Conversation with Multicoin partner: The crypto market has bottomed out, and this cycle looks promising for three cryptocurrencies

Source: “When Shift Happens”

Compiled by: Felix, PANews

Multicoin Capital’s managing partner Tushar Jain recently shared his views on the current crypto market on the “When Shift Happens” podcast. He said the crypto market has bottomed out and is about to enter a new turning point, and he also detailed his investment logic for Solana, Hyperliquid, and Zcash.

PANews has compiled the highlights of the interview.

Host: Do you think we’re at a turning point right now?

Tushar: Yes. Life is beautiful, and the market has started moving again in a direction that benefits us. This is the most exciting part of the cycle. I think we are at a turning point. There are a few signs that prove it. First, you have to see that market sentiment truly hits rock bottom before it can reverse—just like in a bull market, sentiment has to reach mania for the top to form. Second, when bad news no longer causes the market to go down, that’s a sign of a turning point; when good news no longer makes the market rise, that’s also a turning point. Last month we went through some major bad news, like significant hacks, but it didn’t trigger large-scale selling—which is a huge signal. On top of that, application adoption has kept increasing, and there’s been a disconnect between price and fundamentals. So I think it’s a perfect storm.

Host: Everyone knows you and Multicoin are extremely bullish on Solana. Have you changed your view on Solana? And when you say you’re bullish on both Solana and Hyperliquid, how do you allocate positions?

Tushar: This is a matter of time horizon. I still believe Solana is the right technical architecture for an internet capital market—you need a permissionless, open-source chain to integrate everything into a single platform. I still like its performance and architecture. But at the same time, we’re also seeing derivatives trading volume moving toward Hyperliquid. I currently hold large positions in both assets, and I’m bullish on both. Solana is the leader in spot trading, and I believe it will host spot trading of tokenized securities, while Hyperliquid is clearly ahead in derivatives. Rather than being an extremist, it’s better to think probabilistically and hold both. I’m not a “maximalist” for any single asset, and I won’t die on a particular position or viewpoint.

Host: How would issuers in traditional finance choose? Can this help us judge who the biggest winner is?

Tushar: Issuers in traditional finance wouldn’t issue assets on Hyperliquid. We see institutions like Galaxy issuing stocks on Solana. The core difference here is “credible neutrality.” Solana has credible neutrality that Hyperliquid doesn’t. This is a trade-off: Hyperliquid lacks credible neutrality and has opaque validator nodes in exchange for better performance. Users accept it because they can verify the chain and see the exchange’s real-time solvency. And Solana is not only client open-source, it also has an extremely strong validator community—of course, that also comes with costs. Traditional financial institutions care a lot about credible neutrality. Goldman Sachs can’t settle on a competitor’s Stripe chain, and JPMorgan also wouldn’t settle on DRW’s chain. They would never hand so much power to a competitor.

Host: Since you’re bullish on both SOL and Hyperliquid, how do you decide the position size? Is it a 50/50 split?

Tushar: Position management is an art, not a science. For long-term investors, trying to use quantitative models to allocate positions precisely is a trap. You should concentrate your capital in the asset you like the most. If you put money into your tenth-favorite asset, what’s the point? When deciding position size, you need to consider the demands of external investors, tax costs (for example, we held SOL long before we got HYPE), and the “minimizing regret framework.” Imagine one or two years from now—if you’re wrong on one of the assets, which one would make you feel more foolish?

Host: Looking ahead to 2026, which asset is the most obvious opportunity for you?

Tushar: For me, one very obvious choice is Zcash (ZEC). Although due to liquidity and market-cap constraints its position is relatively small, Multicoin has already accumulated a fairly large portion of the total supply. I like its momentum, use cases, and community—it reminds me of early Bitcoin. When I saw it rise last year and spoke with many people who were early believers, I found that even if the price pulled back, they still held their convictions. This isn’t a short-term hot-money game. Also, Zcash has no fundamentals (no cash flows and no revenue). That means its value depends entirely on people’s consensus, which actually gives it more upside potential. As a store of value, the bigger it gets, the better.

Host: What does Zcash represent to you?

Tushar: It represents a return to the values of the “cypherpunks” that helped build this industry. I support stablecoins and RWA on-chain, but fundamentally they’re centralized and can be frozen. This industry is built on “self-sovereignty,” and now the mainstream is catering to regulation. In my view, today’s Bitcoin has already been captured by institutions (such as BlackRock, MicroStrategy). With the debate around Bitcoin’s quantum risk, early cypherpunk Bitcoin supporters may go the other way in a fork—so I think Zcash represents the industry’s original intention, and more OGs will join.

Host: For assets like Zcash that have no revenue, how do you value them?

Tushar: For assets with operating income, I look at their cash flows and give a target price using a P/E ratio. But for an asset like Zcash, I look at its market-cap ranking. Is it currently 20th, 15th, or 10th? I think it can get into the top five. This approach can also be adjusted as the overall market changes (for example, whether Bitcoin is at 80,000 or 200,000).

Host: For assets like this, do you hold until it enters the top five, or do you trade swings?

Tushar: We absolutely do not proactively trade swings. It’s too hard—humans can’t control their emotions. Many fund managers try to sell high and buy low, and end up getting hit by both sides. I have an extreme aversion to technical indicators. I drew a few lines, and then a real-world news event happened (like a geopolitical conflict)—and the chart was completely useless. We are “active management,” not “active trading.”

Host: Then for revenue-generating assets like SOL or HYPE, what’s your valuation framework?

Tushar: For those, you have to forecast forward. You need to think about what the key drivers of the business are, what claims token holders have on revenue, and what options exist in the market. You also need to consider execution risk and incorporate it into the discount rate (for example, Ethereum’s risk is lower than Solana’s because the time horizon is longer and it’s more decentralized). These numbers are just reference metrics; in the end, you still need to make a qualitative judgment.

Host: How do you choose the timing to buy? How did you manage to accurately catch the bottom in HYPE?

Tushar: Trying to precisely catch the bottom is a skill you can’t repeat. My framework is a “three-part” approach. If I’m going to invest $100, I buy one-third immediately. Then, over a set time window (say, one to two months), I DCA the second one-third. Finally, I keep the remaining one-third as dry powder. During the DCA period, if there’s a big drop (for example, a 10% decline in a single day), I buy more at the lower price. This greatly reduces the regret emotion caused by missing the move.

Host: These past few weeks had two major events. First, there was the Zcash code vulnerability incident, which caused the coin price to crash—but you actually added to your position. What happened?

Tushar: Put simply, when Zcash’s core team used AI tools to check the code, they found a vulnerability in the Orchard privacy pool that could potentially lead to double-spending, and they patched it. The market panicked, thinking someone could mint tokens infinitely. But in reality, transparent addresses were unaffected, and the privacy pool’s “turnstile” mechanism (which records the total amount of funds entering and leaving) showed that there was no evidence that hackers withdrew funds in a big way. On the day it happened, I didn’t take action (I don’t like trading when emotions are extremely volatile and liquidity is poor). After observing for a few days and confirming that no one exploited the vulnerability, I believed this was irrational panic in the market that triggered a chain of stop-losses—so we significantly increased our Zcash position. The team will launch a new pool called Ironwood in July that has undergone “formal verification.” In my view, this was ultimately just a false alarm.

Host: Second, Multicoin recently published a report predicting that HYPE will reach $319 within two years. You hold a lot of HYPE—won’t others think you’re just “calling trades”? Aren’t the conservative assumptions inside too aggressive?

Tushar: We do hold positions, but people should look at our derivation logic and draw their own conclusions. Our assumptions aren’t aggressive:

First is the crypto derivatives CAGR of 35%: over the past 5 years it was 45%, and we’ve already cut a quarter of the growth rate.

Second is DEX accounting for 32% of the derivatives market share: rising from almost zero in 2022 to 16% today—doubling to 32% within two years is consistent with the trend.

Third is Hyperliquid maintaining a 30% share of decentralized derivatives: this is also conservative, because trading-volume data is easy to fake (many other venues may have wash trades). But right now, Hyperliquid has 59% of the network’s real open interest (OI), and this data is very hard to fabricate. As other platforms stop subsidizing, Hyperliquid’s actual share should keep rising.

Fourth is linear growth of USDC collateral with trading volume: as long as traders’ leverage preferences remain unchanged, stablecoins used as collateral should naturally grow in proportion to trading volume and open interest.

Host: Has the market bottom been reached?

Tushar: It’s very difficult to predict the exact bottom precisely, but I think the price low point may already be behind us. Excluding macro black swans (like an escalation in the Iran-U.S. conflict), we’ve already seen a stage of “extreme indifference.” Bad news no longer makes the market fall, and the uncertain have already left—what remains are absolute believers. But this doesn’t mean it will see a straight “V-shaped” reversal and immediately take off. The market may go through a period of sideways trading and indifference for a while, and it needs time to build a new narrative.

Host: Can you expand on the advantages you have in investing?

Tushar: If you don’t have an advantage, you should buy index funds and go play on the beach. There are four sources of advantage in investing. First is channel/information advantage (someone will call you with inside information). Second is analytical advantage (you understand the assets better than others). Third is behavioral/psychological advantage (you know yourself extremely well and can control your emotions—this is the hardest). Fourth is structural advantage (for example, the capital structure over long cycles). We invest in Zcash mainly because of its extremely strong behavioral-psychological advantage (when the market is extremely pessimistic, holders’ beliefs are steadfast), plus some channel information advantage.

Host: What does Ethena represent to you? You built a big position last year.

Tushar: Ethena is in the same track as Aave and Morpho: matching lenders who want yield with borrowers who want leverage. We hold multiple projects in this space (including Kamino on Solana), because the lending market has clear scale effects and liquidity tends to concentrate at the top.

Host: To what extent do you evaluate founders?

Tushar: We value founders very highly. Our evaluation framework has three multipliers. First is the total market size a few years from now. Second is long-term profit margins (whether scale effects prevent profits from being eaten up by competition). Third is execution risk. Ethena’s founder Guy Young is one of the most capable founders in DeFi; he greatly reduces execution risk and increases valuation potential.

Host: If you’re a long-term investor, when do you lock in profits?

Tushar: For our fund, the so-called realization of profits is converting assets into Bitcoin. When the market is extremely euphoric, we sell high-risk assets to buy Bitcoin in order to reduce Beta risk. When the market drops sharply, we use Bitcoin to bottom-fish the projects we like. We only sell in three cases: first, when we find a better target; second, when the investment thesis is disproven; and third, when market valuation becomes overly euphoric and has already priced in expectations for the next several years. Since we commit to running the full portfolio for investors, our “cash” is Bitcoin.

Host: What do you think about Ethereum?

Tushar: It’s hard to evaluate. For the past 6 or 7 years, they kept telling everyone to use L2 scaling, and now suddenly they want to raise the Gas limit to return to L1 scaling—no one can really make sense of what their plan is. The foundation and Vitalik don’t want to hold too much power; they want the market to explore. But the market is a great follower, not a good leader. Even though spot trading lost to Solana and derivatives lost to Hyperliquid, Ethereum’s market-cap resilience still surprises me. The only reasonable explanation is that people treat it as a “store-of-value asset,” or as a better Bitcoin.

Host: Your partner Kyle left Multicoin, and many people feel pessimistic because of it. Why are you staying?

Tushar: I’m also surprised he chose to leave, but I respect his decision. This prompted me to rethink my motivation. I don’t use a framework of “treat every day like it’s the end of the world.” Instead, I ask myself: “If I still have 10 years to live, what do I want to do?” The answer is that I want to win. I like the achievement of being right when others are wrong. I believe blockchain is the underlying infrastructure for the future capital market, replacing the outdated system we currently have. When Zuckerberg turned down Yahoo’s $1 billion acquisition offer, he said, “If I got $1 billion, I would just create another social media company—so why would I leave the one I’m in now?” That strengthened my conviction.

Related reading: A detailed look at the Multicoin report: Hyperliquid (HYPE) has up to a fivefold upside

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