Interview: The Round Trip

Compiled & edited by: Yuliya, PANews

Amidst the approval of Bitcoin spot ETFs and the accelerated influx of institutional funds, coupled with a complex global macroeconomic interest rate environment that remains high, traditional investment paradigms in the crypto market are facing profound challenges. As the old "four-year cycle" map may no longer be applicable, investors urgently need a new roadmap to navigate the fog and find certainty in weathering bull and bear markets. Jason Huang, Founding Partner of NextGen Digital Ventures (NDV), brings his investment discipline honed in the traditional financial world to provide the market with a unique value investing perspective.

With over a decade of venture capital experience at top firms like China Renaissance, Qiming Venture Partners, and BlueRun Ventures, Jason Huang's NDV crypto equity fund achieved outstanding performance, outperforming Bitcoin by 60%-70% in its inaugural round. In the new Founder's Talk series, "The Round Trip," co-produced by PANews and Web3.com Ventures, hosts John Scianna and Cassidy Huang invited Jason Huang to share his reasons for investing in the crypto industry at the end of the bull market and to elaborate on his unique insights into the current market cycle. He emphasized how to apply classic value investing principles to crypto asset valuation, such as investing in Upbit (an exchange whose market capitalization is still undervalued compared to Coinbase) to pursue excess returns from value reversion.

Bear markets present the best investment opportunities, but Asian asset allocation remains relatively conservative.

Host: Welcome Jason to this episode. The timing of your decision to join the crypto industry is quite interesting. It was right at the end of the last bull market, followed by a full-blown bear market, and now the market seems to be entering a period of consolidation. Looking back, do you regret your decision?

Jason: Of course not. First of all, I've always believed that bear markets are the best time to invest . We were very fortunate that NDV's first fund officially launched in March 2023, when I remember the price of Bitcoin was around $30,000. Then, we completed the exit and liquidation of our first fund before the market rebounded sharply in February of this year. It's fair to say that our first fund performed very well, bringing our initial investors nearly four times the return, with investments primarily in crypto equity.

I feel that things are very different now compared to when I first entered the market. Back then, I needed to spend a lot of time convincing clients that crypto assets were worth allocating, even just 1%. But now, especially after the approval of Bitcoin spot ETFs, institutional investors' interest has increased significantly. Our focus when discussing with clients has shifted from "whether to invest" to "what percentage should be allocated to crypto assets."

Host: So, what has your observation been of their current allocation ratio? Has this ratio changed in the past few months?

Jason: I live in Asia, where the allocation to crypto assets is generally low, and the market is still in a very early stage. Most people I've spoken to have less than 1% of their total assets in crypto assets. I usually advise them to increase that to around 5%. I believe this is a more conservative and balanced allocation for them.

Current selling pressure is limited, and a catch-up rally may be expected next year.

Host: Since the beginning of this year, we've seen Bitcoin fall more than 30% from its peak. We'd like to know how traditional Web2 investors are now viewing crypto assets and the blockchain industry as a whole? Are they still very interested, or do they consider it a high-risk asset that needs to be reduced?

Jason: I think it varies from person to person. Most investors who entered the market this year have probably experienced some asset drawdown and will choose to continue holding, but if you ask them to increase their holdings now, given the market volatility of the past three months, they might be more conservative.

But for those who have never invested before, I think they're actually eager to get started now. Many are worried about the so-called "four-year cycle," given how often it has occurred in the past. My personal view is that we may not experience that traditional four-year cycle again. The cycle existed in the past because the new supply of Bitcoin (block reward halving) occurred every four years. But in the current cycle, approximately 19 million Bitcoins have already been mined, and the new supply over the next four years is only about 620,000. This potential selling pressure is negligible compared to the scale of ETF capital inflows we've seen in recent years.

Therefore, I believe that Bitcoin is now more or less correlated with the US stock market. Considering that we are still in a high-interest-rate environment, I believe a new bull market will begin once the Federal Reserve starts cutting rates next year. Therefore, I am currently quite bullish.

Host: Your bullish logic is interesting. But if we step outside the crypto world, since crypto assets are highly correlated with US stocks, why would I take such a high risk to invest in them? Investing directly in the AI industry seems to be much less risky.

Jason: If you take a broader perspective and compare the performance of different asset classes, you'll find that Bitcoin is probably the only major asset class to have negative returns this year . I even joked before that we've underperformed some assets in emerging Asian markets this year. This is very unusual for Bitcoin, because looking back over the past 12 years, it has been the best-performing asset class for nearly 9 years.

Therefore, I believe we are actually in the "late stages of a bear market," and Bitcoin's performance is significantly undervalued relative to other assets. Thus, a catch-up rally is very likely next year. As for AI, frankly, I don't have a particularly firm opinion. This morning I was watching an interview with Michael Burry where he talked about Palantir, and I casually checked its price-to-earnings ratio (P/E), which is a whopping 800... I find it hard to understand how that can be considered undervalued.

Tech companies are the main force driving Asian investment, while Bitcoin and gold are beneficiaries of the overall economic environment.

Host: But Nvidia's P/E ratio isn't that exaggerated. Speaking of investor types, I feel that Asian investors as a whole tend to be more traditional. They don't even have the risk appetite of Web1 investors; they prefer investing in tangible assets like real estate. Getting them to move into AI or crypto seems like a significant challenge. Or, in your opinion, do they prefer a Buffett-style investment approach, favoring businesses that can consistently generate profits?

Jason: I think there's nothing wrong with this investment philosophy, and I wouldn't simply lump all Asian investors together. The traditional real estate families you mentioned certainly prefer tangible assets that generate stable cash flow, but they're also facing considerable pressure recently.

My contacts are primarily with family offices originating from China's tech industry. In their world, success stems from "network effects." Globally, aside from Bitcoin, almost no other asset possesses the same level of network effect. Bitcoin is likely to become the most popular "application" in the next 10 to 20 years because it's an asset that almost everyone would be willing to hold a certain percentage of. Therefore, if we look at the buyer structure, the main force currently entering the Asian market is precisely these tech-sector family offices.

Host: So, do you think the demand for Bitcoin allocation from these family offices in the tech industry is continuing to grow? Especially at this point in time, is the demand for further accumulation strong?

Jason: If we only discuss Bitcoin itself, I think everyone now realizes that the US government will continue to "print money," so gold and Bitcoin are undoubtedly direct beneficiaries of this environment , without a doubt. Among the people around me, at least 80% already understand the significance of Bitcoin as a "store of value."

Regarding public understanding and acceptance of other crypto assets, I think it's still a open question. But personally, I believe that crypto exchanges and stablecoins are the true "business models" in this industry. For those investing in tech stocks, understanding these models isn't difficult.

ETFs are reshaping the buying logic; DAT is more like regulatory arbitrage.

Host: You just mentioned that the traditional four-year cycle may no longer be valid. But based on past experience, bear markets typically last three years, with a 70%-80% retracement from the top. In the last cycle, Bitcoin didn't even double from its high of $60,000. How do you explain this structural change?

Jason: Yes, I think one of the most important structural changes in this cycle is the emergence of Bitcoin spot ETFs. This allowed institutional investors to enter the market on a large scale and in compliance with regulations for the first time. This directly led to several key impacts:

Bitcoin has become more stable because more long-term, rational institutional investors are involved.
Funds are not flowing into altcoins : ETFs are a "one-way street" to Bitcoin, and institutional investors dislike assets without cash flow and lacking intrinsic value support. Therefore, we hardly see the so-called "altcoin season".
Mining costs are providing strong support : Currently, the cost of mining Bitcoin is approximately between $70,000 and $80,000. I'm not saying the price can't fall below this cost, but it's a very strong psychological support level, and many institutional buyers will refer to this price as their entry range.

These factors combined have led to a more stable Bitcoin price, making it less likely to experience the large pullbacks of the past, which could easily reach 75%.

Host: Now that the market structure has changed and volatility has decreased, can Bitcoin still achieve 2x, 3x or even 5x growth after the bear market ends, just like in the past?

Jason: I think Bitcoin's past 5 to 10-fold increases were partly driven by high leverage, especially from retail investors. When a large number of short positions were liquidated, it became the "fuel" that drove prices up. But now, with ETFs taking over most of the trading volume, it will be much harder to see the kind of surges we saw in the past.

So many people are discussing whether it's still possible to outperform Bitcoin in the future. The performance of our first fund actually answers this question; we outperformed Bitcoin by about 60-70%. I believe the reason is that we bet on crypto-related stocks with real value that can be valued using price-to-earnings ratios. When the market enters an expansion cycle, you enjoy the double benefits of expanding price-to-earnings ratios and increased corporate net profit, and this return structure has the potential to outperform Bitcoin. Therefore, I think investing in crypto-related stocks now may be more attractive than in the past.

Host: You're very bullish on investing in crypto stocks. But are there systemic risks involved? For example, Strategy has hinted that if the share price falls below net asset value (NAV), they might have to sell Bitcoin to buy back shares. If this happens, could it trigger a crisis of confidence in the market?

Jason: This is indeed a potential risk within the ecosystem, but I don't think it's a major issue. First, I would look at Strategy separately from other digital asset treasuries (DATs). According to their recent disclosures, they have prepared enough cash to pay interest on their debt for about 24 months, which greatly alleviates short-term selling pressure.

As for other DATs, I don't like them when they're trading at a premium. You can get the same exposure by directly investing in an ETF. The only difference between DATs and ETFs is that they can be pledged to generate additional returns, which I see more as a form of "regulatory arbitrage." Currently, most DATs are trading at a 20%-30% discount, which may offer some arbitrage opportunities, but that's about it.

Overall, I'm not a big fan of Ethereum as an investment theme. If you consider gas fees as the Ethereum network's "net profit," then its current valuation exceeds 100 times earnings, much like Palantir in the AI field. Therefore, I prefer crypto stocks like Coinbase to Ethereum itself.

Value investing is the priority; I am optimistic about RWA and prediction markets.

Host: So, what is the core investment logic of your new fund (Fund II)?

Jason: Our strategy is to go long on stocks we believe are undervalued. While we can't disclose specific IPO targets, for example, we recently significantly increased our holdings in Upbit, South Korea's largest cryptocurrency exchange . This company is valued at approximately $10 billion, but generated over $700 million in net profit in 2024 and paid out $200 million in dividends. Its P/E ratio is only around 15, while globally, exchanges with real profits typically have P/E ratios between 30 and 70. It is fully compliant and audited by PwC Korea.

Our fund initially started by buying GBTC at a discount. To me, investing in Upbit is like "GBTC 2.0"—buying a high-quality Coinbase-style business at a discount. This is a classic example of our preferred approach: value investing first, then future potential.

Host: You sound like a very disciplined investor, which likely stems from your experience in the traditional finance industry. In contrast, crypto investors seem to have a strong affinity for leverage.

Jason: Yes, but I think there are three things that will absolutely "kill" you in the crypto world: leverage, custody risks, and altcoins. If you had to add one more, it would be "alcohol," especially during industry conferences. As Charlie Munger said, "Stay away from things that will kill you." If you can successfully avoid these things, you can become a top 10% of excellent investors in the crypto market.

Host: One last question. Looking ahead to 2026 and beyond, besides being bullish on Bitcoin, what other prospects do you have? Do you think funds will flow back into altcoins?

Jason: I'm personally very interested in a particular sector: the penetration of stablecoins . I see stablecoins as an "upgraded version of banks." When all payment channels and banking systems are upgraded as a result, transaction costs across the entire financial network will be significantly reduced.

I'm particularly interested in prediction markets like Polymarket, and all the new trading platforms that may emerge with the rise of stablecoins. I believe there will be a lot of innovation here, perhaps RWA, or other new business models. Maybe we'll see the birth of the "next-generation Stripe" in the crypto world, as more and more people own crypto assets and want to use stablecoins for everyday payments. These innovations will create real practical value, completely different from the purely meme narratives we've seen in the past few years. I'm very bullish on this space, but we need to be patient and wait for these companies to mature or IPO.

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