New Narratives Online
New narratives online can be speculated upon for fun. However, for already launched projects, I would not invest in new coins that have a high FDV, low circulation, and are bound to decrease in price.
We have great expectations for Pendle, which is the largest on-chain fixed income platform. It is already profitable and shares its earnings with PENDLE holders. We are also very optimistic about EtherFi, as they are building a new type of “bank” in the crypto space.
I recommended EtherFi’s crypto card on Twitter. I have seen many similar products, but this one is reasonably priced, practical, and can be linked to Apple Pay. I believe they will accumulate a very sticky user base. This card is like the “American Express card of the crypto world.”
They also promised to use their revenue to buy back tokens and return the repurchased tokens to ETH stakers. Therefore, if a project that is already online can achieve these, we would be very interested.
Advice for New and Experienced Investors
Kyle: For the viewers watching this video, whether they are newcomers or experienced professionals, what advice do you have? Especially regarding asset allocation, rebalancing, or entry strategies?
Arthur: You first need to define your “return threshold” — who exactly are you comparing yourself to? At Maelstrom, our benchmark is Bitcoin. I can buy Bitcoin directly without paying you a salary. So you need to tell me why your performance is worth hiring you.
We invest in altcoins and early-stage projects, and provide consulting, aiming to outperform Bitcoin. In other words, this is our “threshold return.”
Of course, for someone else, the threshold might be an annualized 5% because they are borrowing money to invest. They need to ensure their annual return exceeds the borrowing cost.
Or they might be a long-term investor, believing in Bitcoin and the narrative of currency depreciation, wanting to buy Bitcoin and hold it for ten years to outperform fiat. It entirely depends on your personal situation and goals.
So before investing, you must define your objectives, and only then can you check if your investments have truly achieved those goals. If not, you need to adjust your strategy. Don’t wait until later to make excuses for a bad investment, saying, “I bought it for that goal.” That would be too late.
Market Rotation Logic
Kyle: I feel like you and I are alike; sometimes we also play in this casino, buying some high-risk coins, which is indeed quite thrilling. When the price skyrockets 50 times, it feels like a shot of dopamine. But what do you think would be an appropriate proportion of high-risk, high-reward Beta investments in their asset allocation for those watching?
Arthur: If you can’t sleep at night due to price fluctuations, it indicates that your position is too heavy.
Kyle: I completely agree. I have experienced this, especially when using leverage with Aave or Avalanche, borrowing and reinvesting. Then, if Bitcoin drops slightly, you become anxious and can’t sleep. That state is really terrible.
Assuming Bitcoin returns to its historical peak, what signs could define that “altcoin season” has really arrived? — Before we move on to the next topic, I have to mention that I’ve been using a Bitcoin auto-accumulation trading strategy recently, and it has been very effective. In just 45 days, I turned 1 Bitcoin into 1.033 Bitcoins. If the trend continues, I expect to grow from 1 Bitcoin to 1.27 or 1.28 Bitcoins.
For example, if you start with 0.1 Bitcoin and stick to this strategy without interruption or withdrawal, after ten years, you would have 1.16 Bitcoins. If Bitcoin reaches $1 million at that time, this initial investment, which was only worth $9,500, would turn into an asset worth over a million dollars.
If you haven’t seen the interview I did with Ash from Sequence, there is a video link in the description below. I will also include a jump tag at the end for you to easily watch it. This might be one of the most powerful and robust wealth accumulation strategies. Now, back to the interview.
Bitcoin Dominance and Market Behavior
Arthur: Personally, I believe Bitcoin dominance will return to levels seen before 2021, around 40% to 70%. Once Bitcoin reaches its historical peak, people will start to rotate their investments. “Is the bull market back? Then altcoins should outperform Bitcoin.” Although this “should” is merely theoretical, market sentiment is ignited this way.
So, everyone begins to return to the ecosystem. “The bull market is established; we went from 70 to 110, then back to 70, and now we’ve broken through 110 again, perhaps even rising to 150 or 200.” If the trading volume rises alongside the price increase and the technical charts look good, typical capital rotation behavior will emerge. The market will enter a phase of “digging for junk coins and searching for hundred-fold coins,” with a full revival of risk appetite.
Strategic Reserve Dreams Dashed
Kyle: Do you think there’s a possibility, like sometimes I fantasize about this scenario: a country’s “strategic reserve” starts buying Bitcoin on a large scale, and then other countries see this is true and follow suit, leading to a severe supply shock in the market where Bitcoin starts rising by tens of thousands of dollars daily, quickly absorbing liquidity? Just like the phenomenon we occasionally see — Trump coin (TRUMP) suddenly surges, and all altcoins drop by 80%, with all the funds being absorbed. Do you think there could really be a Bitcoin dominance surge cycle that makes everyone abandon altcoins, leaving only Bitcoin to soar ahead? Of course, I believe that eventually, capital will rotate back to altcoins, but do you think there will be an extreme phase where Bitcoin stands out alone?
Arthur: We have somewhat experienced this situation before. However, I personally do not believe in the notion of “strategic reserves buying Bitcoin,” especially regarding the country everyone likes to mention — the United States. The U.S. is a deficit country, and the only way to hold Bitcoin as a “strategic reserve” is by not selling the portion seized from law enforcement agencies — like those 20,000 Bitcoins.
But I really can’t imagine a democratically elected politician publicly stating, “We are going to print money to buy Bitcoin.” That would be too difficult for voters to accept — let alone that Bitcoin is often portrayed in public opinion as a “geek club” and “meme for speculation.” Would you really want the public to think you are backing those people? I believe this is impossible.
A more likely scenario is the “China production model”: if you have excess electricity capacity, then mine Bitcoin and store the mined Bitcoin in the treasury, but you won’t buy it on the market. Or like the UAE, convert excess hydrocarbon energy into electricity to mine Bitcoin for reserves. But you wouldn’t directly use the fiscal deficit to buy Bitcoin. You would be more likely to “print money and issue cash checks,” as that earns votes. In short, the imagined “strategic reserve buying Bitcoin” will not happen at all.
Kyle: I agree. We actually discussed similar content last time. Now, more and more companies are starting to mimic MicroStrategy’s approach to buy Bitcoin. Although there won’t be a national strategic reserve plan, we do see that the amount of Bitcoin bought by companies even exceeds that of ETFs. Do you think this trend will continue? Additionally, with Howard Lutnick’s son launching a fund similar to 21.co, do you think these factors combined could create a real supply shock?
Arthur: We participated in the UPXI transaction, and their company will also include part of Bitcoin in their balance sheet. Ultimately, there is indeed a group of investors in the market who cannot invest in Bitcoin ETFs but still want exposure to crypto assets. Their institutional rules do not allow direct holding of cryptocurrencies, but they can invest in U.S. stocks. So Michael Saylor seized this opportunity.
He told these people, “Can’t buy Bitcoin? No worries, I’ll buy it. My company’s balance sheet is full of Bitcoin. If you buy my stock, it’s equivalent to indirectly owning crypto assets.” Thus, their stock prices were pushed up, and the trading premium was far above the net asset value. This is the model they use; as long as there is demand, they can continue this way.
Essentially, these investors are well aware: “I want crypto assets, but I can’t buy directly. So I’ll buy stocks of compliant companies that are allowed to hold them.” Thus, these companies adopt a “quasi-monetary policy strategy” to boost their stock prices. I believe this approach will continue for some time.
Especially since Michael Saylor’s “MicroStrategy” is now one of the S&P 500 companies, it has the ability to constantly raise money from the market to “increase holdings.” Of course, this rhythm may stop after Bitcoin’s volatility decreases. At that point, these stocks may no longer fluctuate significantly, and the market heat may naturally fade.
Decoupling Bitcoin from the Stock Market
Kyle: Recently, we have seen Bitcoin’s trend becoming increasingly similar to gold, beginning to decouple from the stock market. Previously, Bitcoin and the stock market had a strong correlation. Do you think this decoupling is really happening, or is it just a short-term phenomenon?
Arthur: I think we have already seen a certain degree of decoupling. However, I still believe there will be a wave of large-scale sell-offs — when Trump declares again to impose higher tariffs on China to showcase his hardline stance, the market will react violently. Bitcoin may also experience some volatility.
However, people are finally starting to understand: the truly key indicator is “volatility in the bond market.” Whenever the volatility in the bond market spikes, it is a time for monetary easing, which is the best environment for Bitcoin’s performance. Therefore, I believe we need an actual market verification to allow the public to fully understand this logic.
Do you ask me if Bitcoin will once again be highly correlated with the Nasdaq like in early April? I don’t think so. This time Bitcoin should perform more steadily — it may not surge significantly, but it won’t crash like the stock market.
Kyle: Indeed, this kind of trend has rarely occurred in Bitcoin’s history. It has always been traded as a “tech stock,” and now it has finally shaken off that label.
Arthur: This is a good thing; it’s really great.
