do not share it with token holders. The market will punish this; retail investors are unwilling to buy now. So you must do well with your project and treat token holders well. Ultimately, projects like Hyperliquid demonstrate that you don't need VCs; you just need an excellent technical team that shares wealth with token holders to succeed.

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

So now the market has also validated what a successful token model is. Uniswap decided to distribute fees, and the token rose. Although my position is not large and I have lost some, this is a trend. And this trend, after three rounds of altcoin cycles, has entered a clear phase: the table is set; you either distribute profits or go to zero. You have the freedom to choose.

• Host: Many old OGs have gone to Twitter to say: This is the worst cycle ever, with no comparability at all. Solana has risen from 8 dollars at the end of 2023 to its current position; what do you think of this cycle's performance, especially compared to past product cycles?

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

But essentially, they are just venting their frustration because this round is not their home turf anymore. So I don't care much about that.

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; that is the meaning of crypto's existence.

It has always been volatile, and that's not a bad thing. The early stages of technological change are always "vulgar." You see, when early films first allowed actors to speak, people from the Chaplin era thought it was terrible; when television first appeared and women wore miniskirts, it was also called "vulgar"; the same was true when the internet first came out. So if you tell me meme coins are "vulgar" and NFTs are "garbage" art, OK, then I will buy meme coins.

Because these "vulgar" things precisely represent the beginning of the next cycle. The next generation of "Guggenheim" is hidden within these things. So whenever I hear a bunch of people saying "this is not good" or "this is not mature," I know that buying it is the right move. This is a clear market signal.

• Host: But how do you manage to stay "relevant"? You've already made a lot of money, not lying in an ivory tower, but still maintaining sensitivity to the front line. How do you do it?

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

I love to walk around at conferences, see what everyone is selling, and what young people are doing. If you only stay in upper-class circles, relying on private banks to recommend government bonds or Bitcoin ETFs, you can make money, but you will gradually become outdated and rigid.

If Bitcoin doesn't move, it's equivalent to going to 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 working out or communicating with people, you must keep "moving." If you refuse to step into the front line, don't read young people's tweets, don't want to attend exhibitions, and don't want to quietly listen to what others are saying, in the end, you can only sit in a chair, drink whiskey, listen to others recommend financial products, and slowly become fat, age, and die. So this is how I maintain my "relevance."

Of course, there are many people sharper than me, but I genuinely love the market. So even if you just want to know about the future of crypto, you should go see it in person, even if just as an observer.

Message

• Host: For young people who want to turn their fortunes around in the crypto space, what advice do you have? If you were them now, what would you do? What should they focus on, how should they adjust their mindset, and what strategies should they adopt to reach your current position?

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

Think about it, the Federal Reserve has targeted 2% inflation since 1913, and just this little inflation has caused the dollar to devalue by 99%. So even just a small return, as long as it can compound, can accumulate tremendous wealth.

Put aside those fantasies of high-leverage gambling. You can certainly feel that impulse, but more importantly, understand the mathematical principles of compounding and then wait patiently. If you really want to take the "high risk, high return" path, such as leveraged trading, then you must become a professional trader who works year-round, 24/7, familiar with market microstructures, understanding trading products, and mastering market liquidity rules.

If you are not willing to invest that much, then buy spot without leverage. Take a portion of your monthly income, buy the crypto assets you are optimistic about, and then forget about it; do not operate frequently.

Because unless you are willing to invest time to become a trader who can handle high-volatility assets and perpetual contracts, that kind of "gambling to turn around" will only lead you to bankruptcy.

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