The Next Crypto Cycle Will Look Different

Transcript

Welcome everyone. We're going to be chatting about cycles today. How the cycle looks right now, how they looked before. So to do one warm-up question here for the audience, if you can raise your hand if you think that this cycle that is just starting or currently that we're in is similar to the previous ones or the same ones. If you can raise your hand. So basically no one or a few people. Which is good because that's what we're going to be talking about right now. So first question for the full panel.

Uh just just to warm up is what is one thing that you think is like drastically different right now than from the last cycle 4-5 years ago. We can start with Sierra. >> I think one thing is that in the previous cycles we always see rotations of capital flow into different sectors. It's always something that's really hyped. You know, it was ICO in the first place and then we had NFT and meme coin. And now people seem smarter, right? Institutional capital is thinking more about liquidity, thinking about regulations and custody, risk management. So we're not really seeing a lot of rotation in altcoins now compared

to what it is 5 years ago. >> I would say two things, but I'll try to focus on one of them, which is that now we have intelligence on tap as a commodity, which means that you can pay a couple of cents or a couple of dollars to have almost the equivalent of a PhD grade researcher at your fingertips or a software engineer to some extent. Which I think, if we're being honest, necessarily has to change how investing and trading is going to work.

So, to [snorts] me that has to mean that the next crypto cycle must look different. We have AI agents here with us. >> Okay, well. >> All right. Like uh every time I'd say something on stage, I I tend to offend someone. I guess that's why organizer like me. I would say this cycle just like stop being that guy that's only look at candle chart and make your like decision. This is the world. This is the real world now. Like you have to look at the macro. You have to look at the interaction between our world and crypto world and all other different asset class like stocks, commodities. We've been talking a lot about this, I think, today and yesterday already. Um you have to be connected to a real

world. It's not about just being a virtual asset anymore. I think that's important. >> And how are businesses changing? Like obviously exchanges um with all these new products coming coming live, right? Like it used to be that crypto exchanges were focused fully on just crypto spot, perps, options. Now it's Now it's stocks. Now it's, you know, pre-IPO tokens. So many different things and it's starting to become almost like crypto exchanges are becoming almost like Robinhood in the US where it's a very generalized everything exchange. Um Do you think that's a trend that will continue going forward?

>> Yeah, I I do think so. Like I'm coming from like a traditional finance background and this is not something that we are doing in in the crypto exchange as well. Like the traditional broker and exchange want to also come closer to our world as well via different vehicle, maybe like EFT and whatnot. Um for us, it's not about like, okay, a lot of people saying this cycle is like a bit boring for our industry and people is going for gold and going for, you know, US stocks and whatnot. But as an exchange, I think what we trying to do is provide a single platform for multiple asset and then it's make your capital more efficient. Make sure people you don't have to go, you know, go off ramp, get your fiat and then just like

buy it somewhere in a market that don't open 24/7. So, it's a it's a it's a game of access and diversification of the the portfolio, which makes sense in both well anyway. So, that's what we're trying to do. >> I think on this topic when I joined crypto 2017 we would ridicule this boomer take that, you know, we believe in blockchain, we don't believe in Bitcoin. But somehow it feels like the boomer take partially maybe is correct now. >> Right.

>> Because blockchains now you have other types of assets that are not crypto assets, which means that the crypto assets face competition from stocks and real estate and commodities and so on. Like on our platform where people can trade perps and and and tokens and so on. The top perps assets that people trade 10 out of the top 15 are not crypto. And we are a very crypto focused brand and platform. So, I think that's a reality that the same medium that crypto assets have lived are now facing competition from these other assets.

>> Do you think that that has contributed to crypto sort of underperforming over the last 2 years when you compare to like commodities, even stocks? All of them are effectively all-time highs. Crypto is, you know, down 40 50%. Do you think that's one of the contributing factors? >> I think it is. If anecdotally I look around me and I look at people who are genuinely crypto traders and you ask them what are they trading, you know, they might say Korean semi stocks or something that's totally unrelated to crypto, right? But they are using platforms like HyperLiquid to trade. So, it is kind of this weird thing where the actual platforms are benefiting.

Um but the crypto assets themselves I think, are not benefiting from it. >> Just to add on that, I think also compared to if we're talking about 2017, 2018, the correlation between Bitcoin and all of the other traditional assets is extremely low compared to what it is today. And also just because all the exchanges, crypto exchanges are offering FX trading, all of the other assets that we can get access to, it just makes it super competitive for crypto, especially for all coins to be traded and getting good liquidity.

However, I still think um crypto exchanges and crypto itself is very competitive because, you know, compared to banks and traditional trading platforms, you know, crypto has this edge of connected to different kinds of networks like, you know, layer zero for example is our portfolio companies connected to over 150 networks. That's just, you know, something that is very unique and I think it will remain um very attractive for all of the retail and institutional traders out there.

>> What's one thing that you guys are bullish on when it comes to crypto? Like what's one narrative that you think is something that's super obvious to you, but maybe not, you know, obvious to the audience that we have here today? >> I'll go first, okay. So, I I like technology. I think I'm definitely not the smartest guys in this room and it's a very big room. I always like I have the confidence that like there's smart people down there doing something new just like the last cycle, just like NFT, just like DeFi, just like whatever. And then by the time when it happens, it's like oh well, I would have would able to do it. It's like so trivial, right?

Um so, I think that is like what's driving the the the industry for so many years and for so many years going forward. For like the old like traditional financial industry, it's about like operational efficiency. It's about like how you cut costs, how you like doing more like vertical horizontal mergers, but we are still here to innovate. I think that's important. >> I would say agentic trading for me is the number one thing I'm bullish on. I think in the next 12 18 months, trading is going to be totally transformed and we're going to have a golden era of agentic trading. And so if you look at what's happened with coding and software engineering, that world looks totally different now than it did 5 years ago.

And actually it has benefited software engineers because they are way more productive and they can cover way more ground and actually increase the quality of what they do, but it has also benefited people who are not software engineers. So that now if you didn't know how to code before, now you can actually build something, a small application, a landing page, whatever it is. And I think potentially the same thing is going to happen with trading. We're going to have people who are really into trading will level up their skills because they will have better toolkits, better agentic products they can use and it's going to change the role of the trader.

And also people who have never traded are going to be able to express views, beliefs about the world and agents are going to allow them to create strategies, create portfolios, create bundles of assets that they can actually hold and be you know, managed day-to-day. So I think agentic trading is going to have kind of a Claude code or a cursor moment at some point next year and in 2028 it's going to be the norm of how people trade and invest. >> To me the most exciting opportunity is the ones that not that is not only accessible to crypto OG's like our panelists, but also accessible to the greater audience out there. Um

so that would be public traded companies that's um blockchain infrastructure backed or take Circle as example. You know, just everybody out there who hasn't even even have a crypto trading account can take benefits of stablecoin issuers by just trading Circle's stock. I think that's a great opportunity that I'm really excited about. >> Alex, I want to double-click on something that you said which is [snorts] agents and their role um in the future. We've seen the models get insanely smart, Opus 5.5, the Astra models. It's crazy what they can do now compared to what they could do a year ago.

Um what role do you think they will have on crypto? One, probably everyone in this room saw the discussion on Twitter today where people are starting to be worried that maybe encryption could be at some point impacted because the models are just getting too smart as breakthroughs in mathematics. On the other hand, crypto's also very useful to agents because they can transact much easier than if they're using credit cards or traditional banking rails. So I'm curious about your view on this. Like are you leaning very positive or are there also risks? >> So let me focus more on the second part of what you said that I think uh we should all acknowledge that blockchains have horrendous UX for human beings. Anyone who's ever tried to deal with a

blockchain over the last 10 years will have been very disappointed. It's a little bit better now, but it's still pretty terrible. Uh and then suddenly we have these new things, agents, that can just figure it out for us, right? And that's I think an incredible opportunity because crypto has always had a UX problem. And the fact that you can just express your intent to an agent and the agent figures out all the stuff on the back end, I think it's a huge opportunity to just have much better products. And in some ways, I think crypto has always been a back-end technology that we've kind of pretended was a front-end technology, right? The most successful crypto companies are actually companies that

have put the crypto on the back end, but have created centralized front ends, right? If you think of Binance, Coinbase, and so on. So, that is like the bullish part. Um I am a little bit concerned about the stuff that we've been seeing on X lately, and I'm not going to pretend I'm an expert in that area, but I've talked to people who are um experts in the area of cryptography, quantum computing, and so on. Um maybe a year ago, they were saying, "Yeah, 5 to 10 years is kind of that's been the prediction of most experts for a long time, and they just keep rolling it."

Um but I wonder if some of them will have to re-underwrite those estimates when you see how quickly AI is developing, especially in mathematics, right? Some of these proofs that are being produced, and So, that's a little bit scary, but I think the other thing is, if that plays out, it's not just crypto. It's like all of the internet, and like, you know, cryptography more broadly. So, we'll have much bigger problems to deal with, and maybe the solution is just to move back into caves and start hunting animals. >> What do you guys think is the edge um for people that you work with at your companies when AI gets so smart, like these models are just getting smarter and smarter?

How do you then differentiate yourself? Like, one for Alex, maybe like, you know, if everyone has the same tools at their disposal, like, what is the human actually doing? Is he is he the decision-maker for the creativity, or, you know, what is what what is the role of the human in the age of super smart AI models? And I would love to get everyone's thoughts here. >> Yeah, from my point of view, I think um this is kind of the the the the great time for like the ideas guy or the ideas girl. Uh so, I do think creativity and being a contrarian thinker is the thing that's going to be good not just for investing and trading, but also if you look at marketing, everyone's producing the same freaking marketing content everywhere through through Claude and and you know,

chat GPT and so on. So being a contrarian and trying to do things the opposite way, what actually looks unpredictable is the thing that's going to work. And maybe that's the same for trading and investing. But I'm not sure that the skills is the technical skills is the thing that you need because AI can do a lot of that. It's more about the creativity and the courage that you need to do things very differently. Uh so I think investors that have that mindset are going to do well, frankly. >> Yeah, I would tend to agree with Alex, but like I want to go on top of that.

It's like and also like I'm a software engineer and I'm also a trader. I can see like how things going from the both sides. I do remember around like this is a pretty thematic because like around 15 years ago like the the PM in Singapore is actually post on Facebook just like to show he's still programming. He built like a Sudoku like program. All right, I'm I'm not sure how many of you remember. I remember it's like well, if he can do it, I will do it. So I program it. Right? But you have to understand how Sudoku actually works. Today, well, actually last week I did the same thing with um you know, Claude.

It's one poem. But this is like quite spoiled for the next generation. It's like they don't have to understand the underlying ideas. But for our generation who have been through the training of like software engineering, how things work, have write like a for loop or like a function before, they know things how they work and make better idea how to have like better way to implement idea as you said. So um yeah, we are at the golden era, the golden generation. Whatever the next generation being spoiled by the AI, their critical critical thinking and idea generation will be will not be as good as we do.

>> For us as an investor, I think AI definitely helps with you know, due diligence, collecting the data, doing research on the team. Um but you know, it's not replaceable by AI. That's why we have this conference here, right? We're not online. We can talk to all the company we can. But you know, we have this amazing conference here so that people can actually connect. They can build the trust. >> and CR aura. >> Yes. And it's very important to be a strategic investor, not only just provide all the technology and data AI can provide and not only the capital but but also operational expertise that can help people build a token, list a token

that you can get to talk to exchanges or strategic partners like Nansen. So that's all not replaceable by AI. >> I'm constantly shocked with you know, when I when I talk to normal people, how few are still using these models. Like it we have these things at our fingertips and you know, it seems like at least in my bubble like 80% of people are not using these models properly. It seems shocking to me. So one question to follow up on that, do you think it's easier or more difficult now to make money in crypto now that you have access to all this information but everyone else does as well. But then there's the disparity of like a lot of people are just not using the tools efficiently.

>> This is why I think of it as a golden age because exactly to your point, it's not like everyone is using AI at our max abilities. So I think the people are really leaning into this hard are going to outperform, frankly. And again, it doesn't mean you just go out to cloud and you say, you know, make me money, make no mistakes. You have to do a little bit more work than that. But if you do lean into it and if you actually are systematic about how you do it, which which tools you use, the data, the harness, the models, you know, backtesting, paper trading or agents, all of these different things, then it seems kind of reasonable or almost like it's unreasonable to assume that's not going

to help you, especially if you compare to the bar of a retail trader. I'm not going to call out certain, you know, retail trading products out there, but the probability of the users making money on these platforms is very, very low. So, if you are using agents to help you with trading, it seems logical that you should be able to do better than the average retail trader. And then the question is how high can you lift the bar? Can you get to like S&P 500 returns? Can you get to like, you know, Jane Street and Hudson River Trading returns? Uh may- maybe not. That seems kind of difficult.

But it seems very likely that you can do a lot better than a retail trader who's just manually trading on some trading app. >> Yeah, I always say um it's always the um it's always matter is like what happens between the monitor and the chair. So, it's the human factor. Um I'm I remember I I bought a a Kindle for a friend a few years ago. He never actually turned it on. And imagine like Kindle as a technology is like help you, like you don't have a books anymore. Yeah. Where's the camera? Yeah, I'm talking to you, Gavin. Then what's like like we have we have seen this before, right?

We so scared to like send money to people just because like of the wallet address, like there's a typo or something. What's actually the technology provide to us and the the the gap between people and the technology is actually huge. What we should be doing is like how we do it to encapsulate the technology. For example, yeah, agents make things much easier, programming or like finding the signals. Maybe like for example, payment, right? Yeah, using Google Pay and Apple Pay, everyone know how to use it. It doesn't matter if it's like fiat or like crypto at the back. That's like the industry trying to do is just like make things so >> Yeah.

>> full proof and then you you when you trade, we will give you the other saying, "Hey, by the way, we not doxing the the project team just yet or like the the chain actually have viability. Do you still want to trade?" So, I think that's important just provide more like a curated information based on the technology to our users. >> And have you seen any user behavior changes on BingX or [snorts] like people are just behaving differently than two or three years ago? >> Well, I would say like they're changing because users like they have like a spectrum of people. They are people like one like 4% yield or like just staking stablecoin to like whatever 100x leverage on meme coin still today. Um again, for us it's just like provide

like really educated decisions powered that I either by AI or by human being just curate what's happening. As I started the panel today earlier, like what about the macro? Stop just seeing the you know, the candle chart. See a little bit a little bit about the real world. Provide them with the actual related relevant information for them to make the you know, opportunity more realistic. >> Zero, for you you have a good view of the other side of crypto which is projects that are raising, investing in general. How have things changed there um over the last few years? Like it seems like a lot of VC firms are now either pivoting or expanding to investing in other sectors as well. What

have you seen yourself and like how competitive it is compared to what it was before? >> The total amount of money raised in the space is still increasing, but numbers of projects actually being able to raise money is decreasing. So, it means that um all the funds out there they're investing into later stages projects. Compared to years ago, you can just raise with an idea with maybe a piece of paper, right? But now uh investors needs to see products that's actually working, uh real users, and especially retention of users who's coming back to our product when the incentives are gone.

And real revenue. So, I think that's like the trend that we're seeing in this space in terms of fundraising. >> It It's pretty interesting because I think AI has this um effect on raising the bar. Right? And that's kind of what you're saying, that the bar is now raised. It's not enough to have an idea. You You actually have to go further. Um and I think this concept is is the right way to think about what you have to do as like a human being to thrive in this era. And I think there are basically like four human traits that um will determine whether you will succeed in the agentic era or not. The first one is, do you have agency? This is a bit of a meme, but it's it's a real deal. Like, do you actually get up and do things, or do you

just sit around waiting to be prompted? The second thing is, are you Do you have focus? Do you focus on the right problems? The third is, are you able to communicate clearly what you need to do? Uh and the fourth is, do you have a high quality bar? Or do you just release slop constantly, right? And so, I think anyone in whatever category, whether it's investing or trading or building things, like those are the four personality traits or or traits that humans need to do really well. And it's I think it's super important that people don't get pessimistic about AI cuz you hear You hear so much about like entry-level jobs are going away and like, you know, everyone is, you know, losing a bunch of

different various things. But the reality is, you can actually lean in super hard and do better than ever in >> Primary tree ownership of data do matters, and your ability to execute do matters. >> Yes. I remember when Nansen was starting, right? It was just a data analysis company, basically like relatively simple product and you've then basically seen what's what's what's coming on the AI side and transformed the company. So, can you walk the audience a little bit through like how as a leader at a firm or founder, how do you go through that process? Like when did you realize that agenda trading is going to be something that the firm wants to focus on and maybe the data by itself is not a sustainable product.

>> Yeah, so when we started the company, we used AI a lot on the back end, right? Behind the scenes. We have 500 million plus labeled addresses and a lot of them are agentically labeled and most of them are algorithmically labeled, but people don't see that. They just see the labels in in the product. And what we've seen is that AI is kind of coming to the foreground of the user experience and in some ways, even if you have more complexity, the goal is really to make the product simpler. And if you look at the product today versus 2000 20, it's actually a simpler product for the end user today, but there's way more complexity on the back end to make that happen.

Uh in 2020, you'd have to navigate, which chart should I look at? Which metrics? What does this mean? And today, you can use our mobile app and you just talk to the agent and you say, "Hey, which tokens are smart money buying? Right? Who are the top holders of this token?" And it does all of that for you. So, it is a little bit ironic because the technology has gotten really complex, but I think it has actually forced us to make the product and user experience a lot simpler. So, that's on the product development. In terms of the team and the organization, we've done our best to make a really AI native culture in the company. Uh which is uh which means that you are positive about what AI is going

to bring. And you're not, you know, dunking on people for having an M dash in a message, you know, you acknowledge that people use AI to communicate and you don't want to make it sloppy. You have to be very critical of slop. But you acknowledge that people will use AI for everything in their work. They should be doing that. But you shouldn't remove the thinking component, right? You have to raise the bar and actually think harder but have, you know, 10x the quality in everything you do. So, yeah, there's a lot of stuff we could talk about here but those are some of the points.

>> Kevin, one more question for you. Um For exchanges, security is one of the main aspects of the business itself, right? Like if you're compromised, you lose trust and there has been more and more hacks of DeFi protocols. Bitget also was impacted a couple of weeks ago. Has it gotten a lot more difficult for exchanges to defend against these threats now that I'm guessing AI is contributing to, you know, be able to find these vulnerabilities? >> Yeah, uh Funny enough, I start my career 20 years ago like in IT risk management in JPMorgan. So, it's actually something I I can I can chip in. Um It's Is it like more and more difficult?

Definitely, yes, because of AI and because of like if you see the hack recently, it's actually nothing to do with the internal system. It's like vendor. So, you you have to do additional layer of like due diligence on like the security system of like all your vendors. It's really hard. But you know what doesn't change? Is uh again, like whatever problem between the monitor and the chair. Um it's been like a really, really big [snorts] and huge focus for us internally. We have continuous and regular training with not only the IT staff, but like every single one. Have to make sure that you know what's going on, what you can send to people and what is like a fishing attempt. And on top of

that, user educations, right? So, I would assume that like both of us here like OG, we've been through that, we've been unfortunately hacked before or rugged pool before, but there's every single day there will be like 200,000 people like joining the industry for the first time, placing the the first trade in on chain for the first time. And these are the people never actually know this hacking, especially with AI's help. So, um yeah, educating people is a continuous battle more so than, you know, just like tightening the actual infrastructure.

>> So, I've one last question for the entire panel before we wrap up, which is what's one advice you would give to the audience of what you should be spending time on and focusing on in the next year or so. And please keep it to about 30 seconds. >> I mean, I'll just rehash agency, focus, communication, and quality bar. If you develop those four with AI and maybe add systems thinking as the additional thing, then you're going to do super well, I think. >> I would agree on AI, but not only use it use AI as the end product.

Use AI as a mean to your end product. Okay, five coding, I used to hate it, and apparently I only hates the face. I actually like five coding now. So, like but the end product is yours, right? It's not depending on the AI anymore. You can build whatever you want in this world, create from nothing. And the second thing is always like this is the reality now. This is not a isolated industry. Look at your crypto portfolio, but at the same time look at the real world, look at equities, look at commodities, how to make the best investment decisions out of like all the market connected, and that would be the real opportunities for the next cycle.

>> For me, it's risk management. If you're a builder or operator in the space, custodian of the funds, very important. As a retail trader, don't leverage up. >> Well, thank you so much for listening. This is it for this panel. Thanks a lot.