Author: When Shift Happens; Translator: Felix, PANews

Tushar Jain, Managing Partner of Multicoin Capital, recently shared his views on the current crypto market in the podcast "When Shift Happens." He pointed out that the crypto market has bottomed out and is entering a new turning point, and elaborated on his investment rationale for Solana, Hyperliquid, and Zcash.

Host: Do you think we are at a turning point now?

Tushar: Yes, life is good, the market is starting to move in our favor again, this is the most exciting part of the cycle. I think we are at a turning point now.

Tushar: Yes, life is good, the market is starting to move in our favor again, this is the most exciting part of the cycle. I think we are at a turning point now.

... Several signs support this: First, you have to see market sentiment truly bottom out before it reverses, just like in a bull market, sentiment has to reach a fever pitch before it peaks. Second, when bad news stops causing the market to fall, that's a turning point signal; when good news stops driving the market up, that's also a turning point. Last month we experienced some major hacks and other bad news, but it didn't trigger a massive sell-off, which is a huge signal. Add to that the increasing adoption of applications, and a disconnect has emerged between price and fundamentals. So I think this is the perfect storm.

Host: Everyone knows you and Multicoin are super bulls on Solana. Have you changed your view on Solana? When you say you're bullish on both Solana and Hyperliquid, how do you allocate your positions?

Tushar: It's a matter of time. I still believe Solana is the right technical architecture for the internet capital markets; you need a permissionless open-source chain to integrate everything onto one platform. I remain bullish on its performance and architecture.

However, we are also seeing a shift in derivatives trading volume towards Hyperliquid. I currently have significant positions in both assets and am bullish on both. Solana is the leader in spot trading, and I believe it will carry spot trading of tokenized securities, but Hyperliquid is clearly leading in derivatives. Rather than being an extremist, it's better to think probabilistically and hold both simultaneously. I'm not a "maximizer" of any asset and won't stubbornly stick to any particular position or viewpoint.

Host: How do traditional financial issuers choose? Does this help us determine who the biggest winner is?

Tushar: Traditional financial issuers don't issue assets on Hyperliquid. We see institutions like Galaxy issuing stocks on Solana. The core difference here is "credibility neutrality." Solana possesses credibility neutrality that Hyperliquid lacks.

This is a trade-off: Hyperliquid lacks trusted neutrality and opaque validator nodes, but gains better performance in return. Users accept this because they can verify the chain and see the exchange's real-time solvency. Solana, on the other hand, not only has an open-source client but also an extremely strong validator community, though this comes at a cost. Traditional financial institutions highly value trusted neutrality. Goldman Sachs would never settle on its competitor Stripe's chain, and JPMorgan Chase would not settle on DRW's chain; they would never relinquish such significant power to competitors. Host: Since you are bullish on both SOL and Hyperliquid, how do you decide your position size? Is it a 50/50 split? Tushar: Position management is an art, not a science. For long-term investors, trying to precisely allocate positions using quantitative models is a trap. You should concentrate your funds on the assets you are most bullish on. What's the point of putting money in your tenth most bullish asset? When deciding on a position, you need to consider the demands of external investors, tax costs (for example, we held SOL long before we acquired HYPE), and the "minimize regret framework." Imagine a year or two from now, if you misjudged one of these assets, which one would make you feel more foolish?

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

Tushar: A very obvious choice for me is Zcash (ZEC). Although its position is relatively small due to liquidity and market capitalization limitations, the multicoin has accumulated a significant proportion of the total supply. I like its momentum, use cases, and community, which reminds me of early Bitcoin. When I saw it rise last year, I spoke with many early adopters and found that even with price pullbacks, they remained steadfast in their beliefs; this isn't a short-term hot money game. Furthermore, Zcash has no fundamentals (no cash flow or revenue), meaning its value depends entirely on consensus, which actually gives it greater upside potential. As a store of value, the larger it is, the better.

Host: What does Zcash represent to you? Tushar: It represents a return to the "cypherpunk" values ​​that built this industry. I support stablecoins and RWA on-chain, but they are inherently centralized and can be frozen. This industry is built on "self-sovereignty," while the mainstream is now catering to regulation. In my view, Bitcoin is currently captured by institutions (such as BlackRock and MicroStrategy). With the debate surrounding the quantum risks of Bitcoin, early cypherpunk Bitcoin supporters may move to the other side in forks, so I think Zcash represents the industry's original spirit, and more OGs will join. Host: How do you value an asset like Zcash that has no revenue? Tushar: For assets with revenue, I look at its cash flow and give it a price-to-earnings ratio as a target price. But for an asset like Zcash, I look at its market capitalization ranking. Is it currently ranked 20th, 15th, or 10th? I think it can break into the top five. This approach can also be adjusted according to changes in the overall market (e.g., whether Bitcoin is at 80,000 or 200,000). Host: For these types of assets, do you hold them until they break into the top five, or do you engage in swing trading? Tushar: We absolutely do not actively engage in swing trading; it's too difficult, and humans cannot control their emotions. Many fund managers try to buy low and sell high, only to be proven wrong on both sides. I strongly dislike technical indicators; I draw a few lines, and then a news event occurs in the real world (e.g., a geopolitical conflict), and the charts become completely useless. We are "actively managed," not "actively traded." Host: So, for income-generating assets like SOL or HYPE, what is your valuation framework? Tushar: For them, you have to anticipate future movements. You need to think about what the key drivers of the business are, what claims token holders have to revenue, and then look at what options are available in the market. Additionally, you need to consider execution risk and factor it into the discount rate (for example, Ethereum is less risky than Solana because it has a longer timeframe and is more decentralized). These numbers are just reference indicators; ultimately, you need to make a qualitative judgment. Host: How do you choose the right time to buy? How did you manage to accurately buy the dip in HYPE? Tushar: Trying to accurately buy the dip is an impossible skill to replicate. My framework is the "three-part method": Suppose I want to invest 100 yuan, I will immediately buy one-third; then I will regularly invest the second third over a set period (e.g., one to two months); the last third is kept as contingency funds, and if there is a significant drop during the regular investment period (e.g., a 10% drop in a single day), I will buy on the dip. This greatly reduces the regret of missing out. Host: Two major events have occurred in the past few weeks. The first incident was the Zcash code vulnerability, which caused the price to plummet, but you actually increased your holdings. What happened? Tushar: Simply put, when the Zcash core team was using AI tools to inspect the code, they discovered a vulnerability in the Orchard privacy pool that could have led to double-spending and fixed it. The market panicked, thinking someone had issued unlimited tokens. But in reality, transparent addresses were unaffected, and the privacy pool's "revolving door" mechanism (which records the total amount of funds entering and leaving) showed that no hackers had withdrawn large amounts of funds. I didn't trade 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 that no hackers had exploited the vulnerability, I believe this was an irrational market panic that triggered a chain of stop-losses, so we significantly increased our Zcash holdings. The team will launch a new, formally validated pool, Ironwood, in July, so this, in my opinion, was just a false alarm. Host: The second thing is that Multicoin recently released a report predicting that HYPE will reach $319 within two years. Since you hold a large amount of HYPE, won't people think you're just "hyping" the market? Aren't the conservative assumptions too aggressive? Tushar: We do hold a position, but everyone should look at our reasoning and draw their own conclusions. Our assumptions are not aggressive: First, the compound annual growth rate of crypto derivatives is 35%: it was 45% over the past 5 years, and we've already cut a quarter of that growth. Second, DEXs hold a 32% market share in derivatives: from almost zero in 2022 to 16% now, doubling to 32% within two years is in line with the trend. Thirdly, Hyperliquid maintains a 30% share of decentralized derivatives: This is conservative, as trading volume data is easily manipulated (many other exchanges have fake transactions), but Hyperliquid currently accounts for 59% of the total real open interest (OI), a figure difficult to fake. As other platforms stop subsidizing, Hyperliquid's actual share should continue to rise. Fourthly, 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 bottomed out? Tushar: Predicting the exact bottom is extremely difficult, but I believe the price low may have passed. Excluding macro black swan events (such as an escalation of the US-Iran war), we have already seen a phase of "extreme indifference." Bad news is no longer causing the market to fall; the wavering investors have left, leaving only the absolute believers. However, this doesn't mean a "V"-shaped reversal and immediate takeoff. The market may experience a period of sideways movement and indifference, requiring time to build a new narrative. Host: Could you elaborate on the advantages of investing? Tushar: If you don't have an advantage, you should buy index funds and go to the beach. There are four sources of advantage in investing. First, channel/information advantage (someone will call you with inside information); second, analytical advantage (you understand assets better than others); third, behavioral/psychological advantage (you have an extreme understanding and can control your emotions, which is the most difficult); and fourth, structural advantage (such as long-term capital structure). We invested in Zcash mainly because of its extremely strong behavioral psychological advantage (seeing extreme market pessimism but holders' unwavering belief), plus some channel/information advantage. Host: What does Ethena represent to you? You built a large position last year. Tushar: Ethena, Aave, and Morpho are all in the same game: 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 a clear scale effect, with liquidity concentrating at the top. Host: To what extent do you evaluate founders? Tushar: We value founders very much. Our evaluation framework has three multipliers. First, the total market size several years from now; second, long-term profitability (whether there is a scale effect to prevent profits from being eaten up by competition); and third, execution risk. Ethena's founder, Guy Young, is one of the most capable founders in the DeFi space; he has greatly reduced execution risk and increased valuation potential. Host: If you are a long-term investor, when do you lock in profits? Tushar: For our fund, "liquidation" simply means converting assets into Bitcoin. When the market is extremely overheated, we sell high-risk assets to acquire Bitcoin to reduce Beta risk; when the market crashes, we use Bitcoin to buy into projects we like. We only sell in three situations: first, when we find a better target; second, when our investment logic is disproven; and third, when market valuations are excessively overheated, overdrawing expectations for the next few years. Because we commit to fully investing with our investors, our "cash" is Bitcoin. Host: What do you think of Ethereum? Tushar: It's hard to comment. For the past 6 or 7 years, they've been telling everyone to use L2 scaling, and now they suddenly want to increase the gas limit back to L1 scaling. Nobody knows what their plan really is. The foundation and Vitalik don't want to have too much power; they want the market to figure it out, but the market is a good follower, not a good leader. Despite losing to Solana in spot trading and Hyperliquid in derivatives, Ethereum's market capitalization resilience still surprises me. The only plausible explanation is that people see it as a "store of value" or a better Bitcoin. Host: Your partner Kyle left Multicoin, which has caused pessimism for many. Why are you still here? Tushar: I was also surprised by his departure, but I respect his decision. It prompted me to rethink my motivations. I don't live each day as if it were my last; instead, I ask myself, "If I had 10 years to live, what would I want to do?" The answer is that I want to win. I enjoy the sense of accomplishment when I'm right when others are wrong. I believe blockchain is the underlying architecture of the future capital markets, replacing the current outdated systems. Zuckerberg said when he rejected Yahoo's $1 billion acquisition offer, "If I took $1 billion, I would just start another social media company, so why would I leave this one?" This reinforced my belief.