Arthur0x: from a 90% drawdown to betting on ZEC, HYPE and NEAR this cycle

Cheong says the bear market has ended and the market is underpositioned

Asked directly whether this is a bull or bear market, Arthur Cheong said "the bear has most likely ended... like this year," pointing to August. He argued the current rally feels different because it was largely unexpected given weak macro conditions, and because the coins leading the move — Hyperliquid, Zcash, Near — reflect what he called "almost like half of the CT smart money" consensus rather than a purely retail-driven move.

Cheong argued the market may still be "extremely underpositioned" because many participants left crypto not just due to falling prices but because they no longer felt safe holding assets themselves. He said he knows "for a fact that quite a fair amount of crypto OG" have moved Bitcoin into ETFs, and that DeFi farmers have moved stablecoin balances into traditional finance to earn safer yields. He said this explains why rallies in strong coins have shown "no major dip" — people lack profit to take because they were never fully positioned.

From 9-figure fund to 90% drawdown: the Three Arrows collapse

Cheong recounted scaling Defiance Capital from eight to nine figures in 2020-21, highlighted by a single month in January 2021 where the fund was up 180%. He said the pace was so fast it still feels "blurry," and that the fund was built on conviction in DeFi tokens from the 2018-19 bear market, including Synthetix, which he bought below a $20 million market cap and held through a 50% drawdown from his cost basis.

He described 2022 as "still the worst year of my life," citing a personal NFT hack costing over $1 million, a $10 million investment in Terra/Luna made in December 2021, and the collapse of Three Arrows Capital, which he used as a platform to manage his fund. He estimated the drawdown at "50 to 60%" from market losses alone, "and then add in the whole Three Arrows stuff is like another 40%, so it's around 90%." He said he chose not to shut the fund down despite the legal battles with liquidators, believing "we know that the facts is on our side."

"I think 2022 is still the worst year of my life so far. I don't think it can be beaten." — Arthur Cheong

Zcash: a bet on Bitcoin whales rotating into privacy

Cheong called Zcash's run, which he described as roughly 20x over the past year, the product of Bitcoin whales "swapping their bitcoin for zcash" as a hedging or insurance thesis, calling it "the most legit explanation" given the rally happened "in the midst of a bear market." He noted Zcash's hybrid shielded/unshielded pool structure has let it remain listed on exchanges, unlike Monero, which he said carries more of a "dark money" association.

He confirmed his fund owns Zcash but said conviction is lower than for his other top picks "due to how parabolic the price action has been," leaving open whether a correction or consolidation comes before another leg up.

Hyperliquid's execution versus its valuation

Cheong called Hyperliquid "still definitely one of the highest conviction" holdings, saying the project has "always consistently" been "on the top of the game" in execution over the past six to twelve months and that he sees no team that out-executes it. The open question, he said, is valuation: on an FDV basis he suggested the project is effectively trying to surpass Nasdaq-level comparisons, which he called "a pretty ambitious goal."

He also noted Hyperliquid's token trades "above 1x" relative to the protocol's deposited value, unlike most altcoins trading below that mark, and that unresolved questions remain, including "what is the relationship between Trade XYZ" and Hyperliquid, though he does not see that as a major issue.

Near as "this cycle's winner" and the AI-privacy thesis

Cheong named Near his second-highest conviction position, crediting founder Illia for staying engaged with investors "even throughout the bear market" and maintaining "a very clear north star" despite the difficulty of building a layer-one without an obvious roadmap. He said he has reversed earlier skepticism about crypto-AI convergence, arguing privacy and encryption norms in crypto could act as a counterbalance to concentrated AI power, citing a case where he said a major AI lab "co-opted" independent mathematicians' research.

Trading psychology: "you're only as good as your last trade"

Cheong said traders must "constantly reinnovate" themselves or risk going "obsolete fairly soon," warning against becoming a "perma-bear" after one big win, as some did after the financial crisis, missing subsequent bull markets. On nature versus nurture, he estimated great traders are "probably 80% born with it," while good traders can be developed through training, comparing it to elite athletes.

On position sizing, he said his fund typically holds five to ten positions rather than the ten-to-twenty an efficient market might warrant, because "there's usually at any point of time less than 10 investable" assets. He sizes positions at 10-20% typically, with top convictions reaching 30-40% in limited cases, but warned against "full Kelly" sizing, saying overconcentration both amplifies losses when wrong and makes it harder to rotate into new opportunities.

Advice for retail: stick to conviction and the "metaphysics" of crypto

Asked how someone could grow $100,000 to $1 million, Cheong suggested concentrating into two or three high-conviction, early-stage projects at roughly 30% each, aiming for multiple 3x moves rather than one 10x, noting such outsized returns are "a lot harder these days." For scaling $1 million to $10 million, he said the same logic applies but expects returns closer to 3-5x rather than 10x given fewer opportunities at that scale.

He closed by describing a shift toward believing in what he called the "metaphysical part" of crypto — that the industry rewards genuine believers even through negative fundamentals such as grifting and failed treasury strategies. He advised deciding a fixed portfolio allocation to crypto and avoiding constant rebalancing, so risk-taking becomes a settled decision rather than a source of ongoing anxiety.