This article is reprinted with permission from Deep Tide TechFlow, and the copyright belongs to the original author.

Bitcoin continues to pull back, and altcoins are in a sea of blood, causing the sentiment in the crypto market to plummet. Looking back to 2025, the performance of the entire crypto industry not only lagged behind the US stock market but also underperformed gold. The question of "Should we leave the crypto space to invest in stocks?" has become one of the most heated discussions in the community.

In this issue, we invite two seasoned friends who are deeply involved in both the "crypto space + stock market" to discuss the current market in depth.

If you only have the last 10 USDT left, would you prefer to participate in the crypto market or the stock market? Has the crypto market really reached its end? What stage of the cycle are we currently in? What opportunities are being overlooked by the market?

If you are in a state of confusion, this episode will provide you with new perspectives and directions.

Guests:

Teacher Jiang (@xingpt): Former investment team member at Binance, early investor in several well-known Web3 projects, macro-focused, and steadfast in the crypto space.

Frank (@qinbafrank): Macro blogger, former mobile internet and VC practitioner, focusing on secondary investments in the US stock and crypto markets.

Deep Tide TechFlow: In the past few weeks, everyone's sentiment has not been particularly good, especially seeing many people making a lot of money in the stock market, leading to discussions about whether to leave the crypto space for stock trading. This topic is quite interesting, so we wanted to invite friends who are experienced in both stock and crypto trading to chat. Today, we are very happy to have Frank and Teacher Jiang here to share their views on this matter. Let's start with a brief self-introduction from both guests.

Frank:

I am Frank. I started working in the internet industry over ten years ago, having worked as a product manager in large companies and also ventured into entrepreneurship for a while, as well as working in VC. I officially entered the crypto space at the end of 2017 for two main reasons: on one hand, the growth dividends of traditional internet were basically coming to an end; on the other hand, many friends around me were enthusiastically pulling me into the crypto space, and I entered the industry in that atmosphere. From 2017 to 2021, I mainly focused on the primary market, engaging with many projects and helping some teams with financing. However, after 2021, due to increasingly strict domestic regulatory policies, and since I was still in the country at that time, operations in the primary market became increasingly difficult, so I later shifted to focus on the secondary market. As for the US stock market, I have always been more familiar with internet technology companies due to my background in the internet industry. I started trading US stocks in 2013, and it has been over ten years now, so I have been keeping an eye on both the US stock market and the crypto market.

Deep Tide TechFlow: Thank you, Frank. The deepest impression everyone has of you now is that Palantir made a tenfold gain.

Frank: I never expected it to rise so much. Last year, I just thought the logic was sound, and I expected a 3-5 times return in three years, which would have been great. But the subsequent developments indeed exceeded expectations. I believe there are several main reasons: first, Palantir's large model business is doing well, especially in the defense and military sectors. Second, Trump's election created a close relationship with Palantir, which opened up a lot of market imagination. These expectations combined pushed the stock price up.

XinGPT: Hello everyone. I entered the crypto space around 2018-2019, about the same time as Frank, and I have been involved in VC and primary market investments. In the past year, I have been focusing more on opportunities in the secondary market. Last year, I was also trading MemeCoins. This year, I have been paying attention to both stocks and the crypto space. Compared to Frank, I entered the US stock market relatively late. I initially traded A-shares, but I encountered a stock market crash in 2016 right after I entered, which left a bad impression on stock trading. It was only later that I gradually started looking at US stocks. However, since I entered the market relatively late, the valuations in the US stock market are relatively high, so I mainly operate more in the secondary market of crypto while continuously learning and sharing.

Deep Tide TechFlow: If you only have 10 USDT now, would you choose to trade crypto or stocks?

Frank:

If it were now, I would allocate to both markets. In the past, I might have had a higher proportion in US stocks, around 60:40 or 50:50. The overall logic has several points:

First, there are indeed many opportunities in the US stock market over the past two years. The trends in technology, large models, and AI are very clear, and I am familiar with both markets. Second, although the crypto space has undergone significant adjustments overall, there are still good opportunities, whether in large coins or small coins. The difficulty now is much greater than in the past; it’s not like 2020-2021, where simply picking the right sector—L1, L2, metaverse, chain games—would lead to gains just by buying and waiting a few months. This year feels more like a continuously rotating market, where opportunity windows may only last a week or two, or even a month. However, from the perspective of major asset classes, the main framework varieties will still present new opportunities after adjustments. Therefore, I always keep an eye on both markets and do not simply think that "US stocks are better, and the crypto space has no opportunities," nor do I believe that "US stocks have risen too much, so the crypto space must be better." The overall strategy is to maintain balance.

The second reason is that Crypto and AI are the two major technological trends of the future, and these two directions reinforce each other. In the current industrial policy in the US, the core focus proposed by Trump is also very clear: AI and crypto. The support for these two fields at the policy level is becoming increasingly clear. At the same time, the US stock market is not as easy as the outside world perceives. Although large tech stocks have performed strongly in 2023 and 2024, if you look at the performance of some US funds over the past year, many funds have actually underperformed the market. The companies they hold have decent EPS performance, with increases of 10% to 15%, but compared to Nvidia, it’s simply not enough. The concentration in the US stock market is very high, with the main upward trends coming from a few sectors: large tech, AI, and the industrial chain surrounding AI—electricity, nuclear energy, energy mining, etc. These sectors are performing strongly, but industries like consumer goods and pharmaceuticals have generally performed poorly this year.

Both the US stock market and the crypto space are experiencing differentiation, but the ways they differentiate are not entirely the same. The similarity is that both markets are highly concentrated. In the crypto space, either the major core assets (BTC, ETH, etc.) continue to strengthen, or small targets experience brief hotspots, such as the RWA, privacy coins, and mature chain project rotations in September-October, or even themes that suddenly emerge in a month (like Aster, Perp Dex). In the US stock market, the leading sectors are large tech, energy, and electricity, which are supported by policy, while other industries are generally weak. The difference is that the US stock market has smaller fluctuations and reacts more slowly to macro factors; the crypto space has larger fluctuations and is extremely sensitive to macro factors. Over the past two years, the movements of many cryptocurrencies have been almost entirely driven by macro liquidity.

I also pay attention to the Hong Kong stock market, but I mainly focus on crypto and US stocks, and I no longer pay much attention to A-shares. On one hand, I am not familiar with the A-share market; on the other hand, I started with US stocks. I entered the US stock market in 2013, 2014, and 2015, during which time the market for Chinese concept stocks was very good, and basically, anything bought would rise. My first stock was Tesla, and my second was Facebook. I did indeed catch the industry dividend at that time; to be honest, I didn’t understand much back then, I just happened to be in the right place at the right time. I only entered the A-share market at the end of the bull market in 2015. Initially, it felt good, but then it fell all the way down, leading to a very poor experience, and I gradually stopped paying attention. I didn’t invest much and didn’t understand it well enough. Essentially, I am not specifically from the secondary market; rather, my background is in two fields: crypto and TMT. So now, the targets I look at the most are still concentrated in areas I am familiar with: AI, TMT, new energy vehicles, and recently the "national fortune stocks" that have strengthened alongside the US market—energy, minerals, etc. I have relatively little involvement in other directions.

XinGPT: If I only had 10 US dollars, I think I would… save up to buy an electric vehicle to deliver for Meituan (laughs).

Because investing with that little money is too risky, the threshold for opening an account in the US stock market is there, and it’s not very convenient to operate directly in the A-share market; while in the crypto space, although 10 USDT can be used, the margin for error is extremely low. Last year, playing with MemeCoins, 10 USDT could still be tried, and indeed some people managed to turn things around; but this year, 10 USDT in the crypto space might be gone in two seconds, unless you are a naturally gifted, quick-reacting PVP player, otherwise it’s very difficult. For example, a former colleague of Deep Tide, Huang Mantou, had a style of "entering the internal market, taking a bite and running, leaving immediately if it’s not right," which is feasible but extremely exhausting, and not something the average person can imitate, especially for those who have already entered mid-to-senior positions in their careers, making it even harder to persist long-term.

I also agree with the major directions that Frank mentioned earlier. Overall, it still comes back to personal risk preferences and asset allocation structures. The US stock market is relatively mature, with fixed ways to play; in the A-share market, the government has been more forceful in "buying the entire market" over the past two years, trying to minimize extreme fluctuations, and the previous leveraged bull markets and stock market crash-style trends are very hard to appear again; the market structure has indeed changed.

The crypto space is even less mature, with an unstable structure, and every round of strategies is changing. The theories that everyone firmly believed in the past, such as "four-year cycles" and "altcoin diamond hands cycles," have basically failed this round. Many strategies that worked last month may not work this month. It is precisely because crypto is earlier and less mature that its gameplay is constantly changing, and you must challenge your inherent understanding at all times: models that used to make money may fail at any time, strategies need to be rebuilt continuously, and trading experiences will be continuously "deconstructed." This may also be the most unique aspect of the crypto space.

Deep Tide TechFlow: Both of you have seized many opportunities this year—as can be seen from the public positions on social media. Next, I would like to ask you to share: whether in the crypto space or the stock market, what has been the most impressive trade for you this year? What new thoughts do you have?

XinGPT: On the stock side, I actually consider myself a novice, having only started buying crypto-related stocks like Coinbase in 2023, mainly extending from my familiarity with crypto. Later, I also began looking at large tech companies like Tesla and Google, which I interact with more often, and I reference some US stock bloggers and Frank's insights. The overall rhythm of the US stock market is more stable, so this year I mainly allocated positions in large tech stocks. I also allocated a bit to Palantir. However, I am still not very familiar with some mid- and small-cap companies in the US stock market. During the previous DAT wave, I participated in BMNR, Strategy, and other targets, and overall, I was lucky, benefiting from the rise of large tech stocks and gaining some Beta, which I am very satisfied with.

The situation in crypto is completely different and comparatively much more difficult. The reason has been mentioned earlier—the gameplay changes too quickly, and experiences are constantly being overturned. For example, the first bull market I experienced when I entered the space was in 2021, when "diamond hands" were very effective: spotting themes, buying in, and holding within a large market cap range. The market rewarded your ability to discover trends and tell stories. There were also "second opportunities" after being listed on exchanges. Last year, many of my profits from smaller exchanges came from second-tier coins, which were somewhat mature but had smaller market caps: there were many opportunities to rise from 20-30 million USD market cap to 100-300 million USD. Coupled with some early participation in Meme opportunities, I was able to make money. Moreover, I am not a day trader; by the time I see something, many people have already made ten times their investment, but I can still profit when I enter, which made last year's market relatively easier to navigate.

After March and April of this year, the difficulty in the entire crypto space suddenly increased. There are two main reasons for this: first, the rebound strength is not as strong as that of stocks. After a large number of altcoins collapsed, they failed to recover to the levels seen after the major crash in April; most altcoins didn't even bounce back to their previous heights. The only ones that managed to do so were Bitcoin and a few strong altcoins (like Hyperliquid), while many coins simply disappeared. The influx of new tokens on exchanges has created a massive supply, leading to a very poor holding experience for most coins. Second, after October 11, liquidity completely collapsed. This was very evident: the liquidity of altcoins directly collapsed, and the liquidity of major coins also significantly decreased; the depth of mainstream coins like BTC and BNB is not what it used to be. The entire industry has entered a state of liquidity tightening. In such an environment, it is difficult to heavily invest in a particular asset, which has led many people to turn to stock trading and rethink their asset allocation.

The strength of gold and technology has also created comparative pressure. The biggest obstacle to Bitcoin's "digital gold narrative" this round is that government institutions cannot include BTC in national reserves. However, gold is already part of the reserve system, so in the context of increasing global uncertainty, gold has attracted a significant amount of capital. Coupled with the continued strength of AI and big tech, Bitcoin's returns appear even less impressive.

To summarize my feelings: the gameplay in the crypto space switches too quickly; the PVP difficulty is too high, making it easy to lose money; holdings in big tech and gold are more stable, with smaller fluctuations and clearer strategies, resulting in a significantly higher Sharpe Ratio. Therefore, the difficulty in traditional markets is actually lower—of course, there are people making big money in the crypto space, such as those trading DEXs, participating in new listings, or getting in on very early Meme projects. But that indeed requires a very high level of skill. For ordinary people, if they do not want to take on operations with too high difficulty, buying gold is also a good option, as you will find that the return rate is quite decent. So this is something to think about—what level of trading are you at, and where are your strengths?

Deep Tide TechFlow: You just mentioned gold, and you previously referred to ZEC as "underground gold." What is your logic behind that? Why did you think ZEC was a good opportunity at that time?

XinGPT:

This logic is actually quite simple, with two main points.

First, it comes from opportunities outside the crypto space. At that time, considering Naval's public endorsements, the only one I could remember was ZEC; even Bitcoin did not have such clear public support. This was a strong trigger for me.

Second, it was the attitude of the tech community. At that time, I saw some people from Google mentioning ZEC in public. When I looked at some on-chain data, I found that the privacy transaction volume of ZEC was indeed rising significantly. Putting these factors together, I felt that ZEC was undervalued when people weren't paying attention. At least in my expectations, its potential should exceed that of XMR, while XMR was not being called out by anyone and was further suppressed on the compliance front.

So I believed that a 4-6x return for ZEC was a reasonable expectation. Going up to 8x would rely on some marginal buyers taking over, possibly due to capital inflows from the crypto space, emotional drives, or simply following trends. After the 4-6x increase, the further rise was more about "emotional overflow," which is also why I did not add to my position later. The overall logic is not complicated; it does indeed have a certain element of luck. This holding experience is somewhat similar to stocks: you see a good sector, capital continuously flows in, and the price keeps rising. When you assess its valuation or fundamentals, you find it hard to say whether it is overvalued or undervalued, but at least it is not particularly cheap. It is just that because capital keeps entering, the trend on the K-line is very clear, so the price keeps pushing up. This logic differs somewhat from traditional crypto gameplay.

Looking at the strongest performing coins this round, such as BTC rising after the ETF, it was basically institutions taking over: MicroStrategy, quantitative funds, ETF capital, etc. But why has it recently stopped rising? The data is clear: miners are under significant selling pressure, and OG wallets are continuously selling. Previously, institutions and ETFs were taking over, and the supply-demand balance limited Bitcoin's rebound over the past six months. Now it is found that institutions can no longer absorb the selling pressure; MicroStrategy's buying power has decreased, ETF inflows have slowed, while selling pressure has not stopped, so the price naturally falls back. This stage is closer to "outside logic," as the dividends from "inside logic" have basically been exhausted. ETH is in a similar situation. Whether at $1,800 or $4,000, its fundamentals have not fundamentally changed. However, after experiencing a rise, the chips in people's hands have become lighter, and since there is not much selling pressure left, most of what needed to be sold has already been sold, so the price performance is more driven by external capital rather than changes in fundamentals.

Frank: I completely agree with what Teacher Jiang just said. My overall feeling is that the iteration speed of market strategies is increasing. The strategies I was familiar with and the models that were effective in the past few years have almost all quickly become ineffective in the last two years. For example, as mentioned earlier: I have a deep impression of the 2021 market. At that time, focusing on L2 and several public chains yielded good returns. By 2023 and 2024, I was still using the 2021 mindset to look at many altcoin sectors, but by mid-2024, it was clear that something was off: market liquidity was limited, volatility was greater, and small coins would drop as soon as they rose, unable to hold up.

Last year, I also wrote many tweets discussing my evolving understanding of altcoins. The final conclusion is actually quite simple: the market has changed.

There are several reasons: from 2021 to 2023, a large number of primary market valuations were pushed too high. Now the quality of projects themselves is not as good. Both cycles have experienced "narrative markets," but we still have not seen real implementations, which has damaged market confidence. After the ETF approval, a large amount of traditional capital entered the market, subtly changing the market structure. The more mature capital there is, the more "efficient" the market becomes; and an efficient market will be highly differentiated—this is also true for the US stock market, which was an inefficient market decades ago but has evolved into a highly differentiated efficient market in recent years. Therefore, my judgment is that the crypto market will become more differentiated in the future, and it is already in a highly differentiated stage.

From another perspective, I also agree with Teacher Jiang's viewpoint: we are not the type of traders who watch the market every day. We prefer clear logic and direction, then buy, hold, and are even willing to "diamond hand." However, this cycle has severely punished diamond hands, unlike the previous cycle where they were rewarded. Including myself, I have performed very poorly in small-cap secondary markets. Last year, I realized this, so I began to downplay altcoins and focus on a few sectors and a few targets, but the results were still mediocre. So my current strategy is to place large positions in foundational large assets, primarily in mainstream assets; adjust positions when I see risks; and allocate a small portion of my positions to chase hot trends, pursuing them if I can, and waiting if I cannot.

In the US stock market, my logic remains focused on fundamentals and long-term direction. The most impressive thing for me last year was Palantir. I first saw it through AI, then realized that AI must eventually lead to "applications." Palantir has been serving the US military since 2009 and became famous for its role in locating Osama bin Laden, having long-term collaborations with the Department of Defense, CIA, and military branches. Once this type of software has been in use for over a decade, its substitutability is extremely low. In 2023, Palantir actively shifted towards AI, with both models and practical applications. The key point is that starting from the second half of 2023, its financial data finally began to show an upward curve, which is completely different from previous years. My core logic for it comes from the Russia-Ukraine war: the accelerated proliferation of drones, unmanned ships, and unmanned robots will reconstruct future military systems. Therefore, I define Palantir as "the largest future weapons contractor, the software version of Lockheed Martin." Later, the facts confirmed this logic; as long as the direction is right and the experience is good, one can hold firmly.

Another stock that impressed me this year is Robinhood. I had previously held a position, but it was only a small one. I started adding to my position in April this year because I saw its strategic direction was very clear. In the past, Robinhood was the stronghold of retail investors, but in 2023 and 2024, it made several acquisitions: Bitstamp, a UK crypto exchange, and a Canadian team working on layer two, indicating that the entire team is very aggressive in the crypto industry. Additionally, this year, it has begun to heavily invest in short-term financial and investment products. This led me to frequently compare it with Coinbase in March and April. At that time, Robinhood had a market cap of over $30 billion, while Coinbase was over $40 billion; Coinbase had a PE ratio of over twenty, while Robinhood's was over thirty. However, looking at it comprehensively, I felt both had room for growth, but Robinhood had stronger "elasticity." What impressed me the most was the "wolf-like" nature and sense of rhythm of this team. For example, when the narrative of "asset on-chain" started to gain traction in July, they immediately held a press conference to launch the concept of "property release." Although it was essentially just a unified logic of contracts for difference, they understood that the key was not the product details but seizing the narrative position. In the third quarter, they launched prediction markets and event contracts; while the data may not be large, the growth is rapid, and search volume is very high. All of this left a deep impression on me.

Overall, my judgment in the US stock market is:

As long as the fundamentals are sound, choosing a reasonably valued position to build a position usually results in a good holding experience.

Medium-scale macro shocks can be ignored; the fundamentals of the US stock market are strong enough to withstand such fluctuations.

However, in the face of real large-scale risks (such as the uncertainty of Trump's policies earlier this year), it is still necessary to take appropriate hedging measures.

Essentially, all capital in the US stock market has concentrated on big tech over the past two years, which is a "passive crowding" brought about by AI. What we are benefiting from is this dividend sector. The two US stock targets I mentioned earlier are ultimately also biased towards Beta, moving along with the industry, macro factors, liquidity, and policies.

Deep Tide TechFlow: This year, the overall performance of different markets has been good—whether in the US stock market, A-shares, or gold, all have shown impressive performances. Although some small concept projects in the crypto market have managed to run, overall, the performance of crypto assets has not matched that of other asset classes. Why is this the case? Especially considering that it is generally believed that the interest rate cut cycle will begin in October and continue into next year, while the Federal Reserve is simultaneously reducing its balance sheet. Logically, these factors should be favorable for risk assets, so why haven't crypto assets kept up? How do you understand this round of weakness, and what are your views on the upcoming market trends?

Frank:

First, let’s discuss why crypto assets have performed poorly this year. I think it needs to be understood from a broader perspective. Since 2024, the overall Beta of crypto assets has not outperformed other markets. Teacher Jiang just mentioned that Bitcoin has not risen as much as Nvidia this round. These two are the most representative "cover assets" in their respective markets; Bitcoin represents the crypto space, while Nvidia represents the US stock market. When comparing the two, Bitcoin is lagging behind.

Returning to the internal dynamics of the crypto market, I believe the core issue is that the fundamentals are weak. Bitcoin essentially belongs to a consensus-type asset; it is both like gold and has risk asset attributes, making it a composite "majority asset." The price movements of such assets are primarily driven by macro factors, capital, and sentiment. When the macro environment is good, capital flows in; when the macro weakens, capital decreases.

I previously explained the market trends of mainstream coins using a framework called "big turnover." The buyers are ETFs, listed companies, and traditional institutions, primarily purchasing BTC, ETH, SOL, and even starting to look at ZEC (like Naval). The sellers are on-chain whales, early investors, and swing traders. When the price climbs to a new level, it triggers a round of selling from OGs who feel they have made enough profit and start to cash out. Therefore, in recent years, major coins have shown a typical "stepwise increase": stepping up, resting, retracing, and then stepping up again. The price is essentially a continuous game between buyers and sellers.

Furthermore, the crypto market's movements are highly dependent on macro direction. Are people expecting future easing or tightening? Is liquidity increasing or contracting? Is there a net inflow or outflow of capital? All these factors directly affect prices. Especially in the past two years, we have seen a "big year" in global political and economic events, with strongman politics becoming increasingly evident and uncertainty extremely high. The so-called "heavenly power is unpredictable" means you have no idea what these strong leaders will do next. The emotional nature of policies leads to significant market fluctuations, and the greater the volatility, the harder it is for the crypto market to establish a trend.

In addition, I believe the crypto industry has entered a clearing period, and to some extent, it is experiencing a "crisis of faith." From 2017 to 2021, the market was driven by trends and narratives, relying on stories and imagination. However, these narratives have been told for seven or eight years, and today, if people can only rely on storytelling, the market will naturally show signs of fatigue.

In contrast, while the US market is also trend-driven, there must be performance to back it up after the trend. Stock prices can be pushed up by expectations, but EPS must ultimately be realized; otherwise, the valuation cannot be sustained. The long-term structure of the US market is relatively healthy: from information technology, semiconductors, software, and the internet to mobile internet and now AI, all have driven valuation expansion through trends, which are then filled in by profit growth. This is why big tech has been considered "reasonable" despite years of growth.

For example, many believe big tech has risen too much, but if you look at their fundamentals—each year and each quarter, they generate hundreds of billions to over a trillion dollars in revenue, with profits often in the range of tens of billions or even higher. The PE ratio is around thirty times, but the growth rate is also over thirty. According to a logic from a Wall Street fund manager: if PE divided by growth rate (minus 2%) is less than 1, this is a growth stock. Many US tech stocks are currently in this state. Even Robinhood, with a PE of over sixty times, has a year-on-year growth rate of 69% in the third quarter; based on the "PE = growth rate" standard, its valuation is still lower than its growth rate.

Why has the US stock market remained strong? In addition to solid fundamentals, there is another crucial factor: the enormous purchasing power brought by stock buybacks. In the past two years, the scale of buybacks in the US stock market has exceeded $1 trillion annually. For example, Apple has repurchased nearly $600 billion since 2017, effectively eliminating 15%-17% of its circulating supply. As the circulating supply continues to shrink, this is a "positive value injection," naturally leading to the strong becoming stronger.

Looking at the crypto space, the current dire situation (especially for altcoins) is actually necessary. Most projects are performing poorly, and the holding experience for mainstream coins is also bad, but this is actually a prelude to the evolution of the industry. The market must first clear out the bad coins before it can stand up again.

The primary market is also being forced back to more reasonable valuations. In the past, some quality projects dared to raise $100 million in the angel round, reaching $500 million to $1 billion in two rounds, and going public directly at $2 billion. Such valuations in the traditional internet industry require solid data support, while Web3 projects often lack business backing. The current valuation compression is the market self-repairing.

At the same time, people are starting to pay attention to fundamentals again. For instance, the performance of HyperLiquid this year and the stability of BNB come from buybacks and real economic models. Among the leading DEXs, AAVE has performed significantly better than UNI this year due to buybacks, while UNI, despite high trading volume and fees, will see weak prices if the token does not carry value.

There is also a deeper issue: in the past few years, the responsibilities and powers of project teams have been extremely mismatched—huge power with minimal responsibility, leading to high moral hazard. After financing, they become "lords," and after going public, they become even more "lords," freely changing commitments to investors and the community, with the only motivation being how to sell the tokens rather than continue building. This model is unsustainable.

Recently, I saw an article from a16z stating that the "foundation model" of the crypto era should now come to an end. This model concentrates power and blurs responsibilities, resembling "feudal lords." The future should shift towards a more modern and transparent structure, linking tokens to business and subjecting them to continuous oversight, with decentralized power and governance resembling that of public companies. Once a new model emerges, the crypto market may undergo a significant reconstruction.

XinGPT:

I completely agree with what Teacher Frank just said; I wholeheartedly support it. I would like to add a perspective I recently heard.

Last week, I listened to economist Fu Peng share some insights, which I found quite enlightening. He also looks at coins, so his perspective somewhat represents how the traditional financial industry views "coins vs. stocks."

His framework is somewhat similar to what Teacher Frank mentioned; he breaks down asset attributes into "numerator" and "denominator." The denominator refers to valuation, as all assets have valuations; the numerator refers to earnings, as all assets should also have earnings. The problem is that the "numerator" of coins cannot be defined; Bitcoin has no profit model, so you can only look at valuation. Therefore, from the perspective of traditional financial allocation frameworks, the ideal asset is one where both "valuation + earnings" can rise simultaneously, which is the typical "Davis double play."

This is precisely what is happening in the AI sector right now. We think Palantir and Nvidia are already very expensive, but they continue to provide brighter quarterly reports, with performance exceeding expectations. You may think they have reached their peak, but a quarter later, they exceed expectations again; and in the next quarter, they continue to exceed expectations. Then the companies use the profits to build more data centers and invest in R&D, pushing future earnings even higher. The entire logic is: performance growth leads to valuation increases, which in turn drives investment, and investment further boosts earnings growth. Investors are fully on board with this positive cycle.

However, coins are completely different. Although the valuation of coins is rising, there are no earnings to support it, and the valuation is not low. From a capital perspective, the price of coins is almost a reflection of capital flows, strongly correlated with short-term interest rates and liquidity. Therefore, recently, with tight capital and soaring short-term interest rates, coin prices have immediately dropped significantly—because they lack "earnings as an anchor." This is why different assets and different fund managers make completely different judgments when allocating between coins and stocks.

Looking back at the market-wide surge in 2021, the logic was very clear:

First, unprecedented monetary easing. The pandemic and unlimited QE.

Second, Bitcoin is the asset that is most sensitive to liquidity; when liquidity increases, it is the most responsive and rises the fastest.

Third, it has no profit constraints and no valuation ceiling.

Fourth, most people at that time did not understand coins at all; they had only heard of "Bitcoin" and "Ethereum," and did not know what a layer one chain or governance was, so the storytelling space was enormous; combined with Meta promoting the metaverse to the skies, the narrative imagination was limitless; and with liquidity leverage, it shot straight up.

But now, the logic is completely different—your liquidity is tight, or barely on the path to easing but not truly loose yet, so risk assets are generally under pressure; your valuation, narrative, and earnings are hard to reconcile; and you have no new stories. Old stories can continue to be told, but few people are excited. Recently, Tom Lee tried to push the Ethereum narrative, and even he, the best storyteller in the network, could feel the forced nature of it. In contrast, when Circle went public, Wall Street was completely on board. Because Wall Street could understand this story and see the earnings, profits, and performance growth. Their imagination of stablecoins is much larger than that of the crypto space—while the crypto space sees stablecoins as "selling coins for transaction fees," Wall Street views stablecoins as the next generation of financial infrastructure, as "crypto version of Swift" and "crypto version of Visa." Therefore, many US stock bloggers say Circle is a major theme for the next decade and can be a long-term investment.

This highlights a core point: there needs to be a new story, realized performance, and a willingness to take on risk from capital for the story to truly take hold outside the crypto space. This is also why I believe ZEC can gain traction. It tells a "new story"—privacy. In the past, many people had a negative attitude towards privacy coins, but mainstream discourse is now shifting towards "privacy rights and sovereign privacy." Additionally, ZEC has been "in the works for a long time," and any influx of capital can create a significant leverage effect; combined with the fact that its on-chain data is indeed growing, these factors create a resonance.

So looking at coins today, I believe we should not only focus on on-chain data or coin prices but rather think of all coins as if they were in a US stock watchlist. If you look at Coinbase, Strategy, Circle, and then Nvidia, if ZEC were a US stock, would you buy it? Is it worth buying? If the answer is "yes" or "worth it," then go ahead and buy.

Deep Tide TechFlow: Looking forward from this point in time, what data indicators will you focus on? What factors will have a key impact on future pricing or trends? What variables are you currently most concerned about? Regarding these factors, do you lean more towards bullish or bearish?

XinGPT: I will start with the crypto space, which I am more familiar with. For me, the core of the crypto space is watching ETFs—both the inflows and outflows of ETFs and the selling pressure from miners. Overall, it still follows the logic of capital market dynamics, which is a fundamental judgment. In addition, I will look for new narratives and new sources of external capital. For example, will there be medium to large countries incorporating Bitcoin into their national reserves? Countries like El Salvador are too small and lack real purchasing power; Bitcoin's market cap is now in the trillion-dollar range, and to have a real impact, it must be a large country with a fiscal scale of hundreds of billions to trillions of dollars, allocating 1% as reserves, which would bring decisive incremental changes. Of course, Kazakhstan has also mentioned this, but its national scale is limited, and it is uncertain whether its actions will be swift enough. Ultimately, it still comes down to the policy direction of China and the US. Therefore, what I focus on in the crypto space are: policy developments, macro environment, on-chain capital behavior, and the balance of ETF inflows and outflows.

In terms of stocks, I prefer to listen more to Teacher Frank; I mainly look at performance. Are the earnings reports meeting expectations, exceeding expectations, and is the trend upward? Then I look at the scale and logic of the industry chain. Currently, many sectors in the US stock market are also exceeding expectations, such as energy, electricity, and nuclear power; many have not yet truly gone into production but are rising entirely based on expectations; resource stocks have not yet opened mines, but AI has driven up demand. Therefore, the key is whether they can achieve their plans on schedule; even if there are temporarily no profits, there must be clear milestones to verify.

Overall, trading coins is indeed much more difficult. You have to look at on-chain data, K-lines, macro factors, secondary markets, and regulations, with many points of focus; trading stocks is relatively simpler: as long as there are no major macro issues, look at performance through earnings reports, and capture themes and hot spots, the logic is clearer. But even so, many people still stay in the crypto space because, as we mentioned earlier—if you have very little capital left, the crypto space offers more opportunities for a turnaround. The low barrier to entry for trading coins is one of its biggest advantages.

Frank: Continuing from "why to stay in the crypto space," I think the core reason is the principle of the circle of competence. Most of us first got into investing through the crypto space; trading coins, investing in the primary market, ICOs, trading memes, trading major coins, engaging in the secondary market, and dealing with derivatives… this is the market we are most familiar with. The market is indeed difficult now, but that doesn't mean there are no opportunities. If you ask me to start over in a completely unfamiliar field, I would rather continue to delve into what I know best and find my true advantages.

For example, I have a friend (a well-known trader on Twitter) who is very strong in K-line analysis, patterns, and technical analysis, and he has been very successful trading both large and small coins in the crypto space. Over the past year, he tried to transition to the US stock market and A-shares, only to find that it is a completely different system. The logic of the US stock market is correct, but it requires time to settle; it may take three months or six months to realize, unlike the crypto space's feedback mechanism of "buy today, rise tomorrow." This has made him anxious and his performance has declined. In the end, he realized that he should still operate in the market he is most familiar with, using the sharpest tools without needing too many tricks—one good move can conquer all. Therefore, comparing different assets is one aspect, but more importantly, it is about what a person's traits, circle of competence, and cognitive structure are suited for.

Returning to the earlier question about "key indicators for the future," I mainly focus on macro factors, looking at the short term and medium to long term separately.

In the short term, I focus on two points:

First, when will the US government shutdown end? This was the logic I discussed on Twitter in mid-October: a shutdown means the Treasury cannot spend normally, monetary disbursement is hindered, and liquidity immediately tightens. Treasury spending is an important source of liquidity replenishment, and a shutdown is equivalent to "blocking the valve." As long as the government resumes operations and spending, liquidity will significantly ease.

Second, the Federal Reserve will officially stop quantitative tightening (QT) in early December. Stopping QT will also greatly alleviate liquidity tightness.

After liquidity eases, the next key factor is whether inflation (CPI, PCE) can continue to remain below or meet expectations. A weakening labor market is already a consensus; the only unresolved variable in the market now is inflation. If inflation continues to decline, the Federal Reserve can continue to cut interest rates, and the expectations for easing will not be broken. You can see that the recent market adjustments, with both the US stock market and the crypto space declining, are largely due to liquidity tightening, coupled with the fact that although the Federal Reserve cut rates in October, the forward guidance was hawkish, suppressing market expectations for easing.

So where are the future opportunities?

I believe that as long as inflation continues to be below or meet expectations, the rapid improvement in liquidity can continue to advance. If inflation is above expectations, it will be relatively difficult in the short term. However, looking at the cycles of two months, three months, or a quarter, I still believe inflation will come down. The logic is that this round of inflation is essentially driven by "cost increases," with tariffs being passed on to commodity prices, which is a cost push and does not belong to "supply disruptions." Only supply disruptions can lead to true inflation spikes.

Historically, the two major inflation spikes were caused by: the oil embargo during the two Middle Eastern wars in the 1970s and the supply chain disruptions caused by the pandemic in 2022. Both were supply shocks. The current inflation in the US is merely due to cost increases, so it will only cause a temporary rebound, and since CPI/PCE are calculated on a year-on-year and month-on-month basis, they will naturally be alleviated by the "base effect." Looking at absolute values, US prices have increased more than threefold from the 1970s to now; this is basic common knowledge.

The second point is that for the Trump administration, controlling inflation is also a political task. We discussed earlier that this year, the "effective tax rate" in the US increased from 3% to 13%, which can add over $300 billion in fiscal revenue. However, investment banks have calculated that if the Federal Reserve cuts rates by one percentage point, US Treasury interest expenses can decrease by $300 billion. This is why Trump has been so forceful in pressuring the Federal Reserve to cut rates. He first threatened to fire Powell, then used the "overbudget renovation of the Federal Reserve building" to criticize Powell's mismanagement, and then turned to pressure several Federal Reserve governors… The core reason is simple: fiscal consolidation.

Fiscal consolidation means "increasing revenue + cutting expenditure": increasing revenue through higher tariffs; and cutting expenditure by lowering borrowing costs, with the key to lowering borrowing costs being interest rate cuts. Additionally, since Powell is set to leave next year, the new Federal Reserve chair is expected to be announced in December, and it is highly likely to be someone aligned with Trump's approach. Therefore, I believe that as long as inflation in October or November can meet or be below expectations, asset prices will enter a favorable period. If it is above expectations, the short term will be under pressure, and the positive momentum will be delayed until the first or second quarter of next year.

From a broader perspective, I see two core points. The first is the "Fiscal Expansion 2.0" in the US. Since 2022, the Federal Reserve has been raising interest rates and reducing its balance sheet, tightening the monetary environment, yet the market has been rising, especially in 2023 and 2024. This is partly due to the AI wave and partly due to fiscal expansion. The three major acts of the Biden administration—the Inflation Reduction Act, the Infrastructure Act, and the Science and Chips Act—constitute Fiscal Expansion 1.0, supporting the market in 2023 and 2024. The "Great America Act" passed in July is Fiscal Expansion 2.0. The current market liquidity is mainly not driven by monetary policy but by fiscal measures. The efficiency of fiscal disbursement is slower than monetary disbursement; it has to flow from the government to businesses, then to residents, and finally to the market, which is a longer chain, but it is essentially still "disbursement." The recent government shutdown has left many policies of the Great America Act hanging in the air, with tax cuts and regulatory relaxations unable to be implemented. If the government resumes operations and fiscal policies restart, that will be crucial; this is the overarching logic of the current market.

The second major macro perspective is "China and the US." This is an era of political economy, with the competition of national interests between China and the US as the main theme. In the short term, I am relatively optimistic because the recent meeting between China and the US has just taken place, which I see as a "one-year truce." In the near future, relations will ease, but it may not last a full year; it is normal for new conflicts to arise in a few months or half a year. Both sides know that the trend of decoupling is irreversible, and structural contradictions cannot be reconciled, but in reality, there is a strong dependency: China relies on the US for chips, high technology, and consumer markets; the US relies on China for rare earths, key minerals, and manufacturing. Neither side dares to suddenly cut off the supply chain, or else the US would immediately face "embargo-level inflation." Therefore, what we see now is a situation of "fighting without breaking," with constant surface-level conflicts but no complete rupture. This is a truce period, as well as a buildup period before the next round of conflict; future national interest competition will become more intense, with higher uncertainty, and market volatility will increase accordingly.

Returning to the crypto space, I strongly agree with what Teacher Jiang just said; this is exactly what I previously referred to as "big turnover." This is a "long-term lonely big turnover opportunity," where chips will gradually shift from OGs and retail investors to Wall Street. This is the major cycle of Bitcoin, and within this cycle, macro factors will determine the strength of buying capital. If ETFs continue to see net inflows, the buying power will be strong; if inflows decrease or even turn into outflows, the market will naturally come under pressure. This is the most critical indicator in the crypto space. The logic of the US stock market is similar: looking at fundamentals, especially in a phase where capital expenditures of major tech and AI companies are extremely large, investors will pay closer attention to fundamentals. Although there are many "bubble theories" in the market, I believe AI is merely "expensive," not a bubble, and certainly not on a path to collapse. It is more likely a "valuation adjustment," not a "logic breakdown." However, this also means that the market's tolerance for earnings reports will sharply decline, and flaws will become increasingly difficult to accept. In the future, we need to pay attention to two things: whether earnings reports can continue to exceed expectations and whether the proportion of misses increases. As long as the proportion of companies missing expectations remains in single digits or teens, the market can stabilize; but if misses rise to 30% or 40%, it indicates that performance is not keeping up with valuations, the logic begins to weaken, and the market may shift from "killing performance" to "killing logic," potentially leading to greater panic adjustments. For me, this is the biggest risk point for the future.

To summarize, the key macro determinants include: inflation (which determines when the market will truly improve), the timing of the US government returning to normal operations, the structural uncertainty in China-US relations, and the policy fluctuations brought about by Trump's personal approach. The most critical indicators in the crypto space are liquidity, net inflows and outflows of ETFs, miner selling pressure, and whether the big turnover continues to shift towards institutions. The most critical indicators in the US stock market are whether earnings reports can continue to exceed expectations, whether massive capital expenditures can smoothly translate into revenue and profits, and whether the proportion of misses will expand.

Deep Tide TechFlow: I recently revisited "The Big Short" because I am very curious—why do a few people see the truly "anti-consensus" logic ahead of time when the market is unanimously looking in one direction? So the last question is: Are there any widely emphasized consensus views in the market, such as the cyclical logic of Bitcoin or the overall weakness of the market in a rate-cutting and balance sheet reduction environment, that you actually find problematic or worth questioning? Can you share your own "anti-consensus perspective"?

Frank:

I actually don't have many "anti-consensus views." Let me start with "The Big Short." A few days ago, I wrote a tweet about how Michael Burry correctly predicted the "macro big event shock," but often he was too early when it came to "shorting industry fundamentals." His biggest victory was indeed during the 2007-2008 subprime mortgage crisis, but if you look at his other calls: he shorted Tesla too early in 2020 and lost hundreds of millions; he shorted ARK too early in 2021; and in 2023, he shorted the S&P and semiconductors, and again in early 2025, with mediocre results. Including this time, he shorted Nvidia and Palantir, and he is actually losing money because he bought puts in the third quarter, and the stock price on September 30 was lower than it is now, indicating that his short positions have not made money.

A bigger problem is that his logic itself has some issues. He compares the current large-scale capital expenditures to the internet bubble of 2000, but many companies at that time had no revenue at all; whereas today's big tech companies mostly have earnings reports that consistently exceed expectations. He also compared the 40% growth rate of cloud computing in 2018 to the current 20% growth rate, but he overlooked the huge difference in valuations: in 2018, Amazon had a PE ratio of sixty to seventy times, while now it is thirty times; Google is even only twenty times. The valuations have already adjusted; it is not that "valuations are completely ahead of growth." Therefore, I think Burry is using a "past framework" to evaluate "current fundamentals," which itself will lead to bias.

But I still believe it is possible to short. Why? Because the macro liquidity during this period is already tight, and a large part of the gains in the US stock market has included a lot of "performance exceeding expectations beta." With such significant gains, it is naturally expensive; when it becomes expensive and is compounded by tight liquidity and macro event shocks, a "small-scale valuation adjustment" is reasonable. In my view, a small-scale adjustment in the US stock market is around 10%; it has now dropped about 5-6%, and it may drop a bit more in terms of valuation, but it is not going to collapse in a cliff-like manner as he suggests. The real big problem is still the fundamentals—if a quarterly earnings report truly misses across the board, and AI-focused companies continuously miss, that would trigger a larger-scale adjustment. No matter how good the macro environment is, it cannot save the fundamentals; conversely, if the macro environment is poor but the fundamentals are strong, it can withstand shocks; the logic is essentially like that.

Let's talk about Bitcoin. Personally, I also believe that "the cycle has indeed changed," but it doesn't mean "the cycle no longer exists." I've told many people that the cycle hasn't disappeared; it has shifted from the past "four-year halving" to being "macro-driven." Over the past two years, BTC's total market capitalization has been highly correlated with macro factors, which dictate the rhythm. However, being macro-driven does not mean there won't be declines; declines will still happen, but the magnitude may be smaller than in the past. The extent of Bitcoin's major cycle declines has been continuously converging, from over 90% initially, to 86%, then 83%, and in 2022 it was 70%. In the future, it may be even smaller.

The current challenge is that the economy is at a "decisive moment." The new cycle has not yet been fully embraced by the market, and the inertia of the old cycle's "four-year thinking" is very strong. Many long-term investors may think, "I don't want to be the last one holding the bag." Coupled with the macro fluctuations since October, it's normal for people to start taking profits and locking in gains. There is pressure on the funding side, and inertia on the emotional side, which is why the crypto market has been so bleak during this period. But this is also a critical time: if macro conditions improve and we see another wave of increases, it will likely indicate that "this cycle has truly changed." I mentioned a month ago that the next three to six months will be crucial, determining whether we continue with the old cycle or officially start a new one. My personal inclination is that a new cycle may be emerging, beginning to truly "break away from the four-year theory" and no longer being completely shackled.

If we look at analogies, gold experienced a significant adjustment after the big bull market from 2004 to 2011, dropping over 50% from above $1800 to just over $1100, and it wasn't until 2019 that it started a new wave. Bitcoin may also enter a similar phase. But ultimately, this judgment can only be made as we go along; it is more like a "hypothesis" or a "potential black swan direction." For now, we can only acknowledge that the cycle is changing, but how it changes and when it will be confirmed still requires time.

XinGPT:

One "non-consensus" thought I have is that while everyone is desperately searching for alpha, in the current market environment, it is actually more suitable to "hold beta." Recently, there have been many cases of short-term surges—like Binance Life and ZEC—that are indeed eye-catching, with many people flaunting their profits on Twitter. However, when you calculate the overall returns for the entire cycle, you might be better off "fully holding beta," such as long-term trend clear assets like Nvidia and Bitcoin. Long-term absolute returns are likely to be stronger than chasing alpha.

Why? Because chasing alpha has two major problems: first, it consumes a massive amount of your time, energy, and emotional costs; you have to constantly seek information gaps, research, monitor the market, and gather news; second, there are very few opportunities to take large positions. In the current environment, which is not an absolute bull market, you cannot really take heavy positions on alpha. Unless you go back to the absolute undervalued pits of 2022-2023, like the deep bottoms of SOL, BTC, early memes, or the initial GPT phase after Nvidia was mistakenly sold off, but now these have all risen too much. If you still want to chase alpha and take heavy positions at this point, you basically won't be able to hold on; even a slight fluctuation will wash you out, leading to a very poor holding experience.

So I remind myself and want to share with everyone: in this high-volatility, black swan-dense market, it's best to play defense and just hold beta. Preserve your capital and wait for the real opportunities that crises bring before taking action. Holding beta is already very, very good. I have friends who have only held large-cap tech stocks in the US for the past two years, achieving over 200% returns, surpassing the vast majority of crypto traders.

Another point—always keep cash. My cash position is also relatively high right now. Look at Buffett; his cash position is at a historical high. He doesn't touch AI, doesn't short AI, and doesn't try to bottom fish in AI; he simply doesn't participate. He has heavily invested in Japan's five major trading companies while holding a large amount of cash. This makes me reflect on whether my cash position is too low, so I am also increasing my cash position in preparation for the next crisis. A crisis will definitely come, whether on a macro level, due to structural issues in the crypto space, or structural risks in the US stock market. For example, in the next quarter (Q4 or Q1 next year), if Nvidia or AI companies' earnings reports do not exceed expectations, their stock prices may experience a significant drop—this would be a typical valuation kill. At that time, if you have cash on hand, whether you choose to bottom fish or continue to observe, you will be very calm.

So, the core is: aim to survive longer. The current market volatility is much greater than in the past; we used to not care about the impact of "short-term interest rates" on crypto prices, but now it has a huge impact. What will the next step be? Tariffs? Fiscal policy? We can't say for sure. In this uncertainty, maintaining a cash position and being able to withstand 20-25% volatility is very important.

Related: Analyst: The surge in Bitcoin (BTC) volatility may signal a return to option-driven price movements.

Original article: “Should You Leave Crypto for Stocks? Cycles, Opportunities, and the Path Forward”

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