Crypto Isn't The Frontier Anymore
Summary
Crypto’s winners have come from a narrow barbell of credible stores of value and revenue-producing protocols, not a broad altcoin beta trade. Zcash, Ethena, LIT and HYPE let even a roughly 30% crypto allocation outperform equities, while ETH and SOL lagged and capital reconcentrated into assets institutions can explain to LPs. The panel’s shorthand: crypto has divided into “the store-of-value type trades and then the fundamental stuff.”
Zcash became the market’s most reflexive trade because its store-of-value narrative, constrained mining supply and Bitcoin-relative “moon math” reinforced the price move. The bug-driven fall toward $300 looked like the best risk/reward entry once shielded-pool evidence suggested no exploitation; at roughly $1,500, however, forecasts ranged from support near $1,000 to $5,000 with BTC around $120,000. Most rejected ZEC reaching 10% of Bitcoin’s market cap within a year, while 5% remained a plausible bull case—alongside an eventual “big 80% drawdown.”
HYPE remains a core holding, but its valuation now requires execution from buybacks, RWAs, HyperEVM activity and new products rather than another easy rerating. The panel saw limited obvious upside beyond roughly $100-$150 without fresh proof, flagged a potentially crowded first-week-of-October buyback event, and treated the ecosystem’s missing application layer as both risk and optionality. “HyperEVM is just a zero” in current valuation, leaving Kinetiq/Elysium and options as possible incremental engines.
Onchain options are the clearest underdeveloped crypto primitive because RWAs finally provide assets, hedges and retail demand that earlier vault-based designs lacked. The panel’s core mechanism was that options activity can be hedged through Hyperliquid perps: one HypeCall put spread reportedly generated hedging equal to 5% of S&P volume there. The opportunity does not require options to flip perps—“a 10x from here is still a fraction of perps volume”—but liquidity fragmentation means baskets and flexible sizing make more sense than declaring a winner today.
Crypto is no longer the frontier in the panel’s strict sense; it has entered a deployment phase built around known primitives. The remaining work is “blocking and tackling”: deploy stablecoins, perpetuals and token issuance, embed them in emerging markets, and build small applications that may not need venture-scale funding. AI now resembles crypto in 2017-2020, when “nobody really knew what you could and couldn’t do,” while crypto’s best opportunities increasingly sit in liquid markets and operational rollout.
Tokenized equities and other RWAs could make onchain capital structurally stickier even if the first experiments look speculative. A user who trades stocks onchain can rotate into crypto without withdrawing from a brokerage, while non-crypto collateral could reduce DeFi’s correlation and fragility. That matters because BTC still trades as a macro asset and may need liquidity support to clear roughly $130,000, while assets such as HYPE and other revenue-linked protocols have begun showing they can outperform even when Bitcoin, ETH and SOL stagnate.
The portfolio-level contest is between AGI, which pulls capital and interest away from crypto, and multipolarity plus debt and demographics, which strengthen demand for crypto, gold and defense assets. AGI may eventually raise productivity enough to help governments outgrow debt, but every delay or political obstruction can send attention straight back to debasement. The panel therefore favored exposure to both sides rather than betting that one secular force cleanly wins.
The market’s most important variable is aggregate spending on AI tokens, not any single lab’s market share, because frontier-lab demand underwrites the wider data-center and AI equity complex. Open-source share gains could hurt OpenAI or Anthropic while remaining bullish for AI adoption; structural demand failure would be “we’re cooked.” The panel did not expect the AI bubble to pop within 12 months—2028 was floated as more plausible—but avoided nth-generation AI labs, legacy L1s and much of legacy DeFi while watching catastrophic protocol bugs, a crypto short-squeeze reversal and geopolitical escalation.
Deep dive
1. Selectivity, not crypto beta, drove the year’s returns
The year’s surprise was not that every crypto asset rallied, but that a minority allocation to Zcash, Ethena, LIT and HYPE could “outperform the shit out of” an otherwise defensively managed equity book. Proximity to crypto-native information still produced more usable alpha than broader stock selection.
The panel had expected weak broad crypto performance, persistent strength in HYPE and continued lagging from ETH and SOL. What exceeded expectations was the speed and breadth of the recent rerating after Bessent’s announcement supplied a “very clear risk-on signal.”
One broken thesis was the STRC flywheel: instead of managing the balance sheet around the new instrument, management bought back very long-maturity debt. The resulting drawdown nevertheless accelerated reconcentration into a small set of quality assets.
Institutional investability improved as attention moved away from memes. A fund can defend a thesis around cash-generative protocols or stores of value to LPs; it is harder to underwrite an allocation whose entire rationale is transient meme liquidity.
2. Zcash escaped its old ceiling through reflexivity
Zcash’s bug created the sharpest entry. Once observers could see that shielded-pool balances did not indicate exploitation, the decline toward $300 resembled prior episodes where a protocol was impaired in perception rather than in fact: “There was a bug, but you knew pretty quickly that it hadn’t been exploited.”
The security narrative then reversed. Critics initially treated the theoretical possibility of an infinite mint as proof that transparent Bitcoin was safer; supporters later emphasized protocol hardening, the forthcoming Tachyon upgrade, formal verification and a smaller code base in an era of AI-assisted attacks.
The trade’s fuel is monetary-premium migration. With many crypto assets already overvalued, ZEC offers an easy Bitcoin-relative story: at roughly 1.5%-2% of Bitcoin’s market cap, investors can plausibly meme it toward 5% without requiring a conventional cash-flow model.
Mining adds supply reflexivity. Years of neglect meant few new ASICs, creating an estimated six-to-eight-month lag before additional capacity arrives; unusually high margins let major miners accumulate rather than “perma dump” coins immediately, tightening available supply as price rises.
3. Zcash upside comes bundled with violent downside
The panel rejected a one-year move to 10% of Bitcoin’s market cap as too aggressive: at then-current prices, that implied roughly $8,500 and becomes a moving target if BTC appreciates. Five percent was one speaker’s original “gigabull case.”
A more concrete scenario placed ZEC near $5,000 with BTC around $120,000—still below a 5% ratio. Yet the same speaker expected the store-of-value reflexivity eventually to reverse hard: “You’ll get the big 80% drawdown Zcash; it would be weird if you didn’t.”
Around $1,550, a normal pullback might initially mean $1,300, while $1,000 could become support because “Zcash is a four-digit coin now.” Those were trading intuitions, not certainty: the panel repeatedly admitted it did not know where ZEC goes next.
4. HYPE has graduated from rerating to execution
HYPE remains a core holding and was presented as the likely three-year hold, but its asymmetry has narrowed. One holder struggled to see substantially more upside above roughly $100-$150 and judged Zcash’s remaining upside larger, despite keeping HYPE as a top-three position.
A possible local-top catalyst sits around late September or the first days of October, when concentrated stablecoin buyback activity was expected. Because the event is widely advertised, traders may front-run it and realize gains “plus or minus two days of October 1st.”
The revenue deserves a better multiple than a fleeting trading fee because it is “very sticky and consistent” and scales with product use. Even so, the known buyback component is comparatively bland; the next leg requires new sources of activity rather than the market rediscovering existing economics.
HyperEVM contributes almost nothing to current valuation because users cannot perform the spot trading, speculation or general onchain activity available on Solana. That makes the proposed Kinetiq/Elysium stack optionality: it might unlock ecosystem capital—or fail to justify another L2.
5. Options are the last major crypto primitive without a settled winning design
The thesis was not that options must displace perpetuals. Their current base is so small that even a 10x increase would remain a fraction of perp volume, while RWA growth expands the addressable universe beyond a few concentrated crypto majors.
HypeCall’s design makes options constructive for Hyperliquid rather than competitive with it: trades are hedged through HYPE’s perp liquidity. One put spread reportedly required hedging equal to 5% of S&P volume on Hyperliquid, showing how modest options growth could generate material underlying flow.
Earlier onchain options failed because vault structures trapped users, prevented clean resale and bore little resemblance to centralized products such as Deribit. Newer order-book-like designs, pre-IPO assets and tokenized RWAs make expression and market-maker hedging more conventional.
The panel expected fragmented success before consolidation. HypeCall focuses on RWAs, Derive targets a more institutional interface and majors, Paradex is adding options, and Lighter is expected to launch a limited version before a fuller release; Hyperliquid’s core team may wait until external teams prove demand.
6. Options exposure should begin as a flexible basket
Liquidity remains the immediate constraint. In one token, roughly $25,000 could almost double the price, making the quoted market capitalization less actionable than it appears; several projects still do diminutive real volume.
Derive was called the clear current winner, but the panel rejected complacently extrapolating its reported 96% share into future dominance if options take off. Different venues are solving different cold-start and collateral problems.
Their preferred early-theme playbook was to own a few candidates, then size into whichever one validates its design: “If you see the facts change, you just sort of size into the one that’s winning.” Several panelists still owned none because more mature opportunities competed for capital.
Valuation divided the table. Bulls saw liquid access near private seed-round prices against an enormous, already-proven TAM; skeptics noted that nine-figure valuations are not obviously cheap for products still requiring substantial adoption.
7. Crypto has moved from invention into deployment
The panel used Carlota Perez’s innovation cycle to frame crypto’s zero-to-one phase and its current deployment phase. The investable task is distributing what works and compounding adoption, not funding endless infrastructure variants.
The surviving primitives were reduced to three: perpetuals, stablecoins and token issuance. Their next decade may be relatively predictable even if individual winners are not, which shifts opportunity toward liquid assets and equity teams doing operational deployment in emerging markets.
Venture economics have weakened because “everything’s been built” and the necessary application teams can be small, scrappy and lightly funded. Crypto may still be “the best liquid market in the world,” periodically generating new metas even if it no longer attracts the smartest builders at the frontier.
AI supplies the contrast. It feels like crypto from 2017-2020: primitives remain unsettled, capabilities are still being mapped, and “nobody really knew what you could and couldn’t do.” Crypto now knows its branches; builders are mostly extending them.
8. RWAs can retain capital that equities once pulled offchain
The historical fear was that exciting equity themes would drain crypto liquidity. Tokenized stocks change the plumbing: investors can remain onchain while holding equities, then rotate into crypto immediately when conditions improve rather than withdrawing from a brokerage and redepositing.
The panel’s best consumer example was a crypto neobank that rewards ordinary purchases with tokenized stock in the merchant. Unlike most zero-sum crypto speculation, equities are wealth-building assets; their lower correlation could also make DeFi collateral systems safer.
RWAs do not make every chain necessary. Robinhood can justify another OP Stack L2 because it brings differentiated distribution, while Hyperliquid may justify a specialized execution layer; the old “multi-rollup thesis” around TIA no longer persuaded even a former TIA bull.
9. Bitcoin remains macro-bound while crypto dispersion grows
Bitcoin probably needs some liquidity catalyst to reach roughly $130,000. The panel called it a macro asset and credited Bessent’s liquidity-positive announcement for the current move, though the mechanism was healthier than dependence on a single buyer.
The more important structural change is that BTC no longer has to lead every winning trade. Even a decline toward the mid-$70,000s might coexist with relative strength in HYPE, options or other revenue-linked protocols, though Zcash could still fall with Bitcoin.
ETH, SOL and BTC were described as increasingly difficult to value because capital is rotating out of monetary-premium-heavy L1s. Trading volumes that anchor the valuations of many crypto assets could die silently while newer businesses continue compounding.
The panel accepted the critique that crypto misallocated billions of dollars of monetary premium to ETH, SOL and other L1 tokens. It rejected only the stronger claim that all of that premium must migrate into Zcash.
10. Three secular forces pull portfolios in opposing directions
The macro map had three forces: AGI, growing multipolarity and war, and debt plus deteriorating demographics. AGI is a net negative for crypto because it absorbs capital and interest, does not obviously require crypto and is deflationary.
Multipolarity and fiscal deterioration are strongly positive for crypto, gold and defense. Cross-border friction, geopolitical blocs and multiple war fronts realize an uncomfortable early crypto bull case: a fragmented world needs harder, more portable and politically neutral assets.
The portfolio answer is dual exposure. AI assets capture the strongest force, while crypto, gold and defense hedge the other two; demographics are unlikely to reverse, and governments may spend even more to compete in AI.
The counterpoint was duration. Agents, humanoids and industrial robotics could eventually add enormous effective headcount and productivity, giving governments a route to outgrow debt and making the long-run debasement case less certain—even if “it probably gets worse before it gets better.”
11. AI demand matters more than the data-center construction headline
Political opposition to data centers could delay capacity while debt-financed commitments continue accruing costs. That worsens compute scarcity, keeps prices high and blocks the cheaper inference needed to unlock marginal applications, increasing the risk that revenue arrives too slowly.
The counterargument was that slower construction might smooth supply and prevent a blow-off top. The panel nevertheless invoked Jevons’ paradox: as inference prices fall, utility and usage can grow by more, so abundant capacity may expand revenue rather than destroy it.
An estimated 25-50 gigawatts of data-center capacity could be built next year, even allowing for cancellations. No technology cycle matches five-year demand perfectly; an eventual bust likely requires genuine overbuilding after alternating shortages and overshoots.
The single most important portfolio metric was frontier-lab revenue—or, more precisely, aggregate expenditure on LLM tokens. If total usage keeps rising, market-share migration is digestible; if AI proves less useful than expected, “everything is going to sell off.”
12. Frontier labs resemble L1s approaching magical-thinking valuations
The early bear case said intelligence would commoditize like blockspace and labs could not capture value. As with ETH and SOL, the leading platforms then “ran in your face”: OpenAI and Anthropic remained meaningfully better while most competitors hosted little consequential activity.
The risk is the next stage of the analogy. At L1 peaks, investors stopped requiring DCFs because chains supposedly secured the whole economy; frontier labs now attract similar “magical thinking” that recursive superintelligence will solve science and justify almost any valuation.
Sustainable enterprise value may require internalizing intelligence rather than merely selling tokens—Anthropic’s wet lab and drug discovery, and OpenAI’s chips, mathematical breakthroughs and related efforts, were cited as the direction of travel. Otherwise open-source models could compress pricing while leading labs “just incinerate capital.”
Open-source share gains would initially damage lab-backed data-center commitments but could be bullish for AI and society through cheaper intelligence. Structural demand failure is categorically different: because lab demand underwrites CoreWeave and the broader buildout, that scenario means “we’re cooked.”
13. The unresolved risks span regulation, nationalization and catastrophic failure
The panel did not expect an AI-bubble collapse within 12 months; 2028 was floated as more plausible, with 2027 potentially still strong. Yet profitability eventually matters because optimizing margins could surrender the frontier, forcing labs to keep funding capacity and selling a growth story.
Jose’s honest answer on AI-lab nationalization was that he had not underwritten it. The group nevertheless saw a government investment as plausible—and potentially bullish—because there would be an incentive to keep critical capability domestic; outright seizure, regulation and an Intel-style capital injection would have radically different outcomes for shareholders.
Within crypto, the open policy question is whether SEC and CFTC changes after CLARITY is gone revive ICOs. That outcome, once unthinkable, could create a new issuance cycle and determine how deeply Hyperliquid becomes embedded in the US market.
The darkest tail risks remain technical and geopolitical: a Ledger-scale hardware-wallet flaw, a catastrophic bug in Hyperliquid, Solana, Ethereum or Zcash, or today’s multiple conflicts later being recognized as the beginning of a wider war. The nearer-term market risk is simpler: the rally may be “one big short squeeze momentum thing” that melts back down because no genuinely new use case arrived.