Crypto's future hinges on fundamental value and productive output, not speculative narratives, as the market converges with traditional finance.
Investment Posture: Concentrated Fundamentals
- Thea's portfolio holds fewer than 15 companies, with top positions exceeding 10% of the book.
- Attractive opportunities exist in large-cap DeFi (revenue-generating firms) and liquid venture bets (early-stage, $10-30M valuations).
- A "no man's land" exists between these two buckets, with few appealing options.
- Smac (Compound) describes a thesis-driven, research-centric firm investing predominantly in private markets across crypto, traditional AI, ML, robotics, healthcare, and computational biology.
- Compound's deployment pace is slower, with recent investments favoring bio and crypto due to high AI valuations.
"We're purely focused on being long only fundamentals and really are just focused on the internet financial system." — Noah Goldberg
Valuation Debate: Cash Flow Over Monetary Premium
- Noah Goldberg argues that crypto valuations, when benchmarked against standard venture metrics, consistently appear high.
- Early growth justified rich valuations, but current crypto-native business opportunities target a limited audience (under 100,000 active users).
- Smac dismisses the "monetary premium" as a "difficult and dangerous game," preferring investments with tangible revenue.
- Excess capital raised in 2021 continues to inflate valuations, with marginal funds now smaller, indicating a market correction is underway.
"I think the monetary premium is a difficult and dangerous game to play just because it's so intangible." — Smac
Narrative's Role: Attracting Talent and Capital
- Smac observes traditional markets adopting crypto's narrative-driven dynamics, while crypto markets move towards traditional fundamentals.
- Narratives attract talent and capital, crucial for building large companies, especially in AI.
- Smac cautions that narratives must be "right" and grounded in reality; a compelling story alone does not guarantee success.
- Noah Goldberg views narratives through their impact on fundamentals, enabling companies to raise capital and gain a competitive edge.
"Narratives matter more today because a lot of times they help you attract talent." — Smac
Market Evolution: Dispersion, Not Beta
- Smac notes that traditional market indicators do not suggest crypto will be the "fastest horse" in the next cycle.
- Noah Goldberg believes the 2021 cycle differed significantly from the current 2023-2025 period, with crypto often "dragged up" by external factors like Bitcoin ETFs.
- Noah Goldberg argues crypto has been "net relatively unproductive" over the past several years, facing headwinds from smaller new funds.
- Smac predicts an end to crypto as "one big trade," with most assets bleeding while a select few outperform.
"I don't really see why crypto is going to be the fastest horse. I think that crypto is kind of in a crisis of faith where people need to become more productive." — Noah Goldberg
Durable Advantages & Investor Blind Spots
- Smac points to "hyperliquid" as an example where post-airdrop traction, while not ephemeral, can be misread without understanding long-term capital gains incentives.
- Noah Goldberg notes that most investors ignore anything beyond a one-year horizon, creating opportunities for those with a multi-year view.
- Liquid funds face existential questions due to a narrow mandate and a limited pipeline of high-quality tokens.
- Many liquid funds now explore public equities (e.g., fintech companies using blockchain) for diversification and different risk profiles.
"The largest advantage that still exists in crypto today is the majority of participants still struggle to differentiate durable advantages that compound from ephemeral ones that decay." — Smac
Emerging Opportunities: Precision, Protection, and Distribution
- Smac identifies a need for tools and protocols enabling more precise expression of market views (long/short, different timelines) beyond simple beta exposure.
- Noah Goldberg sees opportunity in regulatory shifts that will compress fees in antiquated finance, benefiting companies with strong distribution.
- Consumer apps (e.g., Apple Wallet, Starbucks) integrating financial primitives represent a significant, overlooked opportunity.
- Fixing token markets by providing better investor protections is a major opportunity, exemplified by MetaDAO and Superstate (bringing high-quality assets on-chain).
- Smac also expresses interest in distributed water purification technologies, particularly desalination, driven by infrastructure needs and technological advancements.
"I think the big opportunity is probably somewhere in consumer." — Noah Goldberg
Investor & Researcher Alpha
- Capital Reallocation: Expect capital to shift from broad crypto beta plays to highly concentrated, fundamentally strong assets and applications. Liquid funds are already diversifying into public equities with blockchain integration.
- Narrative Refinement: While narratives attract capital and talent, investors must scrutinize their underlying reality. Companies with compelling stories but weak fundamentals face rapid collapse.
- Token Market Infrastructure: Significant alpha exists in projects focused on improving token market structure, investor protections (RegTech), and the efficient tokenization of real-world assets (RWA). This addresses a core "existential risk" for token-focused businesses.
Strategic Conclusion
Crypto's maturation demands a pivot from speculative hype to verifiable fundamentals and productive utility. The industry's next step involves building robust, cash-flow-generating applications and infrastructure that offer tangible value, attracting sophisticated capital and talent beyond short-term narratives.
