Cosmo Jiang: Long-term crypto investment requires patience, gold’s pullback signals new dynamics, and Hyperliquid transforms trading with 24/7 access

Key takeaways

• Long-term investment strategies in crypto require patience due to market volatility.
• Price discovery is increasingly happening in internet capital markets, reflecting a shift in asset valuation.
• Gold is acting as a higher beta asset, with its recent pullback potentially over.
• Central banks are diversifying into hard assets like gold, affecting its market dynamics.
• Bitcoin remains a viable asset despite the current focus on gold.
• Clearing houses hold significant centralized power, impacting market risk management.
• Retail investors often face negative outcomes when entering markets late in a rally.
• Hyperliquid is facilitating significant trading activity in precious metals derivatives, blending crypto and traditional markets.
• Tokenized equities offer superior trading opportunities by allowing weekend trading.
• The introduction of prediction markets could consolidate the everything app concept.
• Liquidity is driving traders to 24/7 markets like Hyperliquid.
• Regulated onshore trading platforms could benefit DeFi but may not attract institutional liquidity quickly.
• The nomination of a new Fed chair could lead to a more focused Federal Reserve.
• The future of stablecoins could influence the global power dynamics of the US dollar.
• The Clarity Act is likely to pass, driven by political motivations for a crypto win.

Guest intro

Cosmo Jiang is a General Partner at Pantera Capital, where he oversees liquid token strategies and leads the firm’s special opportunities platform. He previously founded and managed Nova River, a digital asset hedge fund focused on fundamental, thesis-driven investment strategies, and spent seven years at Hitchwood Capital as Managing Director overseeing consumer and internet investments. With over five years of digital asset investing experience and a background spanning traditional finance roles at Apollo Global Management and Evercore Partners, Jiang brings deep expertise in market structure and capital formation across both traditional and onchain venues.

The evolving landscape of asset valuation

• “Long-term conviction in an asset may require a strategy of patience.” – Cosmo Jiang
• “If you really have long term conviction in an asset sometimes your answer is just wait.” – Cosmo Jiang
• Price discovery is increasingly occurring in internet capital markets, a significant shift in financial landscapes.
• “Clearly the price discovery is actually happening on internet capital markets now which is truly truly incredible and exciting.” – Cosmo Jiang
• Gold is acting as a higher beta asset, with its recent pullback potentially over.
• “Gold has been acting as a higher beta asset today JPM has been saying gold’s pullback is probably done.” – Cosmo Jiang
• Central banks are diversifying into hard assets like gold, affecting its market dynamics.
• “You had a couple of central banks that are like I need to decouple from the dollar, I’m gonna sell treasuries and buy gold.” – Cosmo Jiang
• Bitcoin remains a viable asset despite the current focus on gold.
• “I don’t think it’s time to write Bitcoin’s obituary either to be honest with you.” – Cosmo Jiang

The role of clearing houses and retail investors

• Clearing houses play a crucial role in managing market risk and hold significant centralized power.
• “The clearing houses are like the sun they’re the most powerful parts of market structure.” – Cosmo Jiang
• “They have emergency powers they can essentially wake up and say hey I wanna do this and everyone’s gonna do it.” – Cosmo Jiang
• Retail involvement in markets often leads to negative outcomes, especially when entering late in a rally.
• “Whenever retail gets involved in the last leg things often end poorly and that’s what we saw happen.” – Cosmo Jiang
• Understanding the behavior of retail investors is crucial for predicting market trends.
• The centralized power of clearing houses impacts systemic risk in financial markets.

Hyperliquid and the integration of traditional and crypto markets

• Hyperliquid is enabling significant trading activity in precious metals derivatives.
• “The fact that hyperliquid volumes on silver and gold are exploding right now just as retail attention is is is coming onto them really speaks to the idea that… hyperliquid is amazing.” – Cosmo Jiang
• Hyperliquid allows trading on weekends, unlike traditional markets, facilitating continuous price discovery.
• “Traditional markets don’t trade Saturday and Sundays… but they do trade on open permissionless blockchains like hyperliquid.” – Cosmo Jiang
• Funds are likely to choose Hyperliquid for trading silver and gold over traditional exchanges like CME.
• “We’re gonna see a lot of them choose to trade the silver and gold on hyperliquid instead of on CME because they can risk manage on the weekends now.” – Cosmo Jiang
• The blending of crypto and traditional markets is transforming trading dynamics.

The advantages of tokenized equities and prediction markets

• Tokenized equities are superior products due to the ability to trade on weekends.
• “It’s simply a better product right just like we talk about it all the time equity tokenization tokenized equities are better products you can trade them on the weekend.” – Cosmo Jiang
• The introduction of prediction markets will consolidate the everything app concept.
• “We’re hearing now that HIP four is coming out which is also pretty interesting because now that’s gonna we’re gonna start seeing prediction markets.” – Cosmo Jiang
• Liquidity will drive money to markets that operate 24/7, like Hyperliquid.
• “Money is going to go where the liquidity is right traders want to be able to trade people want access to prices and information and liquidity twenty four seven.” – Cosmo Jiang
• The integration of prediction markets could reshape how markets operate and interact with users.

The impact of regulation on DeFi and institutional participation

• The introduction of regulated onshore trading platforms could benefit DeFi.
• “I do think that could be a really interesting tailwind for more of the d the the defi the the perp dexs of the world if you have that liquidity.” – Cosmo Jiang
• Institutional liquidity may not be attracted quickly to these platforms.
• “I just don’t know if they’ll it’s gonna take a while for them to get institutional size is is is my concern.” – Cosmo Jiang
• The concern about auto liquidating markets is that low liquidity can lead to significant risks for traders.
• “One of the biggest concerns around auto liquidating markets… was that oh low liquidity everyone the farmer’s gonna wake up and he’s gonna get liquidated.” – Cosmo Jiang
• Understanding the current landscape of DeFi and the potential impact of regulation is crucial.

The nomination of a new Fed chair and its implications

• The nomination of a new Fed chair could lead to a more focused Federal Reserve.
• “I think there’s gonna be a new form of treasury and fed accord… that means the fed is gonna stay independent… its mission will be more focused.” – Cosmo Jiang
• The balance of power may shift to the Treasury, indicating a change in the relationship between the Fed and Treasury.
• “In certain cases the balance of power is gonna shift to the treasury… the fed got over its skis it’s outside its remit.” – Cosmo Jiang
• Understanding the implications of the Fed chair’s nomination on monetary policy is crucial for investors.

The strategic importance of stablecoins

• The future of stablecoins could significantly influence the power dynamics of the US dollar globally.
• “Who’s really in love with stablecoins and sees that as an important future for the power of the US dollar is gonna export stablecoins throughout the world.” – Cosmo Jiang
• The relationship between the Fed’s balance sheet and interest rates is complex and can be neutralized under certain conditions.
• “If you shrink the balance sheet but also cut rates that’s probably net neutral right as we look about what’s happening if you balance those forces.” – Cosmo Jiang
• Understanding the role of stablecoins in the global financial system is crucial for assessing their impact.

The Clarity Act and its potential impact on the crypto sector

• The Clarity Act will likely get done as the president seeks a win for the crypto sector.
• “I think clarity act gets done okay and and here’s why… I think the president wants a win he he really wants the crypto he really wants a crypto win.” – Cosmo Jiang
• The current financial establishment supports the Fed chairman because he is experienced and well-intentioned.
• “I think he is the sober pick that at the very least you know calms the market… people know that they’re well intentioned well thought out.” – Cosmo Jiang
• Understanding the current political climate and the administration’s stance on crypto regulation is crucial.

The role of shareholder activism and market dynamics

• Shareholder activism is expected to increase as debts remain undervalued.
• “We will continue to see more and more shareholder activism as more of these debts you know wallow below one time staff.” – Cosmo Jiang
• Management teams often do not act in the best interest of shareholders.
• “Oftentimes management teams don’t do what’s best for shareholders but shareholders are gonna look out for what’s best for shareholders.” – Cosmo Jiang
• There may be an increase in debt mergers and acquisitions as companies seek to acquire undervalued assets.
• “Are we gonna see debt m and a because if you’re a debt trading stronger do you look at debts that are trading below mnav and just acquire them.” – Cosmo Jiang
• Understanding the dynamics of shareholder activism and market behavior is crucial for investors.

The need for industry collaboration to address trust issues

• The lack of trust in the market is a structural problem that needs to be addressed collectively by the industry.
• “The industry has to get together it’s not just one any one party it’s not just any one segment like really the industry has to get to better fix it.” – Cosmo Jiang
• The impact of recent market events will continue to affect liquidity and price action for months.
• “It gutted a lot of retail it gutted the market makers it had a material impact on liquidity for months and it explains a lot of the price action that we’ve seen.” – Cosmo Jiang
• Collateral is a critical factor in running a clearing house, but it is not the only consideration.
• “Collateral is very important you look at all different things when it comes to collateral.” – Cosmo Jiang
• Addressing trust issues in the crypto market requires industry-wide collaboration and transparency.