Hivemind: Are L1s Still Overvalued, Hyperliquid’s End Game & State of The Market

Nothing said on the hive mind is a recommendation to buy or sell securities or tokens. This podcast is strictly for informational purposes only and any views expressed by anyone on the show are solely our own opinions, not financial advice.

Hello everyone, welcome back to another episode of the Hivemind podcast. I am your host Cedus. I'm the head of research at Deli Digital. With us we have as usual Yan ventures partner at Deli Ventures, Jason, head of markets at Deli Research and LTR Markets on Chain Sleuththing at Deli Research.

So we're recording this. It's 10:45 Eastern Wednesday, February 4th. Markets are just looking disastrous again. We're at 74.2K. ETH is at 2.15K. Soul went under 100 bucks. Hyperlid not bad, 3370. So, Hyperlid had a good past few days there. Had some good announcements that have come out. Stocks are also selling off a good amount today, too. So, seems like more of the same. Well, I guess it's like accelerated the past week especially within like Bitcoin land.

So how are we kind of feeling about this right now? I think everybody likes to say like I don't know about short medium term but long term I'm bullish, right? But it does I mean it does kind of feel like this is a fine getting back to like fine levels for like Bitcoin, right? if you're looking I'm not talking altcoins and stuff because I really think that that market is completely changed for the good in some respects but I don't know what are we thinking about the last few days obviously Galaxy had earnings yesterday too and was quite disastrous it was down 20% on the day there was a lot of quantum talk that came out of that as well so yeah how are people kind of feeling about and actually one more thing I think Matt Hogan was it or somebody else said that we're currently in like a 2022 bottom with Bitcoin right now. He thinks we're near the end of it. We'll see.

So, how are people feeling about this right now?

Well, yeah, obviously it sucks, but yeah. So, like we we kind of got the meme, right, where we were going to go to sellers entry price and clearly we overshot that by a few thousand dollars and seems like we're we're not stopping right now.

I still do I mean I was all I so like I think like my like my meme case scenario was like we'll both like hit sellers entry price and new new Bitcoin highs in the same year. I still think that could happen. Like I I do really think like we will like the administration will run it hot into midterms.

I guess the question does then is like okay like if that is what happens generally for markets like how much of that appetite flows through to crypto mo or like I guess Bitcoin and then to you know crypto more broadly. In that scenario, I do think Bitcoin could catch a bid and like I don't think it's like um you know like price is obviously like the the best the best driver of of narrative, right? Like price leads narrative.

So like you get like a you know a week or two of just like good Bitcoin flows, ETF flows come in strong like you get decent reclaims of of like people's like important psychological levels of some kind, right? I don't think you're that far away from from like some kind of risk appetite returning to Bitcoin.

I am worried about equities. Like I think if equities kind of like puke like you know also going to zero again like zero again. I think Bitcoin um I think it'll be really interesting to see like what Bitcoin does. I'm not expecting it to be stronger than equities if equities pull back, but like if it is, it's clearly something to pay attention to.

I think you just have some like big like like big levels that just like make sense from like long-term time horizons, right? Like 60K isn't that far away. Like I don't want to see Bitcoin go to 60K, but like you have a lot of things at 60K, you know, like 200 week moving averages, like tons of that like might entice some longer term buyers to step back into the market.

I think like pretty much like anywhere between like 60 in here just like makes a lot of sense for like yeah like long-term strategic Bitcoin buys that like you just buy and don't look look at for a while. You could go lower, but like I don't know. Like yeah, like my my my my base case is like I just don't see this year. I just don't see how with with new incoming Fed share with midterms like they there isn't some kind of broad risk rally, you know, engineered some way and Bitcoin would probably be a part of that.

So I'm not I don't think it's over. Definitely closer to a bottom for me than than not. I'm definitely looking to probably buy buy like spot holdings for the first time in a long time. And yet hype like you said is like very clearly showing strength in a depressed market. So the thesis is clearly like if the market stops being so the coin that was doing the best should probably continue to do the best, right? And you know there's a lot of like actual like reasons why that could be the case. So like yeah, that's kind of how I'm looking at crypto and like those are pretty much the only things I hold at this point.

Yeah, I think on the initial you know BTC weakness going back you know from the the previous top was just sailor kind of going away and then then broader market weakness and I think the the recent leg down was a combo of equities and quantum risk and we touched on it last week and I'm sure we we'll touch on it some more but that definitely has some impact on price as you know we can weakest hands bail and and then you know the individuals that are next in line in terms of strength act accordingly knowing that the weakest are going to bail and and so you you have a domino effect there.

On the equity side, yeah, it's a tricky one. I think recently especially but but broadly you've seen a lot of blood in in software names with just the growth of all these Agents and and and being able to kind of claw code your way into solutions that that take away from the pricing power that a lot of these software companies had and and you're starting to see that show up.

I think you saw Jensen speaking I think it was today discussing this situation and and his basically counter was that if when you're these Agents aren't going to be rebuilding these tools from the ground up. They're going to be using them. So in the same way you know a robot won't create a new form of screwdriver. it'll just use an existing screwdriver. Same way these software these Agents will use software via API rather than recreating from the ground up. You know, naturally he has to he wants to say that.

But I think that the truth is probably somewhere in the middle where yes, you know, the best products will get used but at the same time some of these simple tasks and and and some other things will kind of get rebuilt and and so you you'll see you know loss of pricing power and and I think just the broader uncertainty is is forcing a repricing of that entire market.

I think even if you look at equities in in 2015 versus late sorry the first like through most of 2025 compared to past couple of months you've seen you know that you had the mag 7 really driving returns in the beginning of that year and and that's since shifted away and you saw the bottom whatever driving the bulk of the returns which I think was probably counter to what a lot of people thought or or perceived the AI trade to how that would impact markets.

So, you've just seen, you know, efficiency gains at the the bottom names and and and a lot of these low margin businesses benefiting from from that from those improvements because there's a lot of kind of you know uh uh margin to to get rid of or like cost to get rid of to improve margins. And then at the same time, you know, we saw the slowdown in the buildout of of uh the data center stuff and and kind of just the the exorbitant costs that weren't being matched with revenue, but rather, you know, you ended up seeing the the effects more downstream and then in the the users of the tools rather than the the makers of them.

But yeah, so all of that kind of creates scary environment for equities. And and and yeah, cryptos because kind of we had underperformance when equities were doing all right and and then it's hard to see a world where crypto does well if equities don't.

You know, to to Jason's point, I guess the counter is is that you've seen many times crypto kind of bottom first. But but you've generally seen that in an environment when crypto is the fastest horse, right? And so I think if it remains the fastest horse then you probably see a similar dynamic. But that's been the concern is you know whether this reintroduction of liquidity and and and risk appetite will materialize in a bid in in this asset class.

So you've seen metals rip and and crypto didn't really do much. At a certain point I think there's a a relative value trade that exists right. So, you know, regardless of whether you think crypto is going to reach massive new highs, I do think there's some relative value trade that will exist after, you know, one asset's very overextended to the upside and and this one's very overextended to the downside.

I think you see some degree of rotation and and then anecdotally, you know, people who I know have cash are are kind of waiting for lower levels, right? And and I think you you typically see that it's just a natural human phenomenon. You know, you can in your head you could set bids lower when when price is much higher, but as price comes down, you know, people kind of pull those bids and and think it's going to keep going lower and and and try and get to that bottom point.

But, you know, I think bottoms are much more obvious in in hindsight and and so that ends up resulting in a big chase scenario where those with bids start to realize that maybe the bottom's in and and they just can can kind of concede and and end up buying much higher.

So, all that to say, I don't really have high conviction in in crypto going in either direction right now, but I I do think that at a certain point, you kind of do see a gap up because I think people are still ready and positioned to bid it.

I think like on on the on the large asset side there's been you know continuous shift to revenue generating assets and and at the same time that takes away from the value of L1. So we'll see you know like Salana at 90s looks really good just based on on you know recent price history but if enough sentiment has shifted away from their just just the general acceptance that an L1 should be massively valuable then you know you can see a scenario where where things price quite a bit lower.

On the ETH side I know there are a lot of onchain liquidation levels and the high in like in the 17 to,900 price range, I think. So as we get closer, you can there's always a risk that those start to get hunted. And and those are are pretty sizable nine figure multiple nine figure positions if I remember correctly. So those tend to be a magnet as well.

So yeah, we we'll see. I'm I'm I've started deploying I was yeah I've started bidding some more here and and kind of happy for it to go either way to some extent. But would would rather see yeah a bounce.

Yeah. I think on the stocks one thing too is like you've seen software get crushed too. I don't know if you said that or not. But uh that's that's just like another sign of kind of like um it's definitely not it can feel like it's it's like stocks the indexes are still making all-time highs, you know, but there's been a lot of pockets that have been getting absolutely crushed, right? And you see like the uranium stuff just going bonkers and software going to zero. Uh and as you said some of these like the broad base gains for everybody um within crypto.

Yeah. On that like Salona versus the Salona looks cheap here. It's like for me it's just I don't see how you can hold ETH over Soul at these levels. But that doesn't mean that Soul goes up to your point, right? Like there is the possibility that the L1 trade is just kind of like over and ETH is just more overvalued than Soul. But that doesn't mean Soul's going to do well.

Like I forget what podcast I was listening to, but they were talking about how like like last cycle Avalanche got to like 100 billion, right? And look at something like Monadan today which can't hold two bill and its tech is objectively a lot better. And it's kind of just like I mean there's there's multiple L1s now under a billion dollars now, right? Which is that was like unheard of like having an L1 was always at least a billion dollars for the longest time.

So yeah, I mean it's uh I think yeah, the revenue meta has has impacted that, right? Not directly from the sense of um of uh soul doesn't really make money because it was always going to be based on on kind of network effects and and holders and and usage of the platform but but trade at some some silly multiple.

I think it's more so that, you know, I think there's been and and you saw Kyle say today, but but generally it's it's dictated our venture investing as well where I think it's much harder to to invest in web 3 apps that don't have a a direct kind of financial component where you're providing, you know, yield or access to assets that that can appreciate uh or or like a second order effect where you know you're providing a service whether it's you know sports betting or prediction markets or something like that where um the the platform itself generates a lot of money and so if there's a broader shift to that as the investment as as what's like reasonably investable then I think the the surface area of apps that will get funded and built out kind of comes down and without you If you're just limited to these financial apps, I think the L1's themselves will gain less and less adoption because you also have the risk of like the, you know, the app themselves becoming one if they get big enough.

But, but broadly, I think it just means that they're going to be less viable apps and and that in particular, I think hurts, right? If if you have something where you have a social network and games and and all the stuff that exists on L1, that that can drive a lot of the value. But I think if the the market begins to kind of coales around the idea that only these financial apps can actually thrive then then the L1 premium kind of needs to rerate lower.

I think people are just apathetic. Like there's a lot of apathy. Nobody's interested anymore. Like previously when we had big dips or whatever, people were still objectively interested in future stuff or like the future prospect of crypto as a whole. whether that be L1's, L2s, whatever, like you know, Murad mode, but there was something to believe in, per se.

Whereas like right now, I I think a lot of people are like, okay, yeah, I mean, blockchain tech can be used. It's going to be a backend for a lot of finance, but that doesn't necessarily mean that drives any value to our existing L1's, L2s. I mean, I think that's pretty apparent with like Robin Hood building its own chain and then, you know, Stripe and Tempo building their own chain and and you're having all this stuff where it's like people are just going to make their own stable coins, make their own business chains, and sure, blockchains are going to be used as a technology um but they're not going to pay rent to existing companies quote unquote.

And like you know we can talk all day about like I want valuations but objectively like it's pretty hard to value these things for one just because they don't act as a normal business but also like on paper I mean ETH was what like 300 bill or something. Enthropic on secondary is like 350 bill. I mean if you're telling me that ETH is near as valuable as Claude which is like the number one AI right now and is everywhere um and growing rapidly I think you're out of your mind.

So, I think it's more that like more things are overvalued. And yeah, maybe soul is less overvalued compared to ETH, but I I just don't see how you can make a case for for those kind of valuations again, especially if we are moving to more towards like a trady convergence within crypto, which I think we are, where more and more stuff like Hyperlid per se are being valued more as normal companies as a result of their business model.

So we'll see. I still think the ma like the big upside case does remain for soul. It's just like um you got to like like people are no are not willing to dream as much and like give the benefit of the doubt of like future plans. They just kind of want to see it happening more. That's probably one of the biggest changes I I would say over the last few years. like you know Monad if it went live three years ago would be trading much much higher based on the story that it it's telling and like the tech that it's developed right whereas now it's kind of like okay this is cool you built this like performant decentralized EVM chain but where are your apps right um what does this really give us over what we already have right.

And that is that is healthy that like we're being more critical, right? And that's why you do see pockets of money like you know hyperlquid you can say that it's overvalued right but it is the one protocol that's just doing so much like consistent revenue and volume and continues to like bring on these new markets that even if it might be overvalued. It's like if you want to allocate to crypto, it's easier to make the case that probably still would just rather own hype, right, than than other stuff and trying to pick bottoms on stuff that's just been grinding down forever.

So, yeah, I still think I don't know. It's like we always think that things aren't going to change when we get these kind of like long drawn out bare periods. and then something usually event ends up changing it.

But uh yeah, I also think it's like a function of like Hyperlquid is objectively one of the only teams shipping meaningful new improvements. like HIPP3 and trade XYZ is like it did a ton of silver volume and people were able to trade pers on metals and largely catch moves there 247 and now they're integrating prediction markets using Yeah. They did over a billion dollars in volume on silver.

But like no other crypto team and I I'm not trying to like be generalist here but is like doing stuff that's like wow like I really need that really fulfills my need right now. like, wow, you're you're shipping something that I'm actually going to use like right now or tomorrow. And Hyperliquid's doing that and at a pretty freaking fast rate. Hyperl or unit or, you know, Hyper EVM adjacent ecosystem companies, whereas like, you know, on Salana, we get another memecoin launchpad and then on ETH, we get some new, you know, prediction market that's standalone with some new, you know, etc., etc., and it just kind of feels like stale.

I think that's come to a head. Maybe this forays into like another topic with the L2 thing Vitalic was talking about. But yeah, I think it's just like a lot of apathy around the other stuff that's like it's the same old same old, whereas Hyperlid is fulfilling needs now. And so there is a case to be made that you can kind of justify a larger valuation because the future EV is better because like you have faith that they'll continue to improve or add more stuff or, you know, do stuff that's like going to be very valuable in the future.

Whereas like I can't say the same right now about other things. I mean, ETH wasted however many years pursuing the L2 thesis, four years, 5 years, and that hasn't come to stuff. And now the CEO or the creator of ETH is like, "Yeah, that was all, you know, Um, we shouldn't have done that." It's like, "Well, great. We wasted like five years."

So, yeah. Yeah. I mean, I don't know what you want to go into first, Cedus. I was curious to kind of get like your take on because I know uh I think you've been pretty pretty uh like balanced with your takes on on hype, right, as somebody who didn't really own it initially. I don't know if you still don't or whatever, but uh how do you feel about hyper EVM?

Yeah, I I feel like they just should like not even do Hyper EVM. Like there's no need, right? Like think about all these EVM chains that are out there today, right? What do they get? They get like an a morpho fork, right? So money markets, they get some unis swap fork or a new unis swap type thing, right? Maybe they get a club like Monet has a club. Um then what they what else are they really getting on these chains, right? And the thing is Hyperlid you could build the money market right into Hyperlid per exchange, right? Um you don't need the Hyper you don't need like lending markets on Hyper EVM, right? it it it's kind of like redundant and there's just like so much more money to be made on uh just like Hyperlid main chain and they're doing you know HIP 3 HIP 4 and whatever future hips are it just seems like that's the way if there's anything you we've learned in crypto it's like the liquidity you got to build around the liquidity right and like HyperVM but doesn't that kind isn't like the like kind of part of the point like building on Hyper EVM will eventually allow them, but it will never be the same as just building directly on Hyperlquid, right?

Like I think they know that though. I mean, I think that's why they keep their team tiny. I mean, like compared to their centralized exchange equivalents, like their employee count or whatever is like minuscule and so like I think they want to keep it that way. um for whatever reasons I know not per se, but like I think they're like, "Yeah, if we don't have to hire a ton more, you know, bring on more company risk by building it internally and we can just make sure our core product is good and then we have people who are maybe better at certain things, building it instead of us trying to find someone like Shoku who, you know, has so much experience within equities and all of like he's probably the best person to build trade XYZ and if he's already a top hype holder and already so aligned.

I think I I do agree with your point to an extent like is there some stuff I think they should have done themselves like possibly like USDH should that have been an internal thing? I agree. Yeah, that probably should have been like their own thing and they could have owned their own stable coin yield on top of the the hyperlquid. But with a lot of the other stuff, I think it does almost give them a shipping power that Binance bybit don't have just because it doesn't necessarily fall on Hyperlid Labs themselves. And so all these people can basically build out the ecosystem and vampire attack the exchanges without it coming necessarily from from one company or or one thing.

Yeah, but a lot of these things are done on the hip like three and like you don't need the hyper EVF, right?

Not not for those things, but like if you want to do like actual, you know, like decentralized lending and like you you would. But um but you can just build that directly into hyperlquid. I guess my point is like if we've come to the conclusion that blockchains are good for like finance and trading then the the having an EVM chain is like less exciting because you don't need all that you don't need this touring complete like general purpose thing. You you basically just want to hold in on the finance and that's what hyperlquid is. It's just you just like build everything directly on top of like within Hyperlid.

So, it just works like more seamlessly and everything. I mean, we'll see. I I agree that like you you launch this and you can have other people come in and build on it, but it would still always work better directly on Hyperlquid. Like a money market on HyperVM is not going to work as well as just being on Hyperlid.

Yeah. Um I mean like as of now like I I think the criticisms are definitely valid. But I still think it's very early uh to to to make a full judgment on it.

Yeah, I mean there's downside of them like Yeah, I was going to say like what's like the real downside to it? Like distraction.

Distraction, right? Um, but I think this is the way to approach it if if you're going to approach it like this. And like I don't know like clearly like the Jeff's Jeff's goal is to have to have right like house all of finance which would include those things that you like don't want to do directly on Hyperlquid that you just might want to do on something like the EVM and just tap into their their liquidity or order books or whatever.

I don't know. I'm I'm interested. It's it's it's the to to your point, it's one of the only things I'm actually interested in in crypto at the moment right now is is watching um watching all these, you know, people go for what's clearly the the end goal of like the global exchange, right? Like um just do just housing everything, doing everything, trading all types of assets.

And I don't know, uh, I think, uh, I think Tommy Tommy and Logan talked about it on on the Deli pod a few days ago or whatever. Um, it's just like a it's one of the like one of the the really big interesting races going on right now in in crypto is um, and you know, competing with Tradfy with Robin Hood and places like that. And I don't know, I don't know if Hyperlid is overvalued or undervalued relative to Tradfi things. I don't know how the regulatory aspect will eventually play into it at some point. There will have to be a conversation probably around the KYC thing.

So the KYC thing to interrupt you is something I've been thinking about recently. It's actually interesting. I think when you implement KYC can either be bearish or bullish, right? I think that if Hyperliquid had to implement KYC like a year ago or even right now, it would probably be bearish, right? But once you once you basically get all like the retail activity that you kind of want, right? And like all the retail activity that's on Binance and Coinbase and all that, then you want like the big money to start coming on, then you actually need KYC and everything to get them on, right? And so if you add it too early, you never build up the liquidity with retail, right? U but you reach a point where like you kind of stay kind of like this offshore bucket shop in a sense if you never get the real institutional money on, right? And so there will be a point and I don't know maybe it's getting closer now. Uh, I don't think it's there yet, but like there will get a point with for Hyperlid, it's probably like, oh, adding KYC and compliance actually now is going to take our product from this level to this next level in like a good way, right?

That's definitely the, you know, the bullcase for it. I don't know. It's, like I said, it's the one position I continue to hold and and actively buying more in. I do think it rerates higher when when appetite returns. They're just doing too many they're shipping too many good things. And I think like I said this last time with flip I think um like the lighter TG I think is going to be pretty like was pretty telling of I think what what will happen to flows when you see all of those other TGEs. I just the vacuum seems to be flowing one way right now.

So I don't I missed I missed Binance when Binance like BNB was such an obvious thing back in like 2018 and stuff. Completely missed it and fumbled that so bad. Uh even though like you know the exchange token was just so clear like this is such a good thing like such a good business right like um even without like buybacks and stuff but I don't know not not missing this one. So that's that's like yeah big lesson. Clearly one of the best businesses in uh in the industry and yeah.

Yeah. Um did we want to talk about the Galaxy quantum thing or do we want to talk about Vitalic L2 thing? I know LTR you you had some things on the quantum thing, right?

I mean, not much aside from I think it was just like people grasping at any negative news right now to to try and explain. I think they did it to CZ as well, like just why crypto has been nuking, why it's been underperforming. And so, anytime there's any sort of headline about someone sold x amount or this is happening or CZ said he's calling off the bull run, like super cycle, like super cycle canled. Yeah, he did. and they're just going to cling to that right now because I think they want some assemblance of oh that's why um versus like the worst possible scenario which would be people just aren't believing you know and they're just selling because they like don't want Bitcoin anymore um versus maybe quantum or something like I think quantum is more digestible to people who still hold Bitcoin as like a reason to sell and they're like oh yeah I can see why you would sell because of quantum but you know I believe it's not going to be a big deal so I still believe in Bitcoin and they'll hold and they feel more confident in it.

Versus like if some OG seller is just like, "Nah, Bitcoin's over, dude. I just don't believe in it anymore." Um, and I'm going to dump nine bill. Like, I think that scares them more. Um, because maybe there's like some info symmetry or something that may they may know. Um but yeah, I think that Yeah, I think that like if the selling is primarily due to quantum that would be a good thing because while I do think that it is like a real risk that people are taking more seriously, uh it's like if all this selling really was due to quantum that would be kind of like a massive overcorrection in the short medium term due to that because still pretty far away, still unclear if it's even going to happen or not.

Um, and there are still things that, you know, I still think that at the end of the day when it comes to it, the coins will just be like burned or they'll just use for tail inflation or something. I don't know. But I think that the resolution from it will happen. And there are there are a lot of people working on quantum within Bitcoin. Um, it's not like everybody working on it's not like there's no team focused on quantum. So, I think that if if a lot of this selling was really quantum, that would be a good thing. Um, I don't really think it is like cuz like I don't know, the disconnect from 1010 is just so glaringly obvious. That's something systemic really did happen there.

Um, and again, you hit that 100k psychological number, it makes sense to sell all this. So, yeah, we'll see. I mean, Novo had this interesting comment the other day and like people aren't really agreeing on his interpretation of it, but there was like some nine billion seller and it seemed like part of the reason this person was selling was because of Quantum. Um, Galaxy came out after and said that no, no, that's not what Novo said. I don't know if you read the transcript. Kind of looks like that's what he said. But regardless, it's like it's it's something that is if you're like a mar if you're on the margin if you're going to sell or not and then you're like quantum seems pretty scary. That can tip you, right? And same on the buying side that can tip you to kind of hold back a little, right?

So, um we'll see. We'll see. As I said, yeah, got it's useful from like a decision-m framework also. If if you know people are selling for a wide variety of reasons, then you know you kind of want to assess each of those and and think about how many other people will believe that and whether they're right or wrong. But if you have one, then I think it's just easier to kind of quantify whether you think the selling the the magnitude of selling is appropriate or not. Granted, it's a very difficult one to quantify.

Yeah. So like chance of zero in X years is like your math that you got to do. Just what's the discount rate use on that, you know? Yeah. No, the EV is is definitely different whereas before it was, you know, uh just just money supply reduced by concerns around long-term security and the the thesis was pretty straightforward. Now it's Yeah. I mean, the thing is for me, Quantum can fix the long-term security if they actually just use Satoshi's coins for tail inflation. Like, it could actually be a bullish thing in that sense, right? Um because like I don't think the the the purest angle of you can't change the 21 mil will matter in the long run. Um not when you get all the institutions and everyone involved. If like you can do something good with Satoshi's coins where you use it just to like put back into the system to increase inflation for another like 200 plus years, uh I think the market will take that as like that's a very good um fundamental change to Bitcoin, right?

So we'll see. I guess the other big thing was like Vitali came out with this L2 post basically saying that um you know they need to scale the L1 that the L2 road map. Uh you know these things being like brands of Ethereum are not exactly correct and that they need to focus more on the L1. Uh I think this was kind of like a long time coming from some people. We saw a lot of victory laps on the timeline yesterday. Which is funny though because like Soul is like getting hammered today, even more so than E