This episode reveals why the current crypto cycle demands thesis-driven patience, exploring how to find value in a market shifting from parabolic pumps to a sustained, choppy grind driven by on-chain gambling and real-world asset tokenization.
The New Crypto Cycle: Patience Over Parabolic Pumps
- The current market is not delivering the instant, massive gains of previous cycles, leading to frustration and premature calls that the cycle is ending.
- Jonah’s perspective is that this reflects a maturation of the asset class. He states, "I think what we're seeing is we're just seeing a maturation of the of the asset class, which means for you, the listener, the important takeaway is just to be more patient with positioning."
- Strategic Implication: Investors should adjust their expectations from short-term parabolic gains to a longer-term, thesis-driven approach. The "Moonboy" strategy of buying anything and expecting it to multiply is no longer viable.
Thesis-Driven Investing in a Maturing Market
- Solana (SOL): Avi discusses his long position based on new information about Digital Asset Treasuries (DATs)—investment vehicles raising capital for specific digital assets. He notes that new DATs are raising cash to buy SOL on the open market, a bullish catalyst that took nearly two weeks to reflect in the price.
- Galaxy Digital (GLXY): He remains bullish on the stock due to the undervalued potential of its AI data center, expecting future contracts to drive significant value. This trade is based on a long-term value thesis, not immediate price action.
- Pump.fun (PUMP): The thesis that Pump.fun would eventually outperform Bonk as a memecoin platform took weeks to materialize, rewarding investors who accumulated and waited.
- Hyperliquid (HYPR): Despite public knowledge of its buyback program, the token traded sideways for a substantial period, allowing patient investors to enter before its subsequent price increase.
A Framework for Conviction: Value, Momentum, and Fundamentals
- Value: Can investors reasonably expect a 2-3x return in the near term?
- Momentum: Is the asset in a clear upward trend?
- Fundamentals: Is there tangible, verifiable on-chain activity, such as revenue and buybacks?
- Using Blockworks Research data, Jonah points out Pump.fun's consistent daily revenue of $1.3M to $2.5M, which directly funds substantial token buybacks. This provides a clear, data-driven fundamental basis for the trade.
- Actionable Insight: This framework allows investors to move beyond speculation and build data-backed theses. By tracking on-chain fundamentals (like revenue dashboards or ETF flows), investors can monitor the health of their thesis in real-time and make more informed decisions.
Legacy Players and Hidden Opportunities: Oracle, Ripple, and Tron
- Oracle (ORCL): Larry Ellison's wealth surge following Oracle's stock performance is highlighted. Avi notes Ellison increased his ownership from 27% to 40% over a decade by not participating in the company's stock buybacks, a masterclass in long-term conviction.
- Ripple (XRP): Avi draws a parallel to Ripple, which is conducting aggressive equity buybacks on secondary markets at increasing valuations. He interprets this as a strong bullish signal from insiders, suggesting a potential IPO is on the horizon.
- Tron (TRX): Jonah points out Tron's unusually smooth, high-Sharpe ratio chart, which he attributes to its dominance as a chain for Tether (USDT) transfers, particularly for illicit activities. He speculates that as competitors like Stable, Plasma, and Tempo emerge, founder Justin Sun may be incentivized to "pump the price pretty massively" to maintain relevance.
- Strategic Consideration: This presents a controversial but logical thesis: longing Tron could be a proxy for "longing crime" and the growth of the on-chain shadow economy, without directly participating in it.
Portfolio Strategy in a Ranging Market
- Jonah's Approach: He maintains a simple portfolio heavily weighted in Bitcoin and Ethereum with light leverage, plus a position in Aerodrome (AERO). He admits a weakness in actively trading altcoins during ranging periods and prefers to focus on his edge: identifying macro trends and bottoms.
- Avi's Approach: Avi is more actively trading, allocating to assets he believes have the strongest narratives for the next 1-2 months, including Ethereum, Solana, and BNB (all driven by the DATs narrative). His goal is to achieve 25-40% returns on these positions before rotating back into Bitcoin.
- Avi remains bullish on the macro outlook, citing on-chain data like the MVRV Z-Score, a metric that compares Bitcoin's market value to its realized value to assess if the asset is over or undervalued. With the score at only 2, he argues that statistics do not support the idea of a cycle top.
The Unstoppable Rise of On-Chain Gambling Culture
- Pump.fun is analyzed not as a frivolous platform but as a "real business" akin to "Vegas on-chain," generating millions in daily EBITDA from its memecoin "slot machines."
- Avi shares a compelling real-world example from a New York Times article about a homeowner who, instead of selling their house, raffled it off using an online platform. By selling 200,000 tickets at $5 each, they generated $1 million for a house likely worth far less, illustrating the massive, untapped demand for gamified financial transactions.
- Investor Takeaway: Gambling is a powerful, enduring human behavior that is rapidly moving on-chain. Investors should actively seek exposure to platforms and protocols that facilitate this trend, such as Pump.fun or Robinhood, which is launching a social feed to amplify speculative trading.
Deconstructing the On-Chain Casino: Asymmetry is King
- Avi explains, "The reason that people buy memecoins is you hear stories of somebody putting in $350 and walking out with 50,000."
- Traditional casino games offer limited, predictable odds and cannot deliver the 100x or 1000x returns that attract crypto-native speculators.
- Memecoins, functioning as decentralized Ponzi schemes, and potentially raffles or lotteries, are the "games" that satisfy this demand for life-changing upside from a small initial investment.
- Research Implication: For developers and researchers, this highlights a key product-market fit in on-chain entertainment. Success lies not in replicating existing games, but in designing new mechanisms that offer hyper-asymmetric risk/reward profiles.
The Next Frontier: Tokenizing Real-World Collectibles
- Avi introduces Collector Crypt (CARDS), a marketplace for tokenizing and trading physical collectibles like Pokémon cards, as a "trench warrior win" that exemplifies the next wave of on-chain value creation.
- The platform solves a major problem for physical collectibles: the lack of a standardized, liquid, and transparent marketplace. By tokenizing these assets, CARDS creates a central hub for price discovery and trading, unlocking immense latent value.
- This model can be expanded to other markets like baseball cards, Marvel cards, or even high-end wine and Hot Wheels collections.
- The ultimate vision is the "tokenization of everything," where holders of these newly liquid digital assets can borrow against them, creating a new financial primitive.
- Future Trend: This represents a powerful convergence of the collector and gambling economies. Investors should monitor platforms that bridge the physical and digital worlds, as they are building the foundational infrastructure for the tokenization of all real-world assets.
This cycle's value lies not in broad market pumps but in specific, thesis-driven opportunities within the on-chain gambling and collector economies. Investors and researchers should focus on platforms that provide the infrastructure for these emerging markets, as they are capturing real, sustainable revenue and building powerful network effects.
