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- [00:00]
A
There's been, I think, an enormous amount of selling from kind of the OG bitcoiners throughout this period. Like the, the most effort throughout any cycle. I mean, and this is like the common story that you, you know, people, people talk about now, but there's like so many wallets that like literally did not touch their Bitcoin for 10 years or, or 12 years and they held through 80%, 90% drawdowns multiple times seeing their net worth being incinerated and do not sell a dime of bitcoin. And now they're finally starting to sell and they're selling the most they ever have.
- [00:39]
B
Hey everyone. Welcome to Unchained, your no hype resource for all things crypto. I'm your host, Laura Shin. Thanks for joining this live stream. Before we get started, a quick reminder. Nothing you hear on Unchained is investment advice. This show is for informational and entertainment purposes only, and my guest and I may hold assets discussed in the show. For more disclosures, visit Unchained Crypto.com this episode is brought to you by Adaptive Security, the first cybersecurity company backed by OpenAI. As AI makes deep fakes and synthetic identities easier than ever, Adaptive helps companies test and strengthen their defenses. Learn more@adaptivesecurity.com if crypto taxes feel overwhelming, you are not alone. That's why Crypto Tax Girl, a team that's been helping crypto investors since 2017, is offering $100 off on one on one crypto tax help. To get $100 off your crypto tax services, go to CryptoTaxGirl.com Unchained Again, that's CryptoTaxGirl.com Unchained. Today's second guest is Ryan Watkins, co founder of Syncrasy Capital. Welcome, Ryan.
- [01:50]
A
Hey, thanks for having me on again.
- [01:52]
B
You recently wrote a post on X saying that crypto is at a stage of development that you called the Twilight Zone. And you said that this is the largest transition period you've seen since joining the industry eight years ago. Explain more about what you mean.
- [02:07]
A
Yeah, so I think the reason why I framed it as like the Twilight Zone is to just, I think it's like a good metaphor for this transition between either sun rise and earth, sorry, night and morning, or like the sun setting and going into into the night. And the reason why is because I think there's so many different contradictions that I'm seeing across the asset class where, you know, you'll have like institutions that are super excited about bitcoin and tokenization and stablecoins and they think this is, like, this big secular trend. Then you have. People have been here for a long time that are, I mean, burning out or checking out, and they're like, all right, you know what? I don't want to deal with this anymore. I'm just gonna go sell my coins. I'm gonna go trade stocks or. They're really bearish on all this stuff. For some reason, I'm trying to reconcile what exactly is going on here, because it's just one thing to say that, okay, there's a huge divergence between sentiment and reality, but I don't think that's quite true, because I think reality is different for different sets of people that have been in this asset class for a long time. And I really, to me, like, what explains most of this is really just 2021. So I think in 2021, that was obviously a huge bubble. And I think we say with the benefit of hindsight, that things went way too far, and we pulled forward a lot of expectations about where this industry was heading. And since then, even this process of rationalizing everything since that period. So you've seen some of the valuations for many of the longer tail of the assets come down during this time. And then even as, like, this industry seemingly has progressed so much, it just hasn't been enough to go higher. Right. Like, all these altcoins are in many cases, lower than they were in 2022. And I think that's what's caused a lot of frustration among the people who are native to this asset class and have a condition that you just want to buy all coins when bitcoin goes up. And then, in contrast, that's why you see some of the institutions that just don't have that baggage of having been here in 2021 just being like, all right, well, I don't really care about any of this stuff. I just care about the fact that this technology seems inevitable now, and I can use it, and bitcoin has done well. And as far as they're concerned, they only asked Stadium to buy for the past two years, since he just reproved. So, yeah, I mean, I was just kind of bidding at the end of 2025 and thinking about, you know, well, obviously, just like, what I. What I expected for. For 2026. And, yeah, just kind of feel like the only word that was coming to my mind was just transition. It's just transition period, where we're seeing who are the new winners, who are new losers, and we're kind of going from this kind of, like, older more speculative area, cryp economy to one that's more productive.
- [04:57]
B
And so, you know, correct me if I wasn't quite reading what you wrote accurately, but to me it felt like you were saying that you felt like sentiment is sort of unreasonably low right now. So what outlook do you think is more realistic?
- [05:12]
A
Yeah, so I think sentiment among the native people, like people who are just trading these cryptocurrency vineyards for a long time, I think that is far too low. And I think the, in many ways, to me this is like the inverse of how he entered 2025, where I think in 2025, remember that time, Bitcoin just rallied from 55k to 110k in the fourth quarter after the election, Michael Saylor bought $20 billion of Bitcoin. Then AI agents became a meta, and collectively those reached 10, $10 billion market capitalization. Hyper Liquid launched at $3 billion valuation. With the 35 billion, Trump launched a mean coin which went to $70 billion in two days in January. And then you had solana going up 300. Like that was a crazy period at the end of 2024. And I think as a result, as we enter 2025, people's expectations of what was going to happen this year were way too high. With the benefit of hindsight, we can say, right. And I think when you have really high expectations, it's really hard to meet those expectations. You know, for one, all the things that people are excited about that would come with this new administration, they just take a long time to play out. You know, it's not like the law does changes and all of a sudden, you know, overnight, you know, there's like a trillion dollars of assets coming on the blockchains, or all of a sudden, you know, your favorite web2 giant decides to integrate stablecoin payments or whatever it might be. So that was like coming into 2025, I was thinking contrast. 2026 is in money in many ways, like the polar opposite, where I think expectations are extremely low. A lot of people think that for a variety of reasons, like four year cycle, they think that tokens are just broken. They're structurally broken. And I think to be fair, many things are true. Tokens have had structural issues for a long time where you couldn't actually accrue value to any tokens. Like a lot of the price you're paying for the fundamentals was way too high for a long time. There's too much information asymmetry between the core teams and the public. And I think that creates A ton of issues if you're a public market investor when you're just being exploited by insiders. And I just think all those issues at the very least are well understood at this point and then also are in the process of being just like change and transformed. Right. So I think now we're at a place point in time where, like I said, I think expectations are extremely low and the potential for upside surprises is, is quite high. And it's like usually when people least expect good things to happen, that good things, when they do happen, have an outsized impact.
- [07:59]
B
Yeah, you, you mentioned that in the post that, you know, right now we're not in a phase where vaporware can suddenly generate vast fortunes as you, which, you know, was the case before. But then you say that now crypto has the requisite conditions to being able to surprise to the upside. So what are some of the conditions that you think will make that possible?
- [08:24]
A
Yeah, so I think for one, like I said, I think valuation being reset, I think it's. Well, it's combination of valuation expectations being reset and the fact that you have like, real fundamental changes that have been developing over the course of the past year in part due to these regulatory and institutional tailwinds. So I give like one example. You know, Twitter announced like the integration with Solana called like, it's like hashtags or cash tags, what it was called. And I think to me, like, that was a prerequisite to like some kind of broader integration with Solana where maybe at some point this year you might be able to enter a trade through Twitter to buy an asset on Solana. And it seems like that's what the Solana account is minting at. These are good examples of like, what could be a surprise to the upside where like, once again, if you're a Web2 enterprise, like a social media company or large financial institution, you just saw like Genius act pass. You just saw like the SEC and CFTC transform and change their stance on, on, on, on the asset class over the past year. But it takes time for you to actually do something about that internally, like build a product around this stuff. And I think now you'll start to see some of these products roll out where it's like, oh yeah, we've been working on this for the past six months, ever since Genius app was passed. And now all of a sudden you can do stablecoin payments on X or maybe you can do it in WhatsApp or whatever. Like, I think these will be things that like, these are like the flavor of Things I think could be coming out this year that'll be, I think meaningful catalyst for, for the asset class. Now to be fair, this doesn't mean that everything will benefit. Right. Because I think at the same time what we're starting to see is increasing divergence of, of outcomes both in terms of like who fundamentally benefits and then also returns of the different assets as well as. So if all these people are going to announce that they're building on a Ethereum Solana, that is not going to be good for smart contract platform number 45. It's just not. In fact, I think as the crypto economy becomes more inevitable, it benefits a smaller number of players. I think it benefits the ones that are actually in the lead and in position to keep compounding. And then to be honest, it also benefits some of the incumbents as well. Because I think the incumbents, they see this technology becoming more inevitable, they're going to go and fight for their slice of the pie too. Right. So I think what we'll also see this year, and this may be good and bad for some of the coins people hold, is there's going to be a lot of large fin institutions and Web2 companies that just spin up their own competing products and that's everything from launching their own financial infrastructure or stablecoins to launching their own blockchains. That'll be I think a big story this year. And you know, like I said, pros and cons. On one hand it's validating the technology. Other hand, in some cases people like, well, you know, they're trying to just, it's almost like they, they copied our homework and they're just going to take credit for it.
- [11:28]
B
Yeah, I mean what you said about how after genius, now we're going to see, you know, a lot of stuff take off with stablecoins. It just made me realize that actually the passage of clarity can either speed up that timeline or if it ends up getting pushed and delayed then it, we could end up. Yeah, because basically what, what happens with that kind of legislation is that then you, you basically do the crypto equivalent of going from like Napster to you know, Spotify. So yeah, it just like kind of creates a lot more clarity for businesses and entrepreneurship. So this is like a slightly different question, but you know, one other thing that I've been wondering about, which, you know, you didn't talk about this in your article, but I'm sure you're very well aware that gold just keeps reaching new all time highs and bitcoiners are sort of Watching the price action of gold and they're, you know, crying a little bit. I, I feel the same way. Well, you know, why do you think it is that bitcoin hasn't benefited from the debasement trade? And why do you think it's lagging behind gold?
- [12:37]
A
Yeah, I mean to be fair, bitcoin from the bottom in 2023 is still up about like 4.5x. And in many cases the reason why it was going up was a combination of factors. You know, there's like a reversal impediment, there's like the institutionalization, the asset class and allocators getting off of zero. But then there's also, I think if you, this tailwind of dollar debasement as well that I think has been benefiting bitcoin throughout this period. Now I think that dollar debasement has bought a much stronger narrative over the past year because of the price action on gold and silver. And bitcoin obviously has not participated in that. But I don't think that necessarily invalidates the thesis for bitcoin. And I think there's many different theories on why bitcoin has underperformed for the past year really since the, the end of 2024, as I said, when we had almost had that blow off top like moment after the election. And and for me I think that, I think 100k is a important psychological level for many people. And there's been I think an enormous amount of selling from kind of the OG bitcoiners throughout this period, like the most effort throughout any cycle. I mean and this is like the common story that you, you know, people, people talk about now, but there's like so many wallets that like literally did not touch their Bitcoin for 10 years or, or 12 years and they held through 80%, 90% drawdowns multiple times seeing their net worth being incinerated and did not sell a dime of bitcoin. And now they're finally starting to sell and they're selling the most they ever have. And I think that enough like when you have like high single digit percentage of supply turning over because of that, that is enough to cap the price of bitcoin for a long time. And I think to add to it in the fourth quarter when there is this concern and it's almost like a mystical concern about like this four year cycle, like there's no, I don't think, I don't think it's like a fundamental law of nature that every four years like we have to go up and then down in like, predictable cadence. But regardless, there are some people that hold bitcoin that do believe it, and there are people that hold bitcoin that don't believe it, but believe that other people believe it. So becomes almost this shelling point for everyone to trade around. Okay? This is the period of time when there's a lot of volatility and people might actually be selling. So I think that explained, I think the underperformance for the past year. And the question for me is just really, are we past this idiosyncratic selling for bitcoin? Because if we are, I think it's actually a matter of time before we do actually catch up to, to gold and silver. And if we're not, then, you know, maybe we just have to deal with another, you know, six 12 months of all these old wallets coming out of nowhere and selling their bitcoin. And that just might be the reality.
- [15:37]
B
All right, so in a moment, we're going to talk a little bit more about Ryan's piece and which areas of crypto he thinks are going to flourish. But first, a quick word from the sponsors to make this show possible. This episode is brought to you by Adaptive Security, the first cybersecurity company backed by OpenAI. As AI becomes more capable, attackers no longer need to break into your systems. They just need a convincing imitation of someone you trust. That could mean a deep faked voice on a call, a synthetic co worker on Zoom, or phishing emails written by AI that are nearly impossible to distinguish from the real thing. Adaptive's platform is designed for this new reality. It runs deepfake vishing and AI generated phishing simulations so your team can see exactly how these attacks work and practice responding before it happens for real. Their AI content creator also turns new threats or compliance updates into interactive multilingual training within minutes. You can learn more@adaptivesecurity.com if you're looking for help with crypto taxes, Crypto Tax girl is offering $100 off for Unchained listeners. They provide personalized crypto tax reports and returns and spots before April 15th are limited. Go to cryptotaxgirl.com Unchained to save $100. Once again, the link is cryptotaxgirl.com UnchainED. So you kind of alluded to this earlier that, you know, we're the developments we're going to see in crypto over the next few years are not going to be evenly spread across the industry. So what are some of the ways that you feel, you know, what are the sectors of the industry that you feel have found product market fit and are poised to do well this next few years?
- [17:28]
A
Yeah, well, I mean if we extend our time horizons the next few years, I think there's a. I think this is a ton of stuff that's really exciting. I mean, so beyond the obvious of bitcoin and Bitcoin and stablecoins, which I think at this point most people can see are at that inflection point of the S curve and starting to get more and more adoption in a predictable way, I think you have just defi Internet capital market, whatever people want to call it, Internet financial system, it's all the same thing. It's just finance moving onto blockchains. And I think that trend is there are many different ways that this ends up playing out. I think for one, it can be as simple as people starting to hold more dollars in wallets and then first they might be using those for payments, but then what is the next thing you want to do if you hold dollars in a wallet? Well, you want to go and earn yield on it and then that will be the growth of like the lending economy on blockchains. You also probably want to trade these assets as well. You want to swap it for whether a spot or derivative exposure to your favorite assets. And I think if you can have all your financial needs being serviced in a single wallet without having to migrate your assets all the time or click on a bunch of links, then I think that's quite powerful. So I think that trend is really what I'm most excited about. So it's not like any specific one segment. It's just for extending our time isn't that long. It really is just all of finance moving on to blockchains. I think for the seal future though, what we continue to be most excited about, at least at syncrecy, is the purpification of everything as one way of putting it. And the reason why is I think there's two different ways to get assets onto blockchains. One is that similar to what stablecoins do, you have some deposit somewhere off chain and you create a representation of that on a blockchain. And so far we've been able to do this for dollars quite easily. We're in the process of doing it for every other asset in the world. The challenge with that is that there's just more logistical challenges to getting these assets onto blockchains. And that's how I think the growth of tokenization has been slow. And the only thing we really tokenize outside of dollars have been treasuries and I mean there's like a small amount of stocks have been tokenized, but nothing really that, that, that, that meaningful. Whereas in contrast, I think creating synthetic representations of these, you know, through perpetuals is quite easy, you know, not to oversimplify, but I think you really only just need like a, a price feed and then two people willing to make different sides of the market. Then you have your, you have your exposure. And at least since like hyperliquid has released their, you know, equity and commodity perpetuals, the growth of this segment has been extraordinary. I mean, faster than even I expected. You're already seeing multiple days in a row just recently doing a billion dollars in volume for like non cryptocurrency trading on hyper liquid and open interest also growing in lockstep. I think that's really exciting because, you know, one of the things that I think is like a common narrative people talk about now is how equities and commodities just offer you better risk reward than in crypto. And that's why some people are leaving to go and trade these things. Well, what if we could actually just trade these assets that people really want to trade on our blockchains and we can do it with a ton of leverage and we can do it from anywhere in the world and we can do it without having to then or money off of a blockchain and put it into a brokerage account and it's just in one place. Well, that's exactly what they're doing. And I think that's what I'm really, really excited about over the next year. I think it's just something where even throughout this period, where we've been in a lull the past, let's say like one to two months, that debt is a sector that has consistently been growing throughout it. And I think the reason why is because it really does have product market fit. People really want to trade these assets and they really want to trade them with leverage. And one of the best ways to do that.
- [21:36]
B
It's so funny because I knew you were going to say something about perps. And we had Thomas on the show who used to work at Jump street and now works at Jito, and he basically was like, yeah, perps are going to take over the world. So I think it's a not uncommon, you know, thought so. There's one thing that you mentioned in your piece which is about the dual, you know, equity token structures, which obviously has been an issue. You know, we saw aave, the AAVE community, the Axar community, Uni There were just a bunch of, you know, sort of kerfuffles around that issue recently and I wondered if you had thoughts on what the optimal structure is or, you know, if you are noticing any standards emerging.
- [22:30]
A
Yeah, I, I, you know, I think so. I think Barian did a, a really good essay on this topic just outlining the differences between tokens and, and equity. Because I think during this, during this period where people come disillusioned with tokens, they're, I think many people are suggesting literally become security if that's really what we want them to approximate. And I think one of the nuances that they bring out are like what are the differences between token and equity? And how. There's no actually single answer for whether you want just token or just equity or both. But one I think clear distinction is that tokens derive value from cash flows from a contract on chain, whereas equity can derive value from cash flows that are off chain and you can actually build a business on a blockchain where the equity accrues value from running a front end interface or running something else that is off chain, whereas the token accrues value from what actually is paid out on a blockchain. I think it's a good distinction. And you know, with that in mind there's like probably higher design where. Here's the one. So this is it. Ambiguous all the value. And then in other cases you might have, it makes sense where you know, you know it actually does make sense to have like equity and token because these are two different things. What I will say is that there is a trend that we're seeing towards like clear what value belongs to the token. And I think that's actually the most important thing. Regardless of whether it's like every value or sorry, all the value from this ecosystem going to this one token, I think that's like less important. What matters is that it's like clear what token holders own and that is like the clear shimmer seeing.
- [24:42]
B
All right, so last question you wrote the crypto economy is not a single market maturing in unison, but a collection of products and businesses moving along different adoption curves, which yeah, for sure that's what's happening now. And I was curious if you could just give some examples and like the different timelines you think they're going to play out on.
- [25:03]
A
Yeah, yeah. So I think the easiest way is Bitcoin versus, I don't know, like decentralized AI or gaming or NFTs. So Bitcoin is very much at this point on the path to global Adoption. Whereas I think let's just use NFTs as an example. I mean we're still figuring out what is the point of this stuff. Like is this even going to come back? Come back? Is crypto gaming a segment that's going to come back? It could actually be another three to five years before those sectors of the crypto economy get to where Bitcoin is today. Right. And I do think it's a. And the reason why I even say this in the first place is because I think as altcoins have done poorly over the past three years, it's compressed people's ability to dream about what this technology can do in a common take that I hear is that, okay, well blockchains are only useful for finance now. So we're going to have store value, we're going to have payments, and then we might have trading and that's it. And in fact you can just bucket blockchains under fintech. This is all just fintech. It's just a subset of fintech. And it's just funny to me how that is where people have landed because I think if you were just to extrapolate what people are currently excited about, then it might be true. But if you actually understand what this technology enables, all the different products and use cases on a his first principles basis, you realize that all these things that we talked about in 2021 will probably materialize it. It just might take a lot longer for some of these things are more speculative. I actually still do believe in some version of the metaverse. If we're actually playing like on a ten year horizon, like I think we will have digital identities in virtual worlds and assets that we own in those virtual worlds. We're going to pay for things in those virtual worlds and then within that we'll have like all this stuff like smart contract platforms, DeFi protocols, NFTs that are the enabling technologies for what we're creating. But that's just not going to be relevant in the next year. Right. So it doesn't. So depending on what your horizon is, I think like that's an example. Another example is, is Deepin. So I think Deepin is in this kind of trough of disillusionment right now where like they're figuring out okay, like how do we actually bootstrap these networks? Like the, the old model of let's just give all these people supplying a bunch of hardware to our network a ton of tokens. It's just not going to work anymore. So they're figuring out different ways of doing it. So, you know, for example, you see projects like Daylight, for example, where they're finding, like, alternative financing mechanisms to actually scale the hardware side of the network. And that's, like, really interesting. So all to say, you know, many of these different segments, because the crypto economy is is, in fact, an economy. It's not just a singular technology. They will start to hit their growth stage at different times, and I think that's totally fine.
- [28:16]
B
All right, Ryan. Well, it's always such a pleasure chatting with you and getting your takes on what's going on in crypto. So thanks so much for joining us.
- [28:24]
A
Yeah. Thank you.
- [28:27]
B
And for everyone who tuned into this live stream, thank you also for tuning in, and we'll catch you next time.