Multicoin Capital managing partner Tushar Jain believes the crypto market has bottomed out and is entering a turning point.

Source: "When Shift Happens"

Compiled by: Felix, PANews

Multicoin Capital managing partner Tushar Jain recently shared his views on the current crypto market in the "When Shift Happens" podcast, stating that the crypto market has bottomed out and will enter a new turning point, elaborating on his investment logic regarding Solana, Hyperliquid, and Zcash.

PANews has compiled highlights from the interview.

Host: Do you think we are at a turning point now?

Tushar: Yes, life is good, and the market is starting to move in our favor again; this is the most exciting part of the cycle. I believe we are at a turning point. There are several signs to prove this: First, you must see the market sentiment truly bottom out before it reverses, just as during a bull market, sentiment must reach a level of euphoria before it tops out. Second, when bad news no longer causes the market to drop, that is a signal of a turning point; when good news no longer causes the market to rise, that is also a turning point. Last month we experienced some significant bad news like major hacks, but this did not trigger a massive sell-off, which is a huge signal. Additionally, the rate of application adoption has been increasing, and there has been a disconnection between price and fundamentals. So, I think this is a perfect storm.

Host: Everyone knows you and Multicoin are super bulls for Solana. Have you changed your view on Solana? How do you allocate positions when you are bullish on both Solana and Hyperliquid?

Tushar: This is a question of time dimension. I still believe Solana is the correct technological architecture for the internet capital market; you need a permissionless open-source chain to integrate everything onto one platform. I still have confidence in its performance and architecture. But at the same time, we are seeing trading volume in derivatives shifting towards Hyperliquid. I currently have significant positions in both assets and am bullish on both. Solana is a leader in spot trading, and I believe it will handle spot trading of tokenized securities, but Hyperliquid is clearly ahead in derivatives. Rather than being an extremist, it’s better to think from a probabilistic perspective and hold both. I am not a "maximalist" for any asset and will not stubbornly stick to a particular position or viewpoint.

Host: How would traditional financial issuers choose? Can this help us determine who the biggest winners are?

Tushar: Traditional financial issuers would not issue assets on Hyperliquid. We have seen institutions like Galaxy issuing stocks on Solana. The core difference here is "trusted neutrality." Solana has a trusted neutrality that Hyperliquid lacks. It's a trade-off: Hyperliquid lacks trusted neutrality and has opaque validator nodes in exchange for better performance; users accept this because they can verify the chain and see the exchange's real-time solvency. Solana, on the other hand, is not only client open-source but also has an extremely strong validator community, which does come at a cost. Traditional financial institutions highly value trusted neutrality—Goldman Sachs cannot settle on a chain of competitor Stripe, and JPMorgan would not settle on DRW's chain; they would never hand over such significant power to a competitor.

Host: Since you are bullish on both SOL and Hyperliquid, how do you determine the size of your positions? Is it a 50-50 split?

Tushar: Position management is an art, not a science. For long-term investors, trying to allocate positions precisely using a quantitative model is a trap. You should concentrate your funds on the assets you are most optimistic about; what’s the point in putting money in your tenth most favored asset? When deciding on positions, external investor demands, tax costs (for example, we held SOL long before getting HYPE), and the "minimizing regret framework" need to be considered. Imagine in one or two years if you misjudged one of the assets—which one would make you feel smarter or more foolish?

Host: Looking ahead to 2026, which asset do you see as the most obvious opportunity?

Tushar: An extremely obvious choice for me is Zcash (ZEC). Despite its relatively small position due to liquidity and market cap constraints, Multicoin has already accumulated a significant proportion of the total supply. I like its momentum, use cases, and community; it reminds me of early Bitcoin. When I saw it rise last year and spoke with many early enthusiasts, I found that even when the price fell, they remained steadfast in their belief; it’s not a short-term hot money game. Furthermore, Zcash lacks fundamentals (no cash flow or revenue), which means its value relies entirely on people's consensus, granting it a larger upside potential as a store of value; the larger it gets, the better.

Host: What does Zcash represent for you?

Tushar: It represents a return to the "cypherpunk" values that built this industry. I support stablecoins and RWA on-chain, but they are essentially centralized and can be frozen. This industry is built on "self-sovereignty," and now the mainstream is catering to regulations. The current Bitcoin, in my view, has been captured by institutions (like BlackRock and MicroStrategy). As discussions around quantum risks facing Bitcoin arise, early cypherpunk Bitcoin supporters may fork and go to the other side, so I believe Zcash represents the original intention of the industry, and more OGs will join.

Host: How do you value assets like Zcash that have no income?

Tushar: For assets with business income, I look at their cash flows and set a price target based on a price-to-earnings ratio. But for assets like Zcash, I look at its market cap ranking. Is it ranked 20th, 15th, or 10th now? I believe it can enter the top five. This method can also adjust with the overall market (like whether Bitcoin is at 80,000 or 200,000).

Host: For assets of this type, do you hold until it enters the top five, or will you trade in and out?

Tushar: We absolutely do not actively trade in and out; it’s too difficult, and humans cannot control emotions. Many fund managers try to sell high and buy low, only to get slapped from both sides. I have an extreme aversion to technical indicators; draw a few lines, and then a news event (like a geopolitical conflict) happens, and the charts are rendered useless. We are "actively managed" rather than "actively trading."

Host: So for income-generating assets like SOL or HYPE, what is your valuation framework?

Tushar: For them, you must forecast ahead. You need to think about what the key drivers of the business are, what claims token holders have on income, and then see what options are available in the market. Additionally, you must consider execution risks and factor them into the discount rate (for example, Ethereum's risk is lower than Solana's because it is older and more decentralized). These numbers are only reference points; ultimately, qualitative judgments must be made.

Host: How do you choose the timing for purchases? How did you manage to accurately bottom HYPE?

Tushar: Trying to nail the bottom is not a repeatable skill. My framework is the "thirds method": assuming I want to invest $100, I would immediately buy one third; then, over a set period (like one to two months), dollar-cost average the second third; the final third is kept as maneuvering funds, during which if there’s a significant drop (like a 10% decline in a day), I will buy the dip. This greatly reduces the regret associated with missing out.

Host: Two major events happened in the last few weeks. The first was the Zcash code vulnerability incident, which led to a sharp price drop, but you instead increased your position. What happened?

Tushar: Simply put, the Zcash core team, while using AI tools to check the code, discovered a possible double spend vulnerability in the Orchard privacy pool and fixed it. The market panicked, thinking that tokens were being infinitely minted. But in reality, transparent addresses were unaffected, and the "revolving door" mechanism of the privacy pool (which records the total amount of funds in and out) showed that no hackers were withdrawing large amounts of funds. I did not make any trades on the day of the incident (I don’t like to trade during extreme volatility and poor liquidity). After observing for a few days and confirming that no hackers exploited the vulnerability, I believed it was irrational panic from the market that triggered a cascade of stop-loss orders, so we significantly increased our position in Zcash. The team plans to launch the "formally verified" new pool Ironwood in July, which I see as a false alarm.

Host: The second event is that Multicoin recently released a report predicting HYPE will reach $319 within two years. You hold a large amount of HYPE; do others think you’re just "shilling"? Are the conservative assumptions in there too aggressive?

Tushar: We do hold a position, but people should look at our reasoning and draw their own conclusions. The assumptions we set are not aggressive:

First, a 35% compound annual growth rate for crypto derivatives: the past five years was 45%, and we have cut a quarter off the growth rate.

Second, DEX captures 32% of the derivatives market share: from nearly zero in 2022 to now 16%, doubling to 32% in two years aligns with trends.

Third, Hyperliquid maintains a 30% share of decentralized derivatives: this is also conservative because trading volume data can be inflated (many other exchanges have fake trades), but currently Hyperliquid captures 59% of the true open interest (OI) across the network, which is hard to fake. As other platforms stop subsidizing, Hyperliquid's actual share should increase.

Fourth, USDC collateral grows linearly with trading volume: as long as traders’ leverage preferences remain the same, the stablecoins collateralized will naturally grow in proportion to trading volume and open interest.

Host: Has the market bottomed?

Tushar: Accurately predicting the bottom is extremely difficult, but I believe the low point of prices may have passed. Excluding macro black swans (like an escalation of the US-Iran war), we have already seen the "extreme apathy" phase. Bad news no longer causes the market to fall; the weak hands have already exited, leaving only the absolute believers. However, this does not mean there will be a "V" shaped reversal to the upside; the market may experience a period of sideways trading and apathy, requiring time to build a new narrative.

Host: Can you elaborate on the advantages of investing?

Tushar: If you don’t have an edge, you should buy index funds and go to the beach. There are four sources of investment advantages. First is channel/information advantages (someone will call you with insider information); second is analytical advantages (you understand the asset better than others); third is behavioral/psychological advantages (you have a deep understanding and control over your emotions, which is the hardest); fourth is structural advantages (like a long-term funding structure). We invest in Zcash mainly because of a strong behavioral psychological advantage (seeing extreme pessimism in the market but strong faith from holders), plus some channel information advantages.

Host: What does Ethena represent for you? You built a significant position last year.

Tushar: Ethena, along with Aave and Morpho, is in the same track: matching lenders wanting yield with borrowers seeking leverage. We hold multiple projects in this space (including Kamino on Solana), as the lending market has obvious scale effects, and liquidity will concentrate at the top.

Host: To what extent do you examine founders?

Tushar: We place a high value on the founders. Our evaluation framework has three multipliers. First is the total market size several years out; second is long-term profit margins (whether there are economies of scale to prevent profits from being eaten up by competition); third is execution risk. Ethena's founder Guy Young is one of the most capable founders in the DeFi space, greatly reducing execution risk and increasing valuation potential.

Host: If you are long-term investors, when do you lock in profits?

Tushar: For our fund, the so-called monetization means converting assets into Bitcoin. When the market is extremely euphoric, we sell high-risk assets for Bitcoin to reduce Beta risk; when the market crashes, we use Bitcoin to buy the projects we like at a lower cost. We sell only in three situations: first, we find a better asset; second, the investment logic is falsified; third, market valuations are excessively exuberant, overextending future expectations for years. Since we commit to full portfolio operations for investors, our "cash" is Bitcoin.

Host: What are your thoughts on Ethereum?

Tushar: It’s hard to assess. They have been telling everyone to use L2 scaling for the past 6 to 7 years and now suddenly want to raise Gas limits for L1 scaling. Nobody can clearly understand their plans. The foundation and Vitalik don’t want to hold too much power and want the market to explore, but the market is a great follower and not a good leader. Even though spot trading has lost to Solana and derivatives are losing to Hyperliquid, Ethereum's market cap resilience still surprises me. The only reasonable explanation is that people see it as a "store of value" or a better Bitcoin.

Host: Your partner Kyle left Multicoin, and many people feel pessimistic because of this. Why do you stay here?

Tushar: I was also surprised he left, but I respect his decision. It prompted me to rethink my motivation. I don’t frame it as "living every day as if it’s my last," but rather ask myself: "If I have 10 years to live, what do I want to do?" The answer is I want to win; I enjoy the sense of achievement when I’m right while others are wrong. I believe blockchain is the underlying architecture for future capital markets, replacing the outdated systems of today. When Zuckerberg turned down Yahoo's $1 billion acquisition, he said, "If I take the billion, I would just start another social media company, so why would I leave the one I’m at now?" This strengthened my belief.