Fireside Chat: This Time Is Different, Blagovest Belev, Vlad Dramaliev| ETHSofia 2025

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All right. Great. So, uh we had some um four brilliant individuals like really uh in the markets sharing their thoughts about you know their crypto thesis. So it's time um to to also look at um well Bobb's thesis because he has one of the he has been running um the the first crypto fund in the country. So he has been in crypto more or less since I've been in crypto.

So that's more than 10 years. He has been following the markets for a very long time. So, um I'm kind of hoping for a contrarian uh perspective of Bobby and the topic is, you know, this time is different and I wasn't sure if it's in brackets or it's just like that. Um but let's start with a couple of questions that I have here for you. Uh and uh also please have a look at uh you scan the code.

I saw that we had some questions from the audience that weren't answered but were quite voted on. Maybe we can go through those uh as well uh after the end. But scan and ask and I'll try to get as many questions in as possible. But let's start uh with the agenda. So first question, fundamentals of crypto today versus five years ago.

Bobby,

thanks on for the intro Vlad. um fundamentals mostly comprise of the uses of crypto, what people use it for uh right now. And in order to assess that, we need to um see the different categories of crypto. And by far the biggest and probably the most important is the use case of storing value or the so-called monetary thesis. Um it's been growing for the past five years.

I think the world is quite a different place right now and the idea of having portable wealth is something that a lot of people consider. For the past 5 years, Bitcoin has not just stored the value of people, it has actually grown it by by a lot. Five years ago was 2020. So, Bitcoin's price was about $10,000. Um right now it's north of $2 trillion overall.

So this um this has grown a lot and that includes not just retail investors. It already includes a lot of old institutional money and professional asset managers who were still I wouldn't say ignorant but um downplaying Bitcoin at the time 5 years ago and right now they are proponents and most of them are looking to allocate some portion of their money into this um thesis also the the changing global geopolitical ical order makes people look for an alternative of the of the current system and the dollar uh assets. So this has grown a lot. Uh also 5 years ago it was just the start of DeFi. Um it was the first real use case of Ethereum and right now it's um it's grown a lot also.

I mean there are um two 270 billion dollars worth of stable coins only. Um so that has grown significantly since then. Um the other two things yeah the stable coins are one of those things and also the casino overall. So lots of people ignore that but it's it's a use case um and a significant use case of crypto. It's been speculation, trading and overall um the casino element and that has been changing and evolving uh and it's by its nature it's it has to change in order to stay relevant otherwise it's going to be gamed and people will be disappointed and it keeps evolving it keeps changing with meme coins and NFTTS and um new types of speculation that are going on right now but But it it's still relevant and likely a lot of the gambling money in the world will keep being in crypto in a way.

It just gives them a wonderful platform. Most of the professional poker players that I know personally are in crypto one way or another. So these are the major four use cases I would say.

Yes, I I I agree. And um I think you mentioned Bitcoin, you mentioned Ethereum. Uh there was a question from the audience before that um because uh it was related to Bitcoin and uh at 110,000 or $120,000 per bitcoin, it's no longer something that is interesting to retail participants that much and they're looking for something, you know, that they can get uh an entire unit of. uh and even if Bitcoin goes to 300,000 or 500,000 that would be a 5x um while at the same period something can go like maybe Ethereum or something more niche can can do a 20x. So um in generally speaking like this is alluding to my next question like what is your investing framework?

Are you looking into Bitcoin specifically? you have a high like a long time frame perspective or are you looking for something that could give you a better return for like in a shorter time uh frame?

We it's always better to earn 10x than 2x, right? And 2x is a little bit boring in crypto, but given the market conditions in the past couple of years, it's been exceptionally difficult to perform better than Bitcoin despite the fact that we're in a bull market and everybody expects uh an euphoric altcoin mania like we're used to having in the past cycles, but we really haven't really seen that this time. Um and there has been many bets that this thing or the other thing would 10x or 100x and some of those things actually did but they reverse their gains. Most most of the I would say 99.9% of the things reverse their gains in terms of Bitcoin very very quickly.

Um, so, so back to your question, I think the monetary thesis has the highest return and the lowest risk over the long period of time. That's why it's still probably the best one for most people to play at because Bitcoin, the first top of Bitcoin basically is the equivalent of the market cap of gold which already is at about $25 trillion which is 10 times higher than Bitcoin right now. and and it has an a real potential for more than that because it in some ways it's more useful than gold whereas in most other thesis the investment thesis of um the technological thesis for example that Ethereum Solana and other L1's play at um in my opinion has much lower target if they are successful and most of the world's money run on Ethereum. I would say that's a that's a quite an estimation. So it may be quite unaccurate, but I would expect Ethereum to be at around 5 to 10 trillion valuation.

Um, and Ethereum is not the only uh kid in town. There is competition, a lot more competition in the technological thesis versus the monetary thesis. and it's much more difficult to predict what's going to happen over there. The third category is the apps that are being built on those L layer 1 platforms and there there is even it's even earlier and there is even more competition over there. So it's really really difficult.

We need to have a venture capital type of approach if we want to invest in those where our expectation would be that one in 20 or one in 30 will actually do a really good return and the rest will basically um will destroy our investment. Um so still for most people it's it's good to think long term and to keep most of the money in Bitcoin which is the store of value thesis and some of the speculation money in other things but not much and and keep in mind that speculation should be short-term and all the profit should be locked back into Bitcoin. Yeah.

Okay. Great. Um, so then maybe we can do something more like more practical if because we're talking about Bitcoin and I mentioned that you know Bitcoin is 100,000 and could could go to 500,000 but most people will not be able to afford the whole Bitcoin. So if you are a normal uh user uh well let's investor let's say uh and you have $50,000 or 50,000 level whatever um how would you um how would you invest this 50,000 uh currently if uh the goal is to really uh you know grow these money to be u meaningful because 50,000 lever uh let's say it's not that much and if you invest them in Bitcoin yes maybe you get them to I don't know 100,000 but that's going to happen you know two three years it's not it's not really clear and you all the time you are seeing other things you know if you're on X you see people may uh doing 100x 20x so there is a psychological element of this information bugging you all the time pushing you into more risky stuff so how would you how would you invest these uh $50,000?

I wish you asked me the same question in 21, not now because we have to see the reality as it is and the market has matured much more compared to before and we may want to get 100x or a 1000x but if the market doesn't give it we will just stay with what we wish for and lose the the rest of the money that we we wanted to invest. We need to be practical and grounded and see what the market wants to offer. And unlike 2017, which was the the wow moment of crypto, it was back then the world realized that this thing exists. It's a a new revolutionary technology. There was a bubble.

It was relatively easy to make money. Whatever you bought went up a lot. Then in 21 there was a huge influx of new money because of the pandemic and this resulted in another bubble which was more difficult to play because not everything went up by a lot but some things really did well. And now we have a mature market that is driven mainly by fundamentals and very shortly on speculation. And even these short periods are really difficult first to to time because they're short and and they vary in in in time and also there is hundreds of thousands of more options to choose from.

And very small percentage of those assets tokens actually uh go up a lot very few of them. And I wouldn't recommend it doesn't matter how much you invest. I wouldn't really recommend to be very highly speculative right now. The only thing that that has a potential to to rise are those things that are being used and has some kind of revenue and those are things like hyperlquid things like pumpf fund that are actually uh uh having a lot of fees collecting a lot of fees and burning those fees. not really burning but buying their tokens.

And this seems to be probably the most generating some kind of fees for the network seems to be the biggest driver outside of Bitcoin during this cycle and there aren't many tokens that are actually doing that. So yeah, um something that is really hot right now is a competitor of Hyperlquid called Aster which actually increased a lot its um its volume in the past few days and thus the the market price went up a lot. Uh however, we don't even know whether that's real trading or not or it's some insider trading by people who own the token, whatever. But but it it also solidifies my thesis that only the things or mostly the things that actually have um real fees and and revenue do a lot of returns. Of course, a lot of meme coins did that.

But then who knows how to play that? I mean there is hundreds of thousands of them. I know a few people who've made a thousandx or 100x, but they invested just a tiny bit of money in a few of those. So, it's not a reliable if you try to play that game with memecoins again, you need to time the period. Right now, it's not a great period.

Uh, you need to know when it is a great period. And then you need to somehow be able to choose the best coins, which is And you have a a huge spectrum of of choice. So your money needs to be divided in many places and whether you win or not it's a matter mostly matter of luck and I don't really like to invest based on luck.

Okay great. So um again talking about investing and about you know people being impatient. Um I see your thesis and yeah I think it's a valid one. Um but do you think that uh long-term investing in crypto has evolved or changed um in with time? Because if it was you mentioned like 2020 or even 2017 if you invest in Bitcoin just hold it for 5 to 10 years uh it will can go a lot like can go up a lot but now again can go up but but a smaller multiple.

So do you think uh in investing it makes sense to also incorporate some level of of trading or uh at least uh you know uh what is it like range trading or you prefer to just invest and just don't touch that that whatever it was invested in uh or do you think it makes sense to also try to follow some you know trends and I guess the question is do you I think an investor starting in crypto today should also be able to trade or should they just follow like focus on what they believe and and what they think makes sense like on the fundamentals

regarding this topic we should listen to the greatest investors in the world not me um look at the billionaires who have been investing for more than 30 years let's say as a threshold of somebody whose opinion actually counts. And I don't really know a lot of people from that category that would recommend trading. And um I personally don't really know people who are really good at trading. I know people who claim to be good at trading. I know people who don't really know how to do their bookkeeping and their accounting.

And maybe they think they're good at trading at some periods, but I don't really know people who are actually sustainably good at trading and can outperform the market. And this is one of those things that it's there is so much data and it from the traditional markets that trading actually is not sustainable. It's not it cannot continue successful trading over a very long period of time. And even if he does, it is maybe one one person in a million that can actually do it. And there is no way to know who that person is.

Um so I I think nothing beats buying quality assets and holding them patiently. Um trading is a way of trying to reduce your volatility, but you're also reducing your expected return. But that's my opinion. Well, yeah, your opinion is uh important. You're on the stage of ETH, Sophia, so it matters.

Um, and let's go to to macro a little bit. Uh, because macro is absolutely affecting crypto and risk assets. Uh, maybe two questions in there. Uh, where are we in the macro cycle? We see that, you know, u the federal funds rate, federal funds rate is going down.

uh people are talking about you know a lot of liquidity now being available to uh flow into crypto. Um so I would like to get your opinion on that and in relation to that do you think you know maybe specifically to Bitcoin uh is it a risk asset really or should we expect it to to to start behaving more and more really like gold and when for example the S&P 500 goes down uh bitcoin to go up more frequently. So two questions in there macro and

okay the the second one is shorter. So, uh, Bitcoin and crypto are still risk assets. So, they're going to go down if there is a market downturn. We saw that earlier this year. It was pretty clear.

Actually, in most downturns, even gold goes down. It just goes down maybe much less than than the the rest of the financial assets. Um, and when to expect a reversal, I think we're a long way from from there, unfortunately, or not. I mean, it's I try not to have a bias there. Uh, I just we need to observe how the market reacts.

So, so crypto and Bitcoin including that are still risk assets. Um, so we need to allocate appropriately and be ready for volatility. Um then on the first question, the macro situation right now is as predict unpredictable as usual with um more uncertainty regarding geopolitics, but the the fact that it's unpredictable, it's it's one thing, but then where we what we see today, we can actually evaluate where what we see and how good that is. And if I I will list a number of things in a in a little bit, but if I take the whole picture, I think we're in a good spot. Honestly, I think we're in a good spot.

As far as I can see in the future, which is not very far, it's maybe a couple of months out because macro is notoriously impossible to predict. I think a couple of months in the future is probably the maximum we can we can be fairly certain about. Um inflation is one of the most important things. It is above target but somewhat anchored which makes the Federal Reserve somewhat happy. That's why they were inclined to to reduce rates which is good for for most assets.

Lower rates means higher asset prices. So even though 3% inflation is the new normal, it's higher than they they want it to be. it it's still okay. The one thing that the Trump administration are doing really well and they're deliberately targeting I think this is to have a low oil price for several reasons and one of them is to to keep it inflation at bay so that rates doesn't go up. Um um and they're somewhat managing to do that.

I don't really understand how, but there is probably a lot of geopolitics behind the scenes. They pushed OPEC to actually produce more oil and thus reduce the price. So, as long as we are below 70 or even $80 per barrel, I'm I'm happy with that. I'm not really afraid of inflation. um which is actually the biggest potential problem right now because all the other problems could be solved with printing more money and inflation wouldn't be.

And the biggest risk for markets right now is um stackflationary recession where inflation is high and the economy is is going down which fortunately we're not there yet. We may get there in the next few years likely. Nobody knows when. Um and and fortunately the economic forecast for now remains good. Uh it's actually increasing.

I'm I'm quite surprised given the low job numbers in the US, but the uh GDP estimation for Q3 is actually above 3% and rising, which is perfectly fine. Um the liquidity is basically it actually went down in the US this month because of refilling the Treasury General account. Uh but in the in the in globally it's going up because of the lower dollar. Um and we can partially see that uh with the rising gold. Um these are the most important factors.

Of course, there is the uh geopolitical uncertainty and the changing world order which is also very difficult to predict and a slowly evolving game. So this is not going to affect the market in a couple of months but definitely plays a huge part of our decisions if we take five years ahead or we think even more long term. So right now in the next few months macro seems fine.

Okay, great. Yes, this this is also my perspective and I think it's the perspective of crypto Twitter as well. Um let's go into the questions because we actually have just a few more minutes but we can we can extend it because we we have only uh one panel upcoming and it's also focused on crypto trading and uh uh yeah trading tech but a few interesting questions and I think the biggest question that I've also seen around in the community is is the four years cycle dead? Are we talking about like are we in a period where there are no psychos anymore and due to the like trade fire institutions coming in um yeah we we don't expect a psycho end we we can expect some you know downturns shortlived maybe and then again uh prices going up. So why what do you think about the fouryear cycle and maybe as short as possible so we can get through a couple of questions.

Well, first let's define what is the the crypto cycle. It is a period that ends with a very large euphoric period that ends up in a bubble and it is followed by roughly one year correct bare market that goes down 80 85 90% of across the across the board. Um, so far we haven't seen really an euphoric period that goes into a bubble. Are we going to see it? I don't think so.

Honestly, I I put more less than 20% chance to to see that in the next few months. Even if we see something, it will be shortlived, I think, because there is a lot of capital waiting on the sidelines to sell their tokens. that's VC funds, um, liquid crypto funds, old investors, whatever. Um, so that will be a lot of selling pressure. And also, are we going to see another decline of 80% or more?

It is somewhat likely even even if we don't see the euphoria if we have a macro bare market um there is a chance that I mean depending on the severity of the bare market we could see another 80% down in most assets 80% down for bitcoin is maybe a bit too much but we could we could easily see 60 to 70% down from these levels

okay thank you um we there is a question regarding funds and you know the digital asset treasuries that are now forming and we have Michael Sailor. Do you think these are positive for the space and can there be a situation when they are forced to sell and this making a bad situation even worse?

Yeah, this is one of the trends that actually are quite new and different this time. Um I mean they are net positive I think because the market apparently is willing to pay premium for those treasury companies um a premium on what they actually hold. So that means that of course there is some speculation but also there is companies and funds mainly funds whose mandate is to buy equity and debt and they cannot really buy uh the Bitcoin ETF but they can buy micro strategy because it's it's a company we could see that with with various different plays but but most recently with the Norwegian sovereign fund that it's holding small amount but still holding micro strategy and Microsoft is still trading roughly 50% above above uh the net asset value of what they're holding. So this is what the market is is saying. Um there could be on the on the way down there could be some forced selling but the leverage thank god it's not really high.

So if there is forced selling it will be mostly because of the premium going below the net asset values and people who want to move out of this certain asset. Um but for for now it seems like the leverage is not too high.

Okay great. Uh two more questions and uh we can we can wrap it up. Uh this is actually from the previous uh for the previous uh panel. uh just what do you think is an underlooked vertical in crypto because we have um we have per we have stables is there something that you know people haven't noticed yet um obviously AI is very big in the in the web 2 space it's uh it's spreading throughout the world everybody's basically starting to use it um but in crypto is obviously not that developed yet is there something interesting with AI happening or is there any vertical that you know people haven't noticed yet that you think is interesting? I'm not a personally a a super early adopter of those things.

So I'm probably not the right person to ask. Um but yeah, I think the the hottest thing right now is the derivatives market around hyperlquid and yeah Yeah, and stable coins overall. But yeah, that's it.

And final question, um, why is Bitcoin seen as a superior store of value compared to Ethereum even though it has higher inflation and lacks utility? And this also relates to another question, you know, when flipping or will do you think there will be a flipping between the market caps of Bitcoin or Ethereum and Ethereum? Well, that's a long topic to discuss, but given how much time we have, u Bitcoin is the original memecoin. Um, in the way that gold is, gold is a memecoin. Um, money is a social construct and we believe it's valuable because there is a network effect of other people believing it's valuable.

So, it's a it's a vicious circle in a way. Um, so Bitcoin was the first mover in this category. It is the most decentralized and censorship resistant of all even though it's not super useful. So right now it remains the king and it remains the the the main competitor in the store of value category and there is not I will use this phrase but right now there is no second best really. Um however once the L1 wars or competition is um is gone and one of the layer ones if it's Ethereum for example if Ethereum wins and it's able to scale and it's able to accommodate the financial assets in the world then it will likely have some monetary premium as well because it's going to be so useful so widespread that everybody will need it, everybody will use it.

So there is a good chance that there will be a monetary premium in whatever network wins the game. But I think it's a little bit maybe one cycle too early to know which one of those will be.

All right, great. I think that's uh quite enough for for now. Thank you for sharing your thoughts. I think those are very valuable. And guys, give it up for Blog Vest.

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