Market Cycle: 50% Drawdown Yet Higher Lows, $60,000 as Support
CZ reaffirms the four-year crypto cycle pattern. Bitcoin has corrected roughly 50% from its peak, compared to previous cycles that saw 80% drawdowns (e.g., after LUNA's collapse and FTX's bankruptcy in 2022, Bitcoin touched $16,000). Today's price is 4-5 times that level, and each cycle's starting point is higher – a clear rising-bottom structure. Technically, the previous cycle's high of ~$60,000 is likely to act as support in future declines, a pattern observed repeatedly in history.
Compared to earlier periods, the current cycle benefits from national adoption (multiple countries backing Bitcoin), institutional participation (BlackRock), BNB ETF listings, and RWA progress (SPCX/preIPO tokens). CZ declines to predict the exact bottom or duration but notes that leverage across the industry is better controlled – no major institutional collapses in the past six months, which is positive.
Convergence of Crypto and TradFi, Coexistence of Centralization and Decentralization
CZ argues that crypto is not an isolated industry but a new technological tool enabling faster, cheaper, and more transparent financial transactions. Traditional financial firms can build their own blockchains, while crypto companies offer lending, savings, stock trading, etc. The two will eventually merge into a unified 'fintech' industry. Regarding the centralization vs. decentralization debate, CZ points out that any platform or team inherently contains centralized elements, but technology continuously pushes toward decentralization. Centralized players that provide low-cost, secure services can attract users through network effects; those abusing monopoly power will eventually lose market share. The spirit of decentralization allows anyone to build their blockchain, and users choose based on cost, security, ease of use, etc.
Hyperliquid, Prediction Markets, and L1-L2 Rotation
CZ appreciates Hyperliquid for creating a new niche – no KYC, claimed decentralization, with innovative technology. For prediction markets, he highly praises Polymarket and Kalshi, calling price discovery and liquidity tools beneficial to the industry despite regulatory disputes. Regarding L2 development, CZ believes L1 remains the future – Vitalik recently recognized that L2s cannot help L1 and refocused on Ethereum mainnet. L1 speed will keep improving, but demand growth will spawn new L2 solutions, forming an L1-L2 cycle.
Investment Portfolio: 70% Crypto, 20% AI, 10% Biotech – Artificial Womb and Knee Regeneration
CZ reveals Yzi Labs' allocation principle: 70% cryptocurrencies, 20% artificial intelligence, 10% biotechnology. Investments prioritize 'impact' over financial returns – e.g., investing $1 billion in a cancer cure project even if it loses money, because it saves lives. Concrete examples: an artificial womb startup (already tested on mice, 5-10 years from human pregnancy) and a knee cartilage regeneration technology (3D-printed scaffold promotes cartilage growth, now in human clinical trials). He also mentions using almost all mobile AI models: OpenAI, Claude (good for coding), while Chinese AIs (Deepseek, Kimi) are useful in regions where US AIs don't work (e.g., Hong Kong). US LLMs are more precise, Chinese ones sometimes less comprehensive.
Industry Outlook: Crypto Will Not Die; AI Will Drive Crypto Usage
CZ firmly believes crypto will grow into a massive industry. Hot money flowing into AI actually boosts crypto trading (people trade AI stocks with crypto). Future AI agents need integrated payment systems – current financial infrastructure (credit cards, KYC) doesn't support AI. Blockchain, being API-driven, is naturally AI-friendly. Thus, even if some capital moves to AI, it will eventually flow on-chain. CZ emphasizes that crypto cannot destroy civilization, but AI could be dangerous if mishandled – regulating AI is far harder than regulating crypto. Now is the perfect time to upgrade financial systems, as AI, blockchain, and the internet collaborate to build better financial infrastructure.
