A conversation with crypto VCs: The four-year bull market cycle is coming to an end

DATs (Digital Asset Trusts) are primarily seen as financial engineering products that offer short-term regulatory arbitrage, especially for assets without ETFs. While they can generate yields through staking or DeFi, their long-term viability depends on maintaining a premium over NAV. Some DATs include locked assets (e.g., FTX's SOL), which could present investment opportunities if traded at reasonable discounts.
Ethereum and Solana narratives are shifting, with ETH experiencing a resurgence due to momentum trading and stablecoin growth. SOL is expected to follow a similar pattern as capital rotates to faster, cheaper chains with compelling narratives.
Dedicated stablecoin chains (e.g., by Circle, Stripe, Tether) are emerging to address specific needs like USD-denominated fees, distribution capabilities, and privacy-compliance balance. Their success hinges on integration and user adoption.
Hyperliquid has emerged as a formidable DeFi competitor to centralized exchanges like Binance, achieving significant trading volume and enabling permissionless listings. Its no-KYC model and efficient token economics (e.g., fee buybacks) could disrupt traditional exchange dynamics by reducing project listing barriers.
The four-year crypto bull market cycle is fading, replaced by factors like macro liquidity, regulatory events, and innovative products (e.g., DATs, DeFi platforms). Market movements are increasingly driven by narratives and capital flows rather than predictable cycles.

Podcast source: Unchained

Organized by: BitpushNews

Guests:

Peter Hans: Partner and Global Business Development Director at Hack VC

Jon Charbonneau: Co-founder and General Partner, DBA

Moderator: Laura Shin

DATs: A trend or a passing fad?

Laura : Everyone's saying the DAT (Digital Asset Treasury) craze might be over, but we're still seeing a lot of new projects, like Sharps Technology's announcement that it will raise $400 million to build SolanaDAT. What are your thoughts?

Peter : Let me make it clear before I begin: the following are personal opinions only and do not constitute investment advice.

As it stands, the DAT cycle isn't over yet, with new products still being launched. However, this isn't a crypto phenomenon. In traditional financial markets, any profitable structured instrument will be replicated. From mortgage-backed securities to today's digital asset trusts, the logic is similar.

As the third-largest asset after BTC and ETH, Solana's launch of a DAT is a natural progression. However, investors already have alternatives like spot trading, futures trading, and ETFs, and don't necessarily need these tools. In the long run, as underlying financial infrastructure gradually migrates to blockchain, the ultimate goal of these DATs may not be clear, which inherently presents a risk. However, it's understandable why they're being launched.

Jon : I thought I'd stopped studying this kind of complex financial engineering after leaving banking, but recently I've been forced to pay attention to it again. Although we don't invest in it, it does drive market capital flows, so it's important to understand it.

Overall, I believe most DATs are a way to "money-spin": putting assets into a box and selling them at a premium. However, this bubble is deflation, new issuance is becoming difficult, and market acceptance is declining. In the medium term, they do play a role in regulatory arbitrage. For example, many assets don't have ETFs, so investors seeking exposure can only do so through these tools. This is especially true for PoS assets like ETH and SOL. If ETFs can't participate in staking, DATs have a competitive advantage because they can help investors earn returns.

In a sense, DATs are more like asset managers: investors entrust their funds to them, expecting risk-adjusted returns through staking or DeFi, something ETFs currently cannot achieve. Therefore, if the manager is reliable, DATs still make sense at this stage.

Laura : Some have suggested that some of the Solana DAT actually consists of locked assets sold by FTX, which were contributed at almost no discount in exchange for DAT shares, allowing holders to exit early. Is this true?

John : It's hard to generalize. More reputable DATs are primarily cash-based and have well-designed yield strategies. However, some DATs do include locked assets, such as FTX's SOL.

This presents both a risk and an opportunity. Locked assets should theoretically be discounted, for example, 70-80% off the market price. Otherwise, it would be unfair to investors. If DATs can be traded at reasonable discounts in the future, they could become an attractive investment option while also reducing selling pressure in the secondary market.

Peter: The long-term survival of DATs depends crucially on whether they can maintain a premium. If DAT stocks consistently trade above NAV, they can continually raise capital and buy more spot shares, creating a positive cycle. However, if they fall below NAV, each capital raise dilutes their book value, creating a vicious cycle.

ETH's narrative flips, will SOL be next?

Laura : We've seen a sudden resurgence in Ethereum's popularity. ETH ETFs are seeing inflows exceeding even Bitcoin ETFs. Why?

Jon : This is actually a classic "momentum trade." ETH was undervalued in the previous period, and now, with the narratives of stablecoins and Circle, it's become a hot spot for capital. TradFi investors see the proportion of stablecoins on Ethereum, which is a very easy-to-understand growth pie chart. Once ETH completes this wave of growth, Solana will likely replicate the same logic: faster, cheaper, and the next wave of narratives will shift to it.

Peter : Financial markets are narrative-driven. Ethereum's narrative shifted from "dinosaur, dying" to "global settlement layer" in a short period of time. Traditional investors can't analyze Bitcoin like stocks, but Ethereum at least provides a framework of "revenue, expenses, and valuation." This is why the narrative shifted so quickly.

Dedicated stablecoin chain: necessary or redundant?

Laura : We've seen Stripe launch Tempo, Circle launch Arc, Tether launch Stable, and Bitfinex support Plasma. Why do we need a dedicated stablecoin chain?

Peter : Simply put, since it's a USD transfer, I want to pay the "handling fee" in USD, not ETH or TRX. Logically, this makes sense. But the real key lies in distribution capabilities. For example, Stripe has a huge merchant network. If they decided to use their own blockchain as the backend, they could quickly establish a scale advantage.

Jon : Currently, most so-called stablecoin chains are actually EVM chains, with minimal technical differences. Arc may leverage Circle's identity to facilitate smoother fiat currency deposits and withdrawals; Stripe's Tempo is more interesting because it truly controls end-user distribution capabilities. Privacy is also a potential differentiator. Traditional businesses and users are unlikely to accept a fully public chain with all funds flowing through it. Therefore, whoever strikes the right balance between privacy and compliance will likely prevail.

Hyperliquid vs. Binance: DeFi’s True Challenger?

Laura : Hyperliquid's trading volume reached $330.8 billion in July, surpassing Robinhood for the first time. Jon, you even called it "the first DeFi platform that can truly compete with centralized exchanges." Why?

Jon : For the past few years, everyone's been saying, "We're going to kill Binance," but that was more of a meme. It wasn't until Hyperliquid came along that I really thought it was possible. They've consistently led the market in perpetual swaps (perps) and pre-launch markets. The majority of price discovery for tokens like Pump, World Liberty, and Plasma happens on Hyperliquid, not on other exchanges.

Even more astonishingly, Hyperliquid even briefly surpassed Coinbase and Bybit in the spot market. A single whale exchanged billions of dollars worth of BTC and ETH directly on the platform through the bridge, demonstrating that it possesses the depth and stability to handle large transactions.

But even more revolutionary is the potential of permissionless listings. If Hyperliquid aggregates sufficient liquidity and users, projects will no longer have to endure Binance's "harsh conditions" to list. Many teams have complained in the past that listing on a CEX often means being forced to surrender large sums of tokens or accept high hidden costs. This "exploitation" puts startups at a disadvantage. Hyperliquid's model, on the other hand, is completely free: anyone can list a contract or spot trading pair, without the need for centralized review.

This will fundamentally change the market structure and give project owners more autonomy. Jon believes this is the first time DeFi has a real opportunity to "liberate project owners" and break free from the constraints of centralized exchanges.

Peter: I completely agree. This is not only a great product, but also a healthy addition to the industry. Competition brings vitality. Hyperliquid's token economics are well-designed: fee buybacks and staking incentives give the HYPE token a tangible value proposition. Binance achieved success through a similar model. Now, Hyperliquid is replicating this logic, but more closely aligned with the spirit of Web3.

In Peter's view, this means that Hyperliquid is no longer just "another DEX", but a competitor that can directly challenge Binance's monopoly on listing coins.

No KYC model: moat or regulatory risk?

Laura : Hyperliquid does not have KYC. Will this become a competitive advantage?

Jon : That depends on how future regulation is implemented. A truly decentralized system likely cannot and does not need to perform KYC, which can actually be a defensive defense. Just as Ethereum doesn't require ID to transfer ETH, Hyperliquid may also have an institutional advantage due to its "non-enforceable KYC." However, if you are an institutional investor under SEC regulation, the responsibility for illegal trading will still fall on you, not the protocol.

Is the four-year cycle dead?

Laura : Last question - does the "four-year Bitcoin halving cycle" in the crypto market still exist?

Peter : In my opinion, cyclical logic is increasingly being replaced by liquidity, narratives, and regulatory events. The crypto market is no longer simply a "halving bull-bear cycle," but is driven by multi-dimensional capital flows and structured products.

Jon : Yes, the current volatility comes more from policies, macro liquidity, and new narrative tools like DATs and Hyperliquid. The certainty of the four-year cycle is disappearing.

Summarize

The two VCs’ judgments on the crypto market are as follows:

DATs are still products of financial engineering, but their value lies in short-term regulatory arbitrage;
Ethereum and Solana's narratives alternate, with stablecoins becoming a new growth point;
Hyperliquid is no longer just “another DEX” but the first real decentralized competitor to challenge Binance;
The myth of the four-year cycle has gradually been replaced by new capital logic and product innovation.