Author: Jocy Lin, IOSG

This article is based on Jocy's live keynote speech at Money Frontier 2026 in Hong Kong. For ease of reading, we have made moderate edits while remaining faithful to the original meaning, and corrected any on-site verbal errors and abbreviations.

1. Opening: Know the White, Keep the Black

Hello everyone, I am very pleased to be invited by the Benmo community to gather with you here during this bear market.

The topic I want to share this time is very interesting—contrarian investing, betting on the frontier: why investments during a bear market often yield the greatest returns.

Let me briefly explain the background. This should be the fourth bear market I have experienced. This time, many people's feelings are very clear, but it is very different from the past. I really like a line from the "Dao De Jing": "Know the white, keep the black": knowing what is light yet being willing to stay in the dark to persist. This in itself is a virtue.

Before going on stage, many friends asked me: Is IOSG still investing?

We are still investing. The current feeling is quite similar to 2018 and 2019—many people do not know how to invest. IOSG will continue to invest in the crypto market; we do not want to become the "last gatekeeper of Asian crypto VC." We hope more investors will join Web3 and help more Asian entrepreneurs toward a better future.

Today, I will start with three "appetizers"—Bitcoin, stablecoins, Ethereum—to clarify the general background, and then discuss four directions, sharing the real businesses we see on the front line that are making money.

2. Bitcoin: Four-Year Cycle, Overcoming All Narratives

First, let’s talk about Bitcoin.

This round of recovery from the low point in 2022 has been propelled by several catalysts unique to Bitcoin: the collapse of Silicon Valley Bank in 2022, the hype around spot ETFs pushing the price to $60,000, and Trump’s election pushing it to about $120,000. By the end of 2025, most of these catalysts will have been fully priced in.

Since then, the situation has changed. With the start of the AI cycle after 2025, assets related to AI, gold, and Nvidia have all strengthened. Logically, these conditions should have been favorable for Bitcoin, but Bitcoin has stopped responding to them and has dropped 29% since the beginning of this year.

Why is that? Borrowing a phrase from the Benmo community's "Bitcoin Divine Power," it’s interesting: the four-year Bitcoin cycle once again has overridden all more complex narratives. The cyclical framework previously pointed clearly to Bitcoin peaking in October 2025, and indeed, the subsequent bear market began precisely in October 2025.

Many people might argue that the four-year cycle could just be a coincidence. But we see that many crypto OGs reinforce this four-year cycle: as long as enough investors expect the market to peak at a certain stage of the cycle, they will reduce their holdings around the same time—this collective behavior, in turn, creates the cycle they expected. This also explains why Bitcoin continues to decline under favorable macro conditions. Believers in "AI, gold, and the market" supporting Bitcoin are actually becoming fewer.

Therefore, I believe the cycle remains valid. In the coming months, the focus is no longer on explaining "why Bitcoin underperformed," but on identifying whether the next accumulation phase has already begun.

Here I also share a bit of internal data research from IOSG. We have tracked the duration of each cycle, and the results are astonishingly consistent: since 2015, they have all been around 1,060 days of increase. Based on this, we have provided several possible scenarios for this round:

• Scenario 1: Bitcoin in the $45,000–$60,000 range may bottom out by the end of October this year (2026);
• Scenario 2: A lower range in Q1–Q2 of 2027, falling to $40,000–$55,000;
• Scenario 3: Various other versions.

Predicting cycles, to be honest, will yield many versions, but our internal data research points to the first scenario mentioned.

Four-Year Cycle and Bottoming Scenario

3. Stablecoins: A Year as Important as 1975 and 2001

The second "appetizer" is stablecoins. This year is a significant year for stablecoins, a very influential year.

I want to make two analogies.

On May 1, 1975, the U.S. Securities and Exchange Commission abolished Wall Street's fixed commission system that had been in place for 183 years, turning stock trading from a game for the wealthy into one that ordinary people could participate in, ultimately giving rise to a $140 trillion asset management industry; Fidelity and Vanguard both emerged afterward. In 2001, China's accession to the WTO was also one of the most significant events transforming the entire Chinese economy.

I believe we are witnessing the same thing happening again, only this time the stage is stablecoins in the crypto industry. The GENIUS Act becoming law means that banks can now legally issue dollars on-chain. I believe that after this bill was passed, crypto will enter a turning point, transforming from "high-risk assets" to "legitimate financial infrastructure." In hindsight, 2026 will be remembered in history like 2001.

4. Ethereum: Moats, Challenges, and the Question of Future Leadership

Next, let’s talk about Ethereum. This topic is complex, so I’ve listed two tables: one for its advantages, and one for its problems.

There are four advantages: as a settlement layer, it carries the largest stablecoins and RWA; security and yield—most DeFi security and yield are on Ethereum; expanding through Layer 2, the final settlement of a complete Rollup ecosystem goes back to Ethereum; and it has more developer infrastructure than any other L1.

The problems are also very real: L2 has siphoned off transaction fees originally paid to L1; the ETH/BTC price ratio has clearly underperformed this round; and there are new public chains like Hyperliquid, as well as external competition.

But I believe the most critical issue lies beyond those. Recently, I’ve written a lot about Ethereum on Twitter. My core viewpoint is: if you compare Vitalik and Elon Musk, many things Vitalik says often take 10 years before you can truly understand why he says them and why they can be realized. What we most look forward to is for Vitalik to be on the front lines like Elon.

Vitalik now says he wants to turn Ethereum into a "smaller ship." But honestly, from Tomasz's departure to the establishment of the new Ethereum entity, these all point to a core question: Who will lead Ethereum? Who will govern? Who will manage? Which founder can stand on the front lines to make this decentralized and open organization great again? I think this is a very significant challenge.

As for the stablecoins, everyone is already familiar: Ethereum-based mostly relies on institutional funds and developed markets; while Tron mainly relies on USDT serving developing markets and cross-border dollar flows.

Ethereum: Advantages and Shortcomings

Stablecoins by Chain Distribution

5. How We Invest in a Bear Market: Redefining Allocation Ratios

Next, let's talk about how IOSG executes investments in a bear market—this is also interesting, as we have redefined our investment allocation ratios during the bear market.

We have lowered our proportion in the primary market; while the proportions of OTC, secondary markets, and incubators are rising.

At the same time, we see a clear trend: Crypto is evolving from a trading market into an internet-native financial infrastructure.

The first layer, Better Money, Better Rails: Stablecoins have proven that better money and better settlement tracks can achieve internet native transformation ahead of the traditional system.

The second layer, Internet Capital Markets: RWA and tokenization can provide clearer real yields and collateral for on-chain dollars.

The third layer, large-scale applications: I believe the crypto industry will produce the next ByteDance or Pinduoduo like the internet industry.

The fourth layer, AI Agent × Crypto: as financial facilities become internet-native, the final users will no longer be just humans—agents will also need wallets, payments, identities, and programmable ownership.

So ultimately, money will go on-chain, assets will go on-chain, and value will concentrate toward the application layer and interface layer, while AI agents will share the same infrastructure with humans.

6. Why There Are the Best Investments in a Bear Market

Back to the present. Why are there the best transactions and investments in this bear market? Because in a bear market, quality is often mispriced, while real income can prove itself. Here are three cards:

First, valuation misalignment. At the worst emotional times, truly valuable projects will be beaten down below their intrinsic value—the best entry price will emerge only when others are leaving.

Second, real income can survive. We prefer businesses that can validate cash flow, not just narratives. If a project can survive a bear market—with clear customers and products—then it will be magnified by compounding in a bull market.

Third, withstand scrutiny. We only invest in projects that can clearly articulate their model from start to finish: who pays, why they pay, and how much they pay. Revenue that can be externally verified is real income.

In this round, we see that projects truly making money in crypto range from several hundred million dollars to about $5.8 billion, distributed across DeFi and various infrastructures. Below, I will discuss the real situations we see from the front line in four directions.

Direction One · Stablecoins and Payments: Circle, fun.xyz, RedotPay

At IOSG, we still hold a four-hour IC (Investment Decision Meeting) every week. Some might say, even in a bear market, what projects are worth discussing? In fact, there are many.

Circle: Three Sources of Income, One DCF

Many people ask about Circle, so let me talk about its model. It makes money mainly in three areas:

First, reserve income. About $73 billion in reserves is used to buy short-term debt, with an annualized rate of 3.5%, earning about $2.6 billion a year, fluctuating with Federal Reserve policy.

Second, distribution costs. Circle shares most of its income—about 62%—with partners like Binance and Coinbase, which results in a gross margin of only 38%.

Third, underlying long-term equity value. Circle has created its own public chain, CCTP cross-chain, and developer API, which currently only accounts for about 6% of its income.

We conducted a DCF valuation model on Circle: from the stablecoin deposits → (yield) reserve income → (38% gross margin) stablecoin gross profit → (15 times in year three, discounted back by 20%) present value per share.

Fun.xyz: The Stripe Checkout of the Crypto World

fun.xyz can be understood as the Stripe checkout of the crypto world— a universal deposit address (UDA), all funds entering Polymarket must go through it, and IOSG is also an investor in it.

RedotPay: A Crypto Card Usable Anywhere

RedotPay is currently the most popular crypto payment card in the market. A crypto card usable anywhere that accepts Visa and MasterCard, it truly brings Crypto into real applications.

A few numbers: more than 5 million cards issued cumulatively, globally available, with a TPV of about $3 billion, leading the market by a factor of 4, and an annualized revenue of about $150 million. Therefore, our underlying judgment is that products combining payments and stablecoins, like RedotPay, are migrating to the mass market and have already gained recognition.

RedotPay Scale and Capital

Direction Two · Prediction Markets: The Niche Future Is the Public Future

The second direction is prediction markets, which are becoming mainstream. Niche products will migrate to mass products, the future of the niche is the future of the masses, which helps crypto move toward a large-scale application cold start phase.

Let’s look at the scale of two industry leaders: Polymarket's trading volume in Q1 2026 was $26.2 billion, a quarterly increase of 90%; the trading volume during the World Cup (from June 11 to July 19) exceeded $15 billion. Its differentiation lies in globalization and non-custodial, making it one of the best representatives of the next generation of crypto applications. Kalshi is taking a compliant route, having obtained federal licenses, with a trading volume of about $32.1 billion in Q1 2026, distributed through Robinhood and Interactive Brokers. Founded in 2018, it faced skepticism for years, but it survived the bear market, obtained its license, and has achieved one of the steepest income curves we have seen in U.S. fintech.

Polymarket · On-Chain Route

Kalshi · Compliance Route

Direction Three · AI × Crypto: How Power, Data, and Money Flow

The third direction is AI and crypto.

In the past five years, everyone focused on model quality: whose transformer is better, whose RLHF is smarter. But now we need to think of a more core logic: where does the computing power come from? Where does the data come from? How does AI's money flow?

First, let’s talk about computing power. Crypto has proven one thing: open networks can coordinate hardware resources globally. In the Ethereum PoW era (before The Merge in 2022), the total GPU power accumulated by the network was equivalent to a cutting-edge training cluster’s scale. This doesn’t mean that miners' GPUs can be directly used to train advanced models—different calibers—but it proves that with token incentives, you can aggregate globally dispersed idle hardware. If this mechanism is correctly applied in the AI computing power market, it represents a real opportunity.

Secondly is data, and third is how AI's money flows, which refers to the agent banking model. Here are a few specific cases.

Grass has about 8.5 million users who earn points by sharing unused bandwidth through a browser plugin and app. Its network layer distributes fetching tasks for AI labs to these nodes, then cleans and structures web pages into enterprise-level data. The key architecture lies in its ability to distribute the demands of AI clients (such as OpenAI, Anthropic, companies willing to pay for training data) to on-chain users, incentivizing them with tokens or revenue. Currently, its data volume exceeds 250 PB. Its economic model is also very real: projected revenue of about $17 million in 2025, and an estimation exceeding $70 million in 2026. So you see, projects issuing tokens in crypto have become very real, with revenue, cash flow, and people willing to pay for it. First to B, then to C, is also one of our investment thoughts.

Hyperbolic is another IOSG portfolio that focuses on inference and GPU computing power markets. Over 250,000 developers are building on the platform, including some cutting-edge AI labs.

The third is the typical project Nous Research that converts Crypto to AI, commonly known as Hermes ("lobster"). I won’t elaborate on the entire tech stack for time reasons.

Grass Economic Model and Data Flywheel

Hyperbolic Computing Power Market

Direction Four · On-Chain Trading and Credit: Collector Crypt, Hyperliquid

The fourth direction is on-chain trading and on-chain credit, which is very interesting.

Collector Crypt is like a "pawn shop + card shop," but it runs on-chain. It is now the second-largest application on Solana by revenue. The model is simple, divided into three steps: the first step is supply side, buy and custody physical cards, store them in a vault; the second step is to tokenize on-chain, each card becomes a tradable token, redeemable at any time; the third step is monetization and exit. Currently, its cumulative trading volume exceeds $1 billion, with 4 million monthly active users, and its daily revenue is one of the largest applications on Solana; protocol revenue in April was about $7.2 million, May about $9 million, June about $15 million, and July about $12 million. Given this scale, it has the opportunity to exceed $200 million in revenue this year. This is a project with real revenue, has issued tokens, and has clear demand.

Hyperliquid is also very interesting. Why do people say it is "eating Binance"? To put it simply, it is a self-reinforcing repurchase flywheel, which can be understood as a decentralized Binance for futures trading: each transaction incurs a fee, of which about 97% goes to repurchasing tokens; more transactions lead to more fees, and more fees buy back more tokens, creating a cycle.

Collector Crypt · On-Chain Cards

Hyperliquid · Repurchase Flywheel

7. IOSG's Strength: East-West Reach + Research Moat

Why us? Because IOSG has the best reach in global opportunities—we have most of our portfolio spanning both East and West, North America and Asia; we can also catch the core paradigms of each cycle early. What supports all this is our very solid research—deep research is our investment moat.

8. Conclusion: The Bear Market is a Starting Point for Layout

I have taken up a lot of your time, so I will conclude.

The best investment opportunities are often hidden in the worst emotions. Key point: According to the "Bitcoin Divine Power" judgment, by the end of October this year, Bitcoin has the opportunity to reach a low point. So those turning to AI or U.S. stocks might also look back and reconsider new opportunities in the crypto market.

What will we focus on?

First, projects with real income. Stablecoins, payments, AI, and crypto-related directions are generating new, verifiable cash flows.

Second, businesses wrongly killed by this winter. Many projects have very strong fundamentals yet have been priced as if completing about 90% of a bear market—this mispricing itself is an opportunity.

Third, IOSG identified them early. The objective of three rounds of contrarian, research-driven investing is singular: to identify the winners before the bull market arrives.

The bear market is the starting point for layout. Thank you all.