The Memecoin Supercycle: Two Years Later

Transcript

Hey guys. Today I'm going to be talking about the meme coin supercycle, crypto, and where I believe these worlds are going. So first things first, where are we now? I believe that it is becoming increasingly difficult to survive in this world as a normal human being. This is the rate of growth of average incomes, the rate of growth of housing prices, GDP, the money supply, corporate profits, the stock market, and the stock market with dividends reinvested.

You can think of each of these as a distinct social class. And in my opinion, money printing, as well as other things, are gradually, consistently, and systematically shifting the wealth from the poor to the rich. As far as buying a house, your life is two and a half times harder than your dad's. And it's not just about houses, the same goes for food as well. Since my speech in Token 2049 two years ago, all of these same exact trends have only accelerated. The K-shaped economy waits for no man. Companies are now staying private for longer, there are fewer IPOs happening per year, and they're happening at significantly higher valuations.

I believe that the entire financial system is slowly transforming from vehicle of opportunity to a vehicle of wealth extraction. And at the same time, the mega corporate profit margins are at all-time highs. Now, all of these trends that I've discussed two years ago, they've only continued to accelerate. Things are now more expensive, wealth inequality is higher than ever before, and everybody is afraid of being left behind in the permanent underclass. The global money supply is growing at almost 10% per year, and the gap between the richest and the poorest people in society is growing at the fastest rate ever in history.

Now, job openings are down while the stock market is up, and there are hundreds if not thousands of such K-shaped charts everywhere in the economy, no matter where you look. And I believe that these trends are only going to intensify and accelerate even more in the next 5 years. Uh things that you used to do 29 years old, such as buying a house, now people are doing them at 41, 42 years old. And these traditional middle-class milestones are increasingly out of reach, obviously, for the young people. While the old and the wealthy are now most of the consumer spending.

Essentially, it's the old and the wealthy that are predominantly enjoying their lives right now, and not the younger people. Uh above you see the total household wealth of Gen X and older, and below you see the wealth of millennials and younger. And everybody's a gambler right now, whether it's sports betting, meme coin trading, prediction markets, or zero-day options. But retail gambling and trading losses quietly continue to climb every single year, and are now in the hundreds of billions. Money is now everybody's obsession, whether they like it or not, and most paths to wealth have been walled off.

I believe that humans are now being systematically disrupted, devalued, and replaced. Now, where are we in crypto? I believe that this is the current market map of the crypto industry. In the future, you're going to have three categories. You're going to have lottery tickets, you're going to have stores of value {slash} mega cults, and you're going to have businesses. Now, literally every pundit, ex-blogger, Substack blogger, VC analyst is saying, "Stores of value and revenue coins are the only valuable things in crypto." But it is not a new take. It's something that has been parroted over and over on crypto Twitter since 2018.

Yes, it took 8 years for the market to adjust, but now this opinion is consensus. The bigger question is, "What is next?" Now, crypto is just increasingly simply finance, right? With all the boomers, with all the ETFs, with all the suits, with all the trad fi people, with the indices and metals on DEXes and CEXes. And even on this conference, 50% of the panels and speakers are about institutionalization and putting the traditional assets on chain. Suffice to say that the Cypherpunk and libertarian fervor has been significantly diminished. The holding times of stocks have been going down every decade, and crypto and specifically meme coins are speed running this trend at 100 times the speed. Now, I believe that there are five ways out, generally speaking, right?

You can focus on your job, continue cutting costs, save and reinvest into the traditional financial system, but fundamentally you're simply propping up the top 1%. You can kind of give up, escape, lay down and rot, but really you're just propping up the entertainment companies. You can vote with your vote. Well, I'll let you decide whether that's an efficient way or not. You can kind of hyper gamble and day trade. We'll talk about that in a bit. Or you can vote with your money. You can unite economically into a single community building effort.

Trading options, betting on sports, and launching and trading uh newly launched meme coins is overwhelmingly losing money. 93% of people lose money trading options. 95% of bettors lose money on sports betting. 97% of pump and dump traders lose money or break even, or 97% of uh bull market traders fund the gains of the top 3%. Now, what all of these platforms are doing, they're using the gains of the top 0.1% of participants as success stories while conveniently leaving out the 500, 600, 700,000 people who lost money and who fund the gains of the top 0.1%. And celebrities are arguably the worst example. Now, fewer than 1% of traders earn above minimum wage over the

long term. And the people that actually make consistent profits in the so-called trenches, they use specialized hardware, they use systematic wallet tracking at scale, systematic relationship graph building at scale, aggressive multi-walleting, ruthless bundling, ruthless sniping, and most importantly systematic mass meme coin launching. If you're not doing these things, or if you're not doing what people call social trickery where you bundle a single coin over seven with 70% of the supply, insider group chats, you know, insider info like happened with a bunch of coins over the past 2 years, coordinated pump and dumping, undisclosed paid partnerships. If you're not doing both of these things simultaneously, and most of you are not,

you're at a huge disadvantage. And all of this is on top of all of the kind of fees at each layer of the so-called memefi stack, or really essentially gambling infrastructure, in my opinion. Now, whether it's the infrastructure itself or the participants in it, they need you to continue gambling in order to continue extracting from these flows. Now, 2 years ago we talked about the pyramid of sophisticated wealth extraction. Now, this has shifted to what I believe is simply over a million gambling addicts all over the world that are financing the profits of web terminals, social trading wallets, launchpads, and various quants.

Now, that was the asset view. This is what I believe is the behavior view. Ruthless, very aggressive, multi-second, um very hyper-competitive of PvP games on the left, and PvE games on the right, which are multi-year holds, community building, even movement building, if you will. Now, where are we going? What are the future shifts in valuations? Everything we discussed so far is just the present, but I think what's interesting is the future. The more accurate you are at predicting the future, the more you stand to benefit by positioning properly. Everybody in crypto right now is talking about RWA tokenization, revenue, or hyper gambling and social trading, and how literally everybody is about to become a trader next year. But, what comes next?

First, we need to understand valuations properly. Over the years in crypto, we've had the fat protocol thesis, the fat middleware thesis, the fat app thesis, the fat wallet thesis, the fat distribution thesis, and many others. Now, I believe that this is the single most important chart in crypto history. It was done by my friend Eon Reborn. And essentially, on the x-axis, you have the number of thousand there's in the community. And on the y-axis, you have the market cap the result. And I believe it clearly shows that community is the core and the main driver of value for all of these coins. Now, this is my formula for crypto valuation.

You have what I call a technical premium. These are things such as speed, cost, programmability, privacy, credibility of scarcity, etc. You have the financial premium such as fees, revenues, profits, etc. And then, you have the social premium. Things such as community, things such as belief, the narrative, the mission, and the movementness of the coin. And to some extent, tokenomics, of course, matters as well. And I believe that this is what are the core driver valuations of each of the big successful coins that we've had in crypto, and that we have in crypto right now.

And this framework, I believe, can even explain why traditional stock companies such as SpaceX can trade over 100 x PE. Essentially, the social premium in those assets are extremely high. Essentially, they they've built a successful um online cult. They've built a successful online movement. And this allows them to be valued significantly higher than that than their financials. And the same exact thing has happened with GME in 2021 as well. Now, let's talk about hyper financialization and tokenization. I believe this is a thousand-year-old trend.

Um you've seen this happen over centuries, famously with securitization in the 20th century, and right now with tokenization. And what is happening? There's an invisible process whose goal is to continuously expand what can be owned, bought, sold, traded, borrowed against, and turned into investment returns. The system wants more, more of everything, more asset classes, more connections, more routes, more liquidity, and more fees. Now, when people talk about tokenization, they say everything will be tokenized, but I don't I think they don't go far enough. They talk about most almost everybody stops at the tangibles or and they don't go far enough in the story. I believe the upcoming wave will focus on the intangibles. Every company, every debt, every physical and financial

asset are going to get tokenized. Every joke and every moment are getting tokenized as well, but what I think is interesting is every community, every movement, and every ideology getting financialized as well. These are the things that are being tokenized right now, but and I think that those are simply 1.5x opportunities. I think tokenizing intangibles is the real 100,000x opportunity a head. Now, AI is becoming cheaper, it's becoming smarter, it's becoming faster, and it's becoming better at long horizon tasks, and is increasingly open-source. Jevons paradox will is implying that we're going to have 1 billion AI agents flooding the world of crypto. And of course, these entities are going to be holding crypto as their MOE and as their SOV. Now, AI agents are going to be heavily pressured

to make money by any means possible. And most people talk about them replacing white-collar jobs, but they're going to be hacking, scamming, as well as crypto trading, meme coin launching, meme coin sniping, and meme coin bundling as well. And today, you are extracted by humans, but in the future, you're going to be extracted but by AI agents. In many cases, until people have nothing left. And because now economic activity and markets increasingly scale with more compute energy and data, the entire world and every market in it is going to become increasingly winner-take-all. And even though everybody's going to have an AI agent, the mega corporate AI agents are going to be 10 times smarter and faster than yours. You're already seeing this with the fact that HFT firms are some of the biggest customers of Anthropic and OpenAI. So, I think discretionary

traders are going to get disrupted and amateur systematic traders as well. Now, these are the jobs that I think are more vulnerable and jobs are less vulnerable, but you can break this down into bounded and short horizon tasks on the left and unbounded and long horizon tasks on the right. And what I believe is going to happen is you're already seeing commoditization of the first half. Eventually, AI is going to come for cluster number four as well. So, what does this mean? You're already seeing with the latest Y Combinator batch that most of the companies are just hardware and hardness startups right now. So, the software VC is a dying game. And what I believe is going to happen is AI agents and of course eventually robotics are going to push humanity towards the far right end of the spectrum. And the this begs the

question, which financial assets will do well in that world? I believe the same exact thing is going to happen in crypto. AI is going to replace all forms of trading that are under a week, if not under a month, and humans are going to be increasingly pushed towards believing in extremely long hold times. Essentially, what I believe is um even the recent shift that you've seen towards FOMO and other social trading apps is essentially people yearning for longer hold times. Trenching and hyper gambling is going to be solved like online chess and online poker. So, what will be valuable? I believe that traders will be forced to become hodlers and believers. You will have no choice but to hoddle. This is not because people suddenly become disciplined. This is simply a matter of survival.

People will be joining long-termist communities as a reaction to mass displacement. The super majority of all active traders lose money. If it's 93% today, I believe it's going to be 99.9% a few years from now. Now, right now a lot of bloggers are saying everyone will be a fast-paced trader, everyone will be a coin coin trader. I believe they are super short-termist and wrong. I believe that AI agents are going to cause a massive shift from gambling to believing, from short-term speculation to a long-term huddle, from PvP to PvE, and the value will flow to coins that are already being hardcore huddled and diamond handed the hardest and the longest.

Now, trading and investing as done by humans will transform into community building, collective ritual, cult engineering, and in my opinion at its best, movement building. Just like passive management is replacing active management, a similar phenomenon will occur with crypto. And I believe that you have to essentially find your sanctuary now. The choice is easy when you realize you have none. Believe. Furthermore, I believe that AI will not just come for trenches and hyper gambling. They're going to come for you too leading programmability, speed, cost efficiency as well.

If Zcash can, quote-unquote, disrupt BTC due to having better tech or rare cryptography devs, what will stop AI from creating yet another superior version further out on the Pareto frontier? Ironically, I believe that the best huddling crypto may be something that's not tied to technology or cash flows at all. Depending on how the AI transition goes, top meme coins may be a safer investment than top store value or revenue coins. Now, let's talk about meme coins. There's a rapid bifurcation of the space that's happening, and I believe that at the gambling level, investing and entertainment are merging into one.

However, at the movement level, investing and spirituality are merging into one. And my prediction is at the hyper gambling level, you're going to see increasingly lower hold times, more coins, and lower ceilings. But on the movement coin side, you're going to see larger hold times, fewer big coins, and bigger ceilings. Now, this is how I see meme coins. I call this the donation box megaphone model. Essentially, people are investing money, time, and labor in ideas and concepts that they want to be loudly heard all over the world. And essentially, people are banding together as a counter-reaction to human replace.

This is essentially what the best, strongest, and biggest meme coins are doing. Now, side note, I believe that pairing meme coins with stocks does absolutely nothing. I think it does nothing functionally. I think it's worse uh due to lower wealth effects compared to if you pair it with a crypto major. I think the impact on the stock itself is small, and even the biggest example so far have accumulated relatively trivial amounts of the stock. The TLDR is you cannot engineer true long-lasting belief with cheap tokenomic gains. Now, this is going to be a bit controversial, but I think the future is not animal coins. I think they lack the kind of intense zeal that will be required in the next 3 or 4 years.

And importantly, and what a lot of people don't understand, is that crypto-native memes will always outperform memes from the outside. Now, I believe that the future mega successes in crypto are going to be giant movements. And movements with a token are going to massively outperform movements without a token. And tokens that are movements are going to massively outperform tokens that aren't movements. The best assets are going to be wealth redistribution assets. Their job isn't to produce revenue. Their job is to act as an empty cup that absorbs wealth from somewhere else.

And think of this as voting think of this as voting with your money. And I believe that this trend is still in its early stages. For example, if you dislike fiat currency, you no longer try to convince bureaucrats. You simply buy BTC. And I believe that that we're going to see many more examples of this. As opportunities for income go down, this is going to sound silly, but I believe that tens or even hundreds of millions of people, their full-time jobs in the future is going to be to be a tokenized community member and evangelist. And if investing is becoming hyper-spiritual and we're witnessing the rise of the ideological investor, then crypto assets that evolve the closest into movements are going to be the biggest ones.

Now, the best You're already seeing evidence of this. Over the past 10 years, the coins that resemble movements have been the best out-performers. And I believe that this is essentially how you should see the hierarchy of all memetic assets, if not all crypto assets. The holy grail is to become a movement. Now, ultimately, value will flow to coins which one, people want to huddle and not sell for a very long time, and two, a lot more people are yet to join. I call this the fat movement thesis. So, what to do? What will be valuable and which assets will do best?

First of all, I believe that wealth inequality is going to become the single biggest issue of our time. And I believe that even if we enter an age of economic abundance, relational sector, the one that deals with human dignity, human status, and human emotion, is going to gradually become the biggest part of the economy. I've been saying since 2024 that the future is post-utility, post-software, and post-commodity. And you've already seen this throughout human history with a shift where hundreds of years ago, your body was the most valuable thing about you. Today, it is your mind. But I believe that in the future, it will be your EQ, your soul, and your spirit, which is going to accrue the most value.

And I believe that the same exact shift is going to happen in crypto. And right now, the market predominantly values the technical premium and the financial premium, but I believe that over the next 5 years, we're going to see a shift towards the social premium being the spiritual bottleneck, and that's where the value is going to disproportionately accrue. If AI kills us all, then none of this matters anyway. But if AI doesn't kill us all, then I believe the value will shift from the technical and financial premium to the social premium. And in my opinion, most of these ways out are not an efficient ways to achieve your goal.

The highest probability and the highest EV way for us to succeed together is to vote with your money and unite economically to stop trading, to believe in something, to community build, and to movement build. So, if I'm right about my theory, then you have to long movements, you have to long the social premium, long long holding times, long passion, and long wealth redistribution assets. My prediction is that eventually the biggest crypto asset will be one with a zero technical utility and zero financial utility. And all roads lead to financialized movements with memetics built around wealth redistribution. I believe that a meme coin will flip the layer one chain that it is built on. And my craziest and most controversial and

most schizo prediction is that a meme coin will flip Bitcoin. And eventually a meme coin will flip the entire stock market. Thank you, guys.