Cobie: 60% of people will lose everything they gained in the last cycle during a bear market
As a well-known KOL in the cryptocurrency industry, Cobie shared his views on the current state and future prospects of the crypto market in this podcast.Source: UpOnly
Compiled by: Dong Yiming, Chain Catcher
Recently, the crypto video podcast UpOnly had a conversation with well-known crypto industry KOL Cobie. Cobie shared his story of entering the industry in 2012 and discussed his views on Ethereum, Ethereum 2.0, DAOs, and made some predictions about the bear market. Below is a compilation by Chain Catcher of this episode, with some parts omitted.
Summary of Views:
- I wouldn't be surprised if ETH 2.0 isn't launched by next year, because the Ethereum community is actually not very supportive of scaling, and the current attitude is even worse. So far, Optimistic rollups have been disappointing, and ZK rollups are not yet compatible with EVM.
- Perhaps nothing is truly meaningful, and meaning isn't that important, especially in short-term trading. Some project teams are very good at content marketing rather than focusing on the crypto technology itself. Narratives can drive supply and demand, but people underestimate how it can spiral out of control.
- If a bear market really comes, then 95% of the currently popular L1 alternatives' ecosystems will fail because they have spent too much money to maintain ecological security and liquidity.
- I think the current DAOs are a form of regulatory arbitrage. DAOs could operate better as companies, but they insist on issuing their own tokens, which worsens their operation.
- In the future, a country's base currency is likely to exist on a fully KYC-compliant national chain with DeFi functionality, without governance tokens, and the underlying asset on this chain will be CBDC.
1. Early Stories
Uponly: I've read many of your blogs and heard some of your amazing stories, but today I want more firsthand information. For example, you entered the crypto industry in 2012 and experienced multiple cycles ? Most people haven't survived these cycles, as one of the few who still remain in the industry, why did you choose to stay?
Cobie: I bought Bitcoin around the end of 2012, but for a long time, I didn't even think about what Bitcoin was. --- Until April 2013, when a bubble with double the price appeared, I gradually fell into the "rabbit hole" and started to think about this issue. If you look at my Twitter account "jordan fish," I posted a few tweets about Bitcoin back then. I also liked to use the "bitcoin tipper bot" to send Bitcoin tips to my friends.
By the end of 2013, I seemed to be going crazy, thinking about Bitcoin every day, wishing I could go back to the day in 2012 when I hadn't come across this thing. The only person I knew who is still active now is Bob Laxative, who was known as "King BTC" at the time, and he was the first crypto Twitter account I followed. I often kept up with his updates because his insights were great, but at that time, the entire crypto market was only worth $5,000. Then I created two accounts, one account completely followed Bob's trading advice.
After 2013, it was like a massacre; 2014 was definitely a very frustrating year, experiencing several pullback events similar to MtGox, and it wasn't until 2016 to 2017 that it truly recovered to the highs of 2013. Many centralized exchanges like Crypsy, MtGox, Bitfinex, etc., were hacked, and everything went to zero. Perhaps in the end, BTC will also be attacked by the government, and all altcoins may go to zero. Ultimately, the only safe asset might be self-custodied BTC (BTC accounts where you hold the private keys).
Uponly: What was your initial capital approximately?
Cobie: To date, I have only invested about two to three hundred pounds (around $500) in cryptocurrencies, and I did invest once again in 2020, but that project also basically went to zero. In the early days, I entered at a very good time and bought many altcoins that performed well. Just because you made a lot of money in a bull market doesn't mean you're a great trader; it just means there's a bubble.
Uponly: Were you fascinated by Bitcoin because of its underlying logic, or did you see it as a monetary experiment? Do you believe in its mission, or do you just want to see the numbers go up?
Cobie: When I was younger, my motivations were impulsive and emotional. Bitcoin as an alternative to traditional finance struck me immediately; I was 100% convinced at that time. In 2008, almost every one of my friends was struggling with money in some way. The banks lost credibility due to unfair lending practices, and the government lost credibility due to failed monetary policies. Many companies went bankrupt due to this financial crisis, countless employees lost their jobs, and even retirees couldn't access their pensions, while the government and banks seemed unaffected and even benefited from it. I saw the potential of Bitcoin to eliminate intermediaries and government intervention, and I felt it was definitely the solution.
Uponly: When did you start looking at charts, understanding the psychological factors behind people's trading behaviors, and becoming a real trader?
Cobie: I might never become a true professional trader. I treat it as a side job, like someone who flips sneakers. I am a very risk-averse person. Some very professional traders like to argue whether prices are random walks or exhibit Brownian motion trends; they even conduct variance independence tests to analyze market efficiency. I respect them a lot, but I can't do what they do; that lifestyle might not suit me as I am someone who easily gets addicted.
I find my strength in studying human markets, like using the past to find answers about the future. The cyclicality of the crypto market means that identifying peaks and troughs is relatively easy, but Bitcoin is special. My investment decisions are generally based on instinctive judgments, learning from my past mistakes.
Uponly: Do you think you became obsessed with cryptocurrencies because you earned enough money to change your life, or did you become obsessed first and then make money?
Cobie: If I'm completely honest with myself, my answer might sound unappealing or even a bit arrogant because deep down, I feel I would have become a millionaire or a multi-millionaire regardless. Even without crypto or investments, just by working, I would still become a millionaire. The things I did before were the same, whether selling my company or having it acquired.
2. About Supercycles
Uponly: Do you think there is currently a phenomenon of "supercycles" in cryptocurrencies?
Cobie: I am quite skeptical about the concept of a "supercycle" in cryptocurrencies because I haven't seen any supercycle phenomenon in crypto in the past; I generally analyze based on past events. Some actual examples of supercycles include gold, Apple, and Google.
Looking at Apple's annual report data over the past 12 years, you can see that its stock price chart is green on the last day of each year. The idea of a supercycle that we described with Su in the previous episode might be correct; if crypto technology becomes more integrated into society and becomes a financial pillar, Bitcoin could become a store of value like gold, then the supercycle would become the only truly meaningful thing, just like gold, Apple, and Google contribute their utility to society.
I don't think now is the right time for a supercycle; the idea is correct, but the timing is off. If crypto technology disappeared now, how many people's lives would actually be affected? Just many people's crypto investments would fail, and there would be some impact on people in high-inflation countries, or those who make a living playing crypto games would also be affected; the main impact on people's lives would be just that. Currently, there won't be situations where people can't make payments due to disruptions in the Solana network.
3. About Ethereum
Uponly: When did you start to feel excited about Ethereum? What impact has it had on your life?
Cobie: To be completely honest, I think I started to become optimistic about Ethereum through the recent bear market. Initially, I was actually bearish on Ethereum because a series of early events like the ETH DAO hack, the hard fork between Ethereum and Ethereum Classic, and the ICO delays made me lose confidence in the project. I only bought a little Ethereum at the beginning, thinking that since they had ambition, if successful, the returns would be good, but later I didn't buy more ETH, which I somewhat regret.
Typically, my premise for investing or asset allocation is to first understand the project itself, trying to see its future potential and the impact it can bring to the world. If I can see that vision materializing in reality, I would be willing to allocate more assets into it. Even if its price is higher at that time, my risk would be lower because I can see its future.
Starting in 2017, OG projects like Chainlink and Eastland began to emerge, and more projects surfaced in 2019-2020. If you look closely at these projects, you can see that the futures they create are more meaningful, even though they are not perfect yet. Rather than focusing on whether they can be monetized (ponzification), it's better to focus on the changes in existing products, such as their real use cases, like the on-chain lending projects being built. Building blocks adds value to the ecosystem because they can support future block construction. For example, OG DeFi protocols like Metamask are leading this change.
4. Founding Lido and Views on ETH 2.0
Uponly: How did you get involved with Lido and ETH 2.0? These things started before DeFi summer; why do you have confidence in them?** (Editor’s note: Lido is a non-custodial decentralized ETH 2.0 staking service platform that allows stakers to freely circulate their stETH tokens through DeFi's AMM mechanism and participate in other DeFi market services.)
Cobie: I briefly served as the CEO of a company called ptp.org, which is a PoS data validation company. If I am considered a co-founder of Lido, then Konstantin and Vasily, along with the core team, are the real brains behind everything. I had a disagreement with Konstantin over the name; he wanted to call it Lido DPool (short for Decentralized Pool), but looking back, it was a very correct decision to name it Lido based on my suggestion.
When PoS blockchains were created, the concept of DeFi didn't exist. Even when Ethereum announced its roadmap to transition to PoS, they didn't have the concept of DeFi. With PoS protocols, you earn rewards for securing the network by staking tokens. Through DeFi, you can lock your assets to earn yields, and they are used as collateral. The two will compete with each other—"Should I stake my ETH in Ethereum or invest in Aave or Compound?" People enter the crypto industry to make money, so they will choose the highest APY under appropriate risk.
After staking your ETH in Ethereum, you can earn rewards with the staked ETH and also use that ETH for other activities on Ethereum. One simple new product I can think of is a new base currency on Ethereum that can earn risk-free yields; risk-free yield is the cornerstone of DeFi.
Uponly: How do you think ETH 2.0 will be launched? What risks will it face? What results will we ultimately get from it?
Cobie: I actually don't have much say; it might be launched in Q2 or Q3 of next year, but I wouldn't be surprised if it isn't launched by this time next year. The Beacon chain has been running for a full year, and people can earn staking rewards on this chain. If ETH 1.0 merges with ETH 2.0, the $35 billion on the Beacon chain will also be unlocked.
The ETH community is actually not very supportive of scaling, and the current attitude is even worse. So far, Optimistic rollups have been disappointing, and ZK rollups have emerged, but they are not yet compatible with EVM. I am also skeptical about L1; is it possible that all L1 games are due to capital rotation? Liquidity is fragmented, and without incentives, most chains will not be able to maintain their ecosystems.
5. Bear Market Predictions
Uponly: How do you determine your next steps, and how will you act?
Cobie: I don't have a crystal ball; rather than guessing what will happen in the future, I prefer to observe real-time market dynamics and see what everyone is doing. For example, if I see everyone building cross-chain bridges to Avalanche, it indicates that people like Avalanche's ecosystem at this moment, which has PMF (Product-Market Fit). Then I would allocate funds into this ecosystem, and if they build it better in the way I envision, I would invest more. Buying in at a higher price carries lower risk because I can see the reality more clearly.
I think rather than making predictions, it's better to allocate a small portion of your assets to things you genuinely find very cool and then wait for their explosion; or you can just observe from the sidelines, see how everyone acts, and then try to join in when you see a project achieving some success.
Uponly: What do you think about Dogecoin, "meme coins," and other similar tokens?
Cobie: To be honest, do you really think the rise of Dogecoin is fundamentally different from the rise of some "ninth-tier dex trading tokens that are alternatives to L1"? I know Dogecoin seems a bit of a joke, but why would you put money into a bottom percentile L1 alternative? It doesn't make sense to me. Many things seem a bit silly at first.
Perhaps nothing is truly meaningful, and meaning isn't that important, especially in short-term trading. Some project teams are very good at content marketing rather than focusing on the crypto technology itself. Narratives can drive supply and demand, but people underestimate how it can spiral out of control.
Uponly: Assuming a bear market is imminent and it is not a supercycle that will repeat, what impact do you think it will have on the entire market?
Cobie: Overall, projects launched in a bear market are more likely to rise during the bear market. If you think of price as a function with variables, you can adjust the factors that affect the price. In a bear market, one major variable is that everyone's portfolio declines, even some very good projects will have many sellers forced to sell their tokens at a loss because some tokens may drop 60%-70%, which people cannot bear. If such a bear market truly exists, then 95% of the currently popular L1 alternatives' ecosystems will fail because they have spent too much money to maintain ecological security and liquidity.
I believe that most NFT projects with development roadmaps will also be abandoned and die in such a bear market. The incentive for people to build NFT projects is to make money, but if you have to build a roadmap, you won't have leftover money to build NFTs.
I think metaverse games will also go to zero because most projects don't have enough funds to help them survive a long bear market.
Meme coins will also go to zero. Any token with constant token release requirements will also go to zero because such projects need to continuously release tokens, requiring users to invest funds into the system to make the project's product work, but as prices drop, a large number of liquidity providers will feel they won't get enough APY, so people will stop supporting these protocols.
Projects with large funds may shift their primary goal to safeguarding treasury funds without regulatory threats.
Regulation may lead to the disappearance of "nominally" decentralized projects.
Some projects may develop well during a bear market because their utility will increase. For example, Ribbon Finance's potential use case during a bear market looks very attractive; of course, I'm not saying this because I bought Ribbon. Young, hungry teams will continue to build.
Additionally, I believe that 60% of people will lose everything they gained in previous cycles that changed their lives.
6. Working in the Crypto Industry & DAO
Uponly: If you were to start a business now, what field would you choose?
Cobie: I probably wouldn't fully engage in crypto-related work. Joining crypto projects or protocols has become more mainstream now, and of course, the risks are greater. In traditional fields, being a founder is somewhat better than being an early employee, as you can enjoy more future dividends, but you also have to bear more risks. However, in the crypto field, it's quite the opposite; I think being an early employee can yield better risk-adjusted returns.
In the early days, I had a TG group called 27Club to discuss the market; without it, I might not have entered the crypto field, but 70%-80% of the members have not succeeded in the crypto space. Most people have a team like this to share alpha. What's important is having such people in your life.
Uponly: For DAOs, what do you think their potential successful model should look like?
Cobie: Currently, I think DAOs are a form of regulatory arbitrage. DAOs could operate better as companies, but they insist on issuing their own tokens, which worsens their operation. There are very good and very bad examples of DAOs now. As a collaborative mechanism, DAOs are a very good idea. The best DAOs should not be those that people like during bull markets; they might even be those with more concentrated ownership, like those operated by 10-15 companies that are more likely to succeed. DAOs need a new type of venture capital, and more types of contributor VCs need to get involved, Paradigm and Delphi are becoming like this.
Uponly: Do you think crypto will ultimately make the world a better place?
Cobie: If I thought crypto wouldn't make our world a better place, I would be working in some other more "sacred" industry.
In the future, a country's base currency is likely to exist on a fully KYC-compliant national chain with DeFi functionality, without governance tokens, but many DeFi projects may disappear due to the lack of governance tokens, and the underlying asset on this chain will be CBDC. This is what I imagine is most likely to happen. But if you ask me what kind of structure I would like to see, I would hope for a foundational smart contract chain supported by the financial system, with several roll-ups for each country, but I think the likelihood of this happening is low.
Capital will incentivize people to develop better things.
7. Finally
At the end of each interview, UpOnly has a routine of asking guests to provide a piece of advice for the audience.
Cobie: Director Albert Maysles once said: "Tyranny is the deliberate removal of nuance." We need to be wary of anyone who intentionally eliminates or ignores nuances in dialogue because they often have a hidden agenda. Becoming a structured critical thinker may be the most important thing in 2022 and the next ten years.
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