Hivemind: Are L1s Still Overvalued, Hyperliquid's End Game & State of The Market
Discussion on crypto market downturn, Hyperliquid's outperformance, Ethereum's L2 pivot, and the impact of quantum risk narratives on Bitcoin.
55m·Guest Yan, Jason, LTR·Host Cedus·
Market Sentiment and Bitcoin Bottom
The hosts discuss whether Bitcoin has reached a bottom, analyzing psychological price levels, ETF flows, and the potential for a risk rally ahead of US midterm elections. They debate whether crypto can decouple from equities in a downturn.
Bitcoin's key psychological support levels cluster around $60K
- The 200-week moving average and other long-term technical levels converge near $60K
- These levels historically attract strategic buyers who accumulate and hold
- Current price action suggests we may be closer to a bottom than not, despite recent weakness
Quote
00:04:41“Like 60K isn't that far away. Like I don't want to see Bitcoin go to 60K, but like you have a lot of things at 60K, you know, like 200 week moving averages, like tons of that like might entice some longer term buyers to step back into the market.” — Jason
Quote
00:05:16“I just don't see how with with new incoming Fed share with midterms like they there isn't some kind of broad risk rally, you know, engineered some way and Bitcoin would probably be a part of that.” — Jason
Price leads narrative in crypto markets
- Sustained positive price action for 1-2 weeks can shift market psychology
- ETF flows reclaiming key levels could reignite risk appetite
- Current weakness reflects broader apathy rather than fundamental issues
Quote
00:03:46“price is obviously like the the best the best driver of of narrative, right? Like price leads narrative. So like you get like a you know a week or two of just like good Bitcoin flows, ETF flows come in strong like you get decent reclaims of of people's like important psychological levels” — Jason
Hyperliquid's Competitive Advantage
Analysis of Hyperliquid's outperformance in a depressed market, focusing on its rapid product iteration, revenue generation, and potential to disrupt traditional finance.
Hyperliquid is objectively shipping meaningful improvements faster than competitors
- HIPP3 and trade XYZ features drove $1B+ in silver volume
- Prediction market integrations demonstrate rapid execution
- Team maintains small size while delivering frequent upgrades
- Contrasts with stagnant development on other chains
Quote
00:21:02“Hyperliquid is objectively one of the only teams shipping meaningful new improvements. like HIPP3 and trade XYZ is like it did a ton of silver volume and people were able to trade pers on metals and largely catch moves there 247” — Jason
Quote
00:21:23“no other crypto team...is like doing stuff that's like wow like I really need that really fulfills my need right now” — Jason
Hyperliquid's KYC strategy balances growth phases
- Avoiding KYC initially allowed retail liquidity accumulation
- Future KYC implementation could attract institutional flows
- Timing is critical - too early stifles growth, too late limits upside
Quote
00:29:14“if Hyperliquid had to implement KYC like a year ago or even right now, it would probably be bearish, right? But once you basically get all like the retail activity that you kind of want...then you want like the big money to start coming on” — Jason
L1 Valuation Crisis
Discussion on the collapsing valuations of layer 1 blockchains, examining whether this reflects a permanent shift in market structure or temporary bear market conditions.
L1 valuations face existential repricing as financial apps dominate crypto
- Market increasingly values revenue-generating protocols over base layers
- Financial apps don't require general purpose L1 capabilities
- Many L1s now trading below $1B market cap (previously unthinkable)
- Social/gaming apps that drove L1 value are no longer being funded
Quote
00:16:24“if you're just limited to these financial apps, I think the L1's themselves will gain less and less adoption” — LTR
Quote
00:14:52“there's multiple L1s now under a billion dollars now, right? Which is that was like unheard of like having an L1 was always at least a billion dollars for the longest time.” — Jason
Relative value between L1s doesn't guarantee absolute performance
- SOL may be cheap relative to ETH but both could decline further
- Last cycle's Avalanche at $100B vs current Monad struggling at $2B shows paradigm shift
- Better technology doesn't necessarily translate to higher valuation in current market
Quote
00:14:35“last cycle Avalanche got to like 100 billion, right? And look at something like Monadan today which can't hold two bill and its tech is objectively a lot better” — Jason
Quote
00:14:08“it's just I don't see how you can hold ETH over Soul at these levels. But that doesn't mean that Soul goes up” — Jason
Ethereum's L2 Pivot
Analysis of Vitalik's recent comments about Ethereum needing to refocus on L1 scaling, and the implications for the L2 ecosystem that has developed over recent years.
Vitalik's L2 critique validates long-standing concerns about horizontal scaling
- Admits L2 roadmap has been misguided for 4-5 years
- Horizontal scaling (many general purpose L2s) creates fragmentation
- Vertical scaling (specialized L2s) would have been better approach
- Market already priced in this reality as L2 tokens underperform
Quote
00:48:57“Vitalic is some professor that just like wanted to experiment and so he did all this” — Jason
Quote
00:36:51“they need to scale the L1 that the L2 road map...these things being like brands of Ethereum are not exactly correct” — LTR
Ethereum's cultural inertia makes successful pivot unlikely
- Multiple failed 'make ETH great again' initiatives over years
- Decentralization ethos prevents necessary decisive action
- Even with L1 focus, can't match Solana's performance trajectory
- $260B valuation leaves little upside without radical improvement
Quote
00:46:32“ETH just does this every few years. like we had that alliance with ETH that I think Paradigm was a part of and like it seems like every year or two there's some like let's make ETH great again” — Jason
Quote
00:48:21“people really underestimate how much like work goes into making salana salana and like the mindset and every it's like a complete culture shift” — Jason
Quantum Risk Narrative
Examination of how quantum computing risk narratives are impacting Bitcoin's market dynamics and investor psychology.
Quantum risk provides psychologically comforting explanation for price decline
- Easier to process than pure loss of conviction
- Galaxy earnings added fuel to quantum narrative
- Creates false dichotomy - either quantum explains drop or fundamentals deteriorated
- Market prefers digestible narratives during volatility
Quote
00:31:52“people grasping at any negative news right now to to try and explain...they want some assemblance of oh that's why um versus like the worst possible scenario which would be people just aren't believing you know and they're just selling” — LTR
Quantum concerns could ultimately strengthen Bitcoin's monetary policy
- Satoshi's coins could be used for tail emission if quantum breaks keys
- Would extend Bitcoin's inflation schedule by 200+ years
- Market may view this as positive fundamental change
- Shows Bitcoin's adaptability despite 'immutable' narrative
Quote
00:36:00“Quantum can fix the long-term security if they actually just use Satoshi's coins for tail inflation. Like, it could actually be a bullish thing in that sense” — Jason
Crypto's Public Market Advantage
Discussion on how crypto's historical public market nature created unique wealth creation opportunities, and concerns about increasing privatization.
Crypto's public market nature enabled unprecedented early access to growth
- Unlike traditional VC where gains accrue to institutions
- Early crypto projects launched tokens publicly from inception
- Created unique wealth distribution mechanism
- Recent high FTV launches threaten this dynamic
Quote
00:51:12“all the gains for the most part early days...the gains were all public and that was like great, right?” — Jason
Private chains like Canton threaten crypto-native innovation
- Permissioned validator sets recreate traditional finance gatekeeping
- Unlikely to support experimental DeFi or risky innovations
- Risk of financial infrastructure consolidating with incumbent players
- Could bifurcate ecosystem between 'clean' and 'wild west' chains
Quote
00:52:51“pumped up funds never being created on Canton. DeFi summer is never happening on Canton” — Jason
Quote
00:52:08“what if Canton in five years is like used is one of the most used chains, right? A lot of those gains just went to like the old guard” — Jason
Software Sector Weakness
Analysis of how AI disruption is impacting software company valuations and the broader implications for tech stocks.
AI agents are eroding software company pricing power
- Agents can rebuild simple functionality without paying SaaS fees
- Even complex tools face pressure as AI handles more workflows
- Low-margin businesses benefit more from AI efficiency gains
- Results in sector rotation away from high-multiple software names
Quote
00:06:57“you've seen a lot of blood in in software names um with just the growth of uh all these agents and and and being able to kind of claw code your way into solutions that that take away from the pricing power that a lot of these software companies had” — LTR
Nvidia's defense of software moats may be overly optimistic
- Jensen Huang argues agents will use existing tools via API
- Reality likely between complete replacement and status quo
- Software stacks becoming flatter as AI handles more layers
- Creates uncertainty in long-term software valuation models
Quote
00:07:57“naturally he has to he wants to say that. But I think that the truth is probably somewhere in the middle where um yes, you know, the best products will get used but at the same time um some of these simple tasks and and and some other things will kind of get um rebuilt” — LTR
Hyperliquid EVM Debate
Contrasting views on Hyperliquid's EVM strategy, weighing the benefits of ecosystem development against potential distraction from core exchange functionality.
Hyperliquid EVM may be redundant given core product capabilities
- Core exchange can natively support financial primitives like lending
- EVM adds unnecessary complexity for most use cases
- Risks diverting attention from higher-impact exchange improvements
- Team's small size better focused on core product
Quote
00:23:46“Hyperlid you could build the money market right into Hyperlid per exchange, right? Um you don't need the Hyper you don't need like lending markets on Hyper EVM, right? it it it's kind of like redundant” — Cedus
EVM enables ecosystem development without scaling team size
- Allows external developers to build complementary products
- Maintains small core team focused on exchange
- Creates optionality for non-exchange financial applications
- Follows Binance playbook of ecosystem tokenization
Quote
00:24:45“if we don't have to hire a ton more, you know, bring on more company risk by building it internally and we can just make sure our core product is good and then we have people who are maybe better at certain things, building it instead” — Jason
⚙ Agent-readable JSON index — click to expand
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