This Is The End Of The Crypto Industry

Added: 2026-05-07

[00:00:00]All right, ladies and gentlemen, we got to have a serious conversation today.

[00:00:02]What I'm about to explain to you is probably not what you want to hear, but it's the truth, and so it's important for me to tell you. I posted the following message on X two days ago. I said, "Most of the crypto industry is dead, and it's never coming back.

[00:00:13]Eventually, people will realize it."

[00:00:15]Now, to say that this message struck a cord across the industry, that would be an understatement. I have been called an idiot. I've been told I was wrong, and I must have been asked over 50 times about the tweet while I was at the Consensus Crypto Conference yesterday down in Miami. But after spending the day at the conference, I'm more convinced today than I was yesterday. Most of the crypto industry is dead, and it is never coming back. Now, when I explain to you why I think this, it's important to remember a few things. I've been writing and talking about Bitcoin in the broader industry for almost a decade now. I'm generally an optimistic person. I want to see people in companies succeed. And literally, I could never be a short seller cuz I just don't have the pessimist gene. It takes a heck of a lot for me to publicly talk about the negative aspects of the crypto industry or a company or a person. But I believe that we all need some tough love right now. And so I'm going to explain to you why I think this. If we don't acknowledge the truth, we can't improve the future. And so this context may not make you or other people more receptive to the message, but at least I can go into this with a clean conscience as I talk about the many parts of the industry that I think have become delusional. So the first thing we got to talk about is to understand why so much of the crypto industry is dead already.

[00:01:21]You got to realize that the natural business cycle is not allowed to play out in crypto. The way that the natural business cycle works is usually an industry will see some sort of technological breakthrough, right?

[00:01:30]There's some big breakthrough and that's followed by a flood of new companies that are formed. Those new companies are leveraging that technology breakthrough.

[00:01:37]But some small percent of those new companies end up succeeding and then there's a bunch of companies that fail.

[00:01:42]And for the companies that fail, the companies are shut down. And that allows the remaining capital and talent to be reallocated to other ideas and companies. The clearing out of the bad companies is almost as important as the thriving of good companies in that natural business cycle. But crypto doesn't have the business cycle. And there's two reasons why. The first one, blockchains almost never shut down. And the second one is that coins almost never go to zero. So let's talk about the blockchains for a second. It's nearly impossible to shut down these blockchains because the software can stay operational as long as one or two people continue to run the network. And so if the network's never shut down, then there's this illusion that the blockchain is like default alive or that it's operational and being used. Let's call these ghost chains. And these ghost chains are much more prevalent across the industry than most people want to admit. Now, let's talk about the coins themselves. There's no official way to like declare bankruptcy for the coin or shut down the coin. So, as long as a small handful of people still quote unquote believe, then the coin's not going to go to literal $0 and0. Instead, what we continue to see is that tokens just lose a lot of value and that makes liquidity evaporate. But the remaining holders are not able to get out of the coin. So, they're just holding a coin that's worth very little and it's essentially a dead coin. And so, maybe some exchanges then delist the illquid coin, but usually the coins just kind of stay stuck in irrelevancy. And so, we can call these zombie coins. But these zombie coins are also more prevalent than people want to admit. So ghost chains and zombie coins, those make up a very large percentage of the crypto industry. There are millions of coins and there are thousands of blockchains.

[00:03:12]Just those two things alone would make my original claim that most of the crypto industry is dead accurate.

[00:03:18]Because you have to ask yourself, does anyone actually believe that millions of crypto coins are going to thrive in the future? I doubt it. I was on stage yesterday and I asked everyone, do you think this? Literally zero people raised their hand. So whether people like it or not, they just don't want to say the truth out loud, and I'm happy to say it for them. But there's more to this story than just zombie coins and ghost chains.

[00:03:39]The second major crisis in crypto is what I call a lack of true believers.

[00:03:42]Now, the industry used to be defined by hardcore missionaries. These missionaries had some very specific views of the world. And frankly, they would rather see Bitcoin succeed than personally make money if they had to choose between the two options. So the success of the industry, the success of the technology was more important than their personal net worth. But the mission, in my opinion, when you go back and you look at a lot of these people, was much more important than their personal success. But those days are pretty much over from what I can tell.

[00:04:09]Missionaries are hard to find now. And instead, the industry is littered with mercenaries. And these mercenaries are willing to go wherever the financial reward is greatest. These mercenaries are purely focused on speculation. And that means that they're devoid of standing up for any specific worldview.

[00:04:24]As the saying goes, if you don't stand for something, you'll fall for anything.

[00:04:27]And I think that's what's happening across the industry. You can clearly see this mercenary effect in the short-lived meme tokens, in the prevalence of scam coins, in the constant market manipulation, the escalating yield farming rates, or even what I call like the vaporware product launches. These product launches are designed to capture attention rather than actually solve problems for users. And so if you have mercenaries outnumbering the missionaries, the broader crypto industry is now run by people who don't understand or believe in the original vision for the industry. And then lastly, I think that there's a clear divergence between the interest of what I call the investor class and the we hate investors class. You can see the online commentary. It is littered with people claiming that VCs are bad, that the large financial institutions are a net negative for the industry or that regulation shouldn't exist in the industry. In my opinion, these ideas are not only dumb, but they further contribute to the death of a large part of the industry. Take venture capitalist as an example. They literally funded almost every company that helped people buy, store, or send Bitcoin for the first decade of the asset's existence.

[00:05:28]We would not have the Bitcoin infrastructure we have today without venture capitalists. And the venture capitalists are also responsible for funding most of the largest projects, companies, or coins in the space. Then take the large financial institutions.

[00:05:40]They're pouring capital into many different areas. And that, in my opinion, maybe one of the most important things to watch is where they're putting their money. These are large sophisticated companies and they're quickly eating market share from the cryptonative firms. So again, crypto is dying and it's being replaced by the incumbents to a degree and I don't think every cryptonative company is going to end up getting replaced but the majority of them are coming under immense competition and some of them are even being acquired by the legacy system. As each one of those companies falls or surrenders, another piece of the industry dies with it. So let's take Morgan Stanley as a good example. They recently announced that they're launching Bitcoin trading on ERA. Why is that a big deal? E Trade's got 8.6 million clients and Morgan Stanley is going to launch this Bitcoin trading with cheaper trading fees than Coinbase and Charles Schwab. Take a listen to the announcement.

[00:06:28]>> It's funny to think given how ubiquitous individuals trading crypto is that there are still very large firms that don't really offer. So yeah, let me explain why this is a big deal at least for the likes of Morgan Stanley which is up to this point Morgan Stanley Goldman Sachs and JP Morgan they offered exposure to uh you know to Bitcoin through the ETF rapper. So that would be through like Mike Novagrat's firm Galaxy, but they have never decided to go direct and provide direct access to Bitcoin trading, Salana, you know, Ether trading, which they will do in the coming months. And so Morgan Sal's uh client specifically is to offer it through Erade and to offer this access through their Erade clients through a little startup called Zero Hash. And another interesting aspect of that is Zurash uh you know, it's been around for seven or eight years, but now it's actually gotten institutional backing.

[00:07:13]They are now partly owned by Morgan Stanley, partly owned by SoFi and Apollo. So, it seems like they've decided they're expressing an opinion about this company being an infrastructure play that will allow banks and fintex to connect to the crypto economy.

[00:07:27]>> So, with that context, what percentage of crypto trading volume do you think is going to end up in traditional brokerage venues or ETFs or on the New York Stock Exchange or on NASDAQ compared to the crypto native firms? I don't know the exact number, but it's probably going to be a lot. That's a big narrative violation. At the same time, the crypto native firms are racing to add non-crypto components to their business.

[00:07:47]They're adding equities, prediction markets, options, commodities, any asset that's going to bring them new customers, new assets under custody or new revenue. These companies need to grow and they realize they've got to expand outside of crypto in order to be able to do that. Is Robin Hood a crypto company or a traditional brokerage? Is Coinbase a traditional brokerage or a crypto company? This is where you get the melding of the legacy financial system and the crypto industry. And then lastly, let's use Michael Sailor as another example. He mentioned yesterday on their earnings call that he could potentially sell Bitcoin in the future to fund the stretch dividend payments.

[00:08:21]Take a listen to how he said it. There are occasionally some short narratives.

[00:08:25]People would would say things like, well, you know, if they sell the Bitcoin, that's bad for the business or it proves the business doesn't work or something. But, you know, we look at it as if you're a real estate development company and you bought land for $10,000 an acre and you sold it at $100,000 an acre and then you bought more land with the profit. No, you know, or if you sold it $100,000 an acre to pay some interest expense on on debt that you use to buy more land. Nobody would say that that's bad for the price of real estate. And no one would say that that proves business doesn't work. Real estate development companies literally exist to buy land cheap and sell it expensively. We're like a Bitcoin development company. We buy it cheap. We sell it uh deer. Um where do the dividends come from?

[00:09:13]Capital gains fund credit dividends, right? That is the essence of the business. We invest in digital capital, Bitcoin. the capital gains uh from the investment fund the credit dividends.

[00:09:30]They will do it in perpetuity if you if the capital appreciates at that break even rate. And it turns out that sometimes we will sell a Bitcoin derivative because it's in the best interest of the company, but it's not necessary. This chart really illustrates that you can strip the business down to something very simple. You uh buy Bitcoin with credit. you let it appreciate and then you sell Bitcoin to pay the dividend. And as long as you're you're issuing credit in excess of the break even point, then this business works and and grows forever. Now, what's interesting to me is after Michael said this, Bitcoin's price is higher today. I think that's a major narrative violation for what people thought would happen if Michael said he was going to sell. This commentary from Sailor would have been blasphemy just a few years ago. But now it's a rational perspective given the state of the industry and the future growth prospects of strategy because remember the crypto industry is dying.

[00:10:28]Majority of the projects and coins, they're just not going to make it. But those that end up surviving, they're going to become important parts of the legacy financial system. And frankly, I couldn't help myself from noticing this big dichotomy at the consensus conference yesterday. There were serious entrepreneurs and investors that were there. These people are focused on building and funding solutions to real problems. Somebody like Mike Kagny at Figure Technologies. I've been an investor in that company for a while.

[00:10:51]Mike's a serious guy who's building a real solution to a real problem. But then there's a bunch of people running around doing memecoins and pumpf fun stuff and a bunch of nonsense. These large cast of pretenders, they're running around holding on to a dream from 2018 that is never going to materialize. In my opinion, most of the crypto industry as we know it is dead. I personally believe that there are four major areas that are going to acrue value moving forward. The first is Bitcoin. The second is stable coins. The third is infrastructure and the fourth is tokenization. Not everything is going to die. Those four areas are likely to end up acrewing value, surviving and thriving. We need that because that's going to upgrade the legacy financial system. But people need to adjust their perspective to incorporate the reality of the current market. I'll leave you with a great example. As I walked into the consensus conference yesterday, there was a large booth and it was titled the crypto carnival. Take a look at this photo right here. We do not need more carnivals. We do not need more nonsense. We are in a competition with the legacy financial firms that have a lot of money and very smart people. We need more people focused on building real things for real problems. Because if we don't see that happen, the industry's most talented people are going to move along to work on other technologies. AI, space travel, DNA sequencing, self-driving cars, national defense. There is so much awesome stuff going on in the economy right now.

[00:12:08]Crypto has to compete for talent. Most of the crypto industry is dead and people do not yet realize it. That doesn't mean that a big part is not able to succeed. It just means that if you are working in or investing in the part of the industry that used to be the longtail, I would be very careful right now and I would think about reallocating my time or my money to the parts of the industry where there is actually the opportunity to upgrade the legacy financial system because at the end of the day, crypto is a free market. The best ideas are going to survive. the best projects, the best companies, they're the ones who are going to end up getting adopted into the legacy system.

[00:12:47]When you hear crypto company or crypto asset, that means that that thing has not yet reached a point where it is able to actually survive in the legacy system. If you go back to the 90s, people used to talk about internet companies. Now we just call them companies. The things that actually have terminal value, the things that have resilience to them in the crypto industry are not going to use the word crypto going forward. Instead, they are just going to be companies or assets, not crypto companies and not crypto assets. Because at the end of the day, crypto is just going to become finance.

[00:13:19]It's all going to become one big thing.

[00:13:22]And the things that try to stay crypto only are going to be the things that end up dying. That's it for today's show.

[00:13:28]Thank you guys so much for watching.

[00:13:30]Please remember to subscribe on YouTube and I'll see all of you live from the desk of Anthony Pompiano