Crypto hedge fund veteran Su Zhu thinks widespread adoption of cryptocurrencies is inevitable as macro events accelerate use-case scenarios for blockchain technologies.
In a new episode of the Uncommon Core podcast, the CEO and CIO of cryptocurrency hedge fund Three Arrows Capital says that one consequence of the US-led sanctions against Russia for invading Ukraine might be that some nations don’t go along with the prevailing trends.
Zhu cites the Overton window, which refers to the range of political topics open to general discourse.
“This is a big widening of the Overton window that we’re seeing right now, which is that people are just ignoring what [Western governments] say. I think what’s likely to happen is a short-term victory for the West where Ukraine will get the better end of a deal with Russia, but then in the longer term, you will see countries really aggressively move away from overdependence on the existing financial systems.
Part of that is embracing technologies that are credibly neutral, [also] working on creating alternate systems to the ones that exist. This whole process will take years and years, and the role that crypto plays in this is many-fold.”
Zhu digs into what the future of crypto might look like and represent moving forward worldwide.
“On the one hand, you will have the continued adoption of crypto by the West as an expression of liberal values, freedom of speech and also freedom of money.
On the other hand, you will see adoption of it by governments and sophisticated players outside of the West, as to say, ‘This is a credible neutral [form of] money. This is a credible neutral platform that I can use to do trade.’
So I think crypto becomes all the things, essentially.”
Regarding how the crypto space stacks up against traditional finance and macroeconomic factors, Zhu believes the market has moved beyond simply being an alternative form of investment.
“I think we’re entering a phase for crypto now where it’s in the big leagues.
People are wondering, ‘When I own this [asset], what sort of things do I believe about the world? What kind of world am I investing into and what kind of things will hurt my portfolio or help?’
I actually don’t think that it matters very much for crypto itself because it’s still very early, that those forces aren’t strong enough to matter for the total market cap of crypto assets.
The macro stuff is to understand the way the other traditional financial people view it… Basically to get in the mindset of a tourist in this market, how they think about whether or not they should own Bitcoin, or if they own Ethereum.”
The Three Arrows Capital CEO concludes by saying that the Russia-Ukraine conflict has served as a defining moment in establishing cryptocurrencies as a disruptive force. What remains to be seen is to what ends they are used.
“The real interesting stuff, aside from macro, the past few weeks has been the political implications of Ukraine-Russia… And there, what we’ve seen is, where before people could criticize crypto as either frivolous and speculative or subversive and dangerous, now absolutely no one says it’s frivolous and speculative.
They can only argue over how subversive it is, or is it creating net-good or net-bad in the world.”
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