Multicoin: The crypto market has hit the bottom; the current cycle looks promising for three cryptocurrencies

Author: 《When Shift Happens》; Compiled by Felix, PANews

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

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

Tushar: Yes, life is beautiful, and the market is starting to move in a direction that favors us again. This is the most exciting part of the cycle. I think we’re at a turning point now. There are a few signs to prove it. First, you have to see market sentiment truly bottom out before it can reverse—just like in a bull market, sentiment has to reach frenzy to form a top. Second, when bad news no longer causes the market to fall, that’s a signal for a turning point; when good news no longer makes the market rise, that’s also a turning point. Last month we experienced some major bad news, such as several significant hacks, but it didn’t trigger large-scale selling—this 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 super bullish on Solana. Have you changed your view on Solana? When you say you like both Solana and Hyperliquid at the same time, how do you allocate positions?

Tushar: This is a question of a time dimension. I still believe Solana is the right technical architecture for the internet capital markets—you need an open-source, permissionless chain that integrates everything into a single platform. I still like its performance and architecture. But at the same time, we’re also seeing derivatives trading volume shifting 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 think it will carry spot trading of tokenized securities, but Hyperliquid is clearly leading in derivatives. Instead of being an extremist, think from a probability perspective and hold both. I’m not a “maximalist” for any asset, and I won’t fight to the death with any single position or viewpoint.

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

Tushar: Traditional finance issuers wouldn’t issue assets on Hyperliquid. We’ve seen institutions like Galaxy issuing stocks on Solana. The core difference here is “credible neutrality.” Solana has credible neutrality that Hyperliquid doesn’t. It’s a trade-off: Hyperliquid lacks credible neutrality and has opaque validator nodes, in exchange for better performance. Users accept this because they can verify the chain and see the exchange’s real-time settlement capability. And Solana isn’t just client open-source—it also has an extremely strong validator community, of course with a cost. Traditional finance institutions value credible neutrality very highly. Goldman can’t settle on a chain controlled by a competitor like Stripe; JPMorgan can’t settle on a DRW-controlled chain. They would never hand over that much power to a competitor.

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

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 into the assets you like most. If you put money into your tenth favorite asset, what’s the point? When deciding position size, you need to consider external investors’ demands, 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 got one of the assets wrong, which one would make you feel more foolish?

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

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

Host: What does Zcash represent to you?

Tushar: It represents a return to the “cypherpunk” values of building this industry. I support stablecoins and on-chain RWA, but fundamentally they are centralized and can be frozen. This industry is built on “self-sovereignty,” and now the mainstream is catering to regulation. To me, today’s Bitcoin has already been captured by institutions (like 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 with no revenue, how do you value them?

Tushar: For assets with operating income, I look at their cash flows and give a P/E multiple as a target price. 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 adapt as the overall market changes (for example, if Bitcoin is at 80,000 or 200,000).

Host: For this kind of asset, do you hold it until it enters the top five, or do you trade it in waves?

Tushar: We never actively trade in waves. It’s too hard—humans can’t control their emotions. Many fund managers try to sell at the highs and buy at the lows, and end up getting hit in both directions. I strongly dislike technical indicators. I drew a few lines, and then real-world events happened (like geopolitical conflict), and the chart was completely useless. We are “actively managed,” not “actively traded.”

Host: Then for income-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 business drivers are, what rights token holders have to claim revenues, and then look at 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 indicators—ultimately you still need to make a qualitative judgment.

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

Tushar: Trying to accurately bottom-fish is a skill that can’t be repeated. My framework is a “three-part method.” If I want to invest 100, I buy one-third immediately. Then I dollar-cost average the second third within a set time period (say one to two months). Finally, I keep the last third as dry powder. During the DCA period, if there’s a big drop (for example, a 10% fall in a single day), I buy more at lower prices. This greatly reduces the regret emotion caused by missing the bottom.

Host: Over the past few weeks, two big things happened. First, there was a Zcash code vulnerability event that caused the coin price to crash, but you actually increased 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 was minting tokens infinitely. But in reality, transparent addresses weren’t affected. And the privacy pool’s “revolving door” mechanism (tracking the total amounts recorded in and out) showed that no hacker had withdrawn funds in a large way. I didn’t make any moves on the day it happened (I don’t like trading when emotions are extremely volatile and liquidity is poor). After observing for a few days and confirming no one exploited the vulnerability, I concluded this was irrational panic in the market, triggering a chain reaction of stop-losses. That’s why we added significantly to Zcash. The team will roll out a new pool called Ironwood in July that has been “formally verified.” In my view, this was just a false alarm.

Host: The second thing is that Multicoin recently published a report predicting that HYPE will reach $319 within two years. Since you hold a lot of HYPE, won’t others think you’re just “calling the trade”? Are the conservative assumptions inside too aggressive?

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

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

Second, DEX accounts for 32% of the derivatives market share: it rose from almost zero in 2022 to 16% now, and doubling to 32% in two years is consistent with the trend.

Third, Hyperliquid maintains a 30% decentralized derivatives share: this is also conservative, because trading volume data is easy to spoof (many other venues do fake trades), but currently Hyperliquid has 59% of the network’s real open interest (OI), and that number is hard to fake. As other platforms stop subsidizing, Hyperliquid’s actual share should keep rising.

Fourth, USDC collateral grows linearly with trading volume: as long as traders’ leverage preferences remain unchanged, stablecoins used as collateral will naturally grow proportionally with trading volume and open interest.

Host: Has the market bottom arrived?

Tushar: Predicting the precise bottom is extremely difficult, but I think the price low point may already be behind us. Excluding macro black swan events (like escalation in the Iran-U.S. war), we’ve already seen an “extremely indifferent” phase. Bad news no longer makes the market fall, and the hesitant have already left—what’s left are absolute believers. But that doesn’t mean a straight “V-shaped” reversal will launch immediately. The market may go through a period of sideways action and indifference for some time, and it needs time to build new narratives.

Host: Can you expand on your advantages 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 advantages in investing. First is channel/information advantage (someone else will call you to tell you the inside scoop). Second is analysis advantage (you understand the asset better than others). Third is behavioral/psychological advantage (you deeply understand and can control your emotions, which is the hardest). Fourth is structural advantage (for example, a long-cycle capital structure). We invest in Zcash mainly because of its extremely strong behavioral-psychological advantage (when the market is extremely pessimistic but holders are steadfast in their belief), plus some channel information advantage.

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

Tushar: Ethena, along with Aave and Morpho, is in the same lane: 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 will concentrate toward the leaders.

Host: To what extent do you evaluate the founders?

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

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

Tushar: For our fund, “realizing profits” means converting assets into Bitcoin. When the market is extremely euphoric, we sell high-risk assets to buy Bitcoin to reduce Beta risk. When the market crashes, we use Bitcoin to buy into the projects we like at the bottom. We only sell in three situations: first, when we find a better target; second, when the investment thesis is falsified; third, when market valuation is overly euphoric and has discounted expectations for the next many years. Since we commit to operating with investors’ full capital, 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’ve been telling everyone to use L2 scaling, and now suddenly they want to increase the Gas limit and scale back on L1—nobody can make sense of what their plan really 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 even as a better Bitcoin.

Host: Your partner Kyle left Multicoin, and many people feel pessimistic as a result. Why are you staying?

Tushar: I’m also surprised he would leave, but I respect his decision. This made me reconsider my motivation. I don’t use a framework of “treat every day like the end of the world,” and instead ask myself: “If I still have 10 years to live, what do I want to do?” The answer is that I want to win, and I like the feeling of being right when others are wrong. I believe blockchain is the underlying infrastructure of the future capital markets, replacing today’s outdated system. When Zuckerberg rejected a $1 billion acquisition offer from Yahoo back then, he said: “If I had $1 billion, I would still just go and found another social media company, so why would I leave this one now?” That strengthened my belief.