Joe McCann Shares Insights on Asymmetric's Success and Bullish Outlook on Solana

In a recent episode of Midcurve, host Justin sat down with Joe McCann, the renowned figure behind Asymmetric, to discuss the strategies that led to their impressive status as the #1 hedge fund, explore the differences between the last crypto cycle and the current one, and gain insights into Joe's macroeconomic views. Joe also shared his thoughts on why Solana stands out in the crypto space and the importance of community and internet culture in driving adoption.

Asymmetric's Rise to #1

Joe McCann began by discussing Asymmetric's recent achievement of being ranked the #1 hedge fund across all asset classes globally. This impressive feat was not just limited to crypto funds but encompassed all hedge funds on the planet. McCann emphasized that this was not their goal but rather a surprising and welcome outcome of their strategies.

"We were notified that for the trailing 12 months of performance from basically March to March, we found out in April that we were number one. Not number one for crypto, but number one for every hedge fund asset class on the planet," McCann revealed.

The Technology-Driven Approach

One of the key factors behind Asymmetric's success is their unique approach to running an investment firm. Rather than viewing it as a traditional financial institution, McCann treats Asymmetric as a technology company. This perspective stems from the nature of cryptocurrency itself - programmable money that requires a deep understanding of technology to navigate effectively.

"The way that I kind of viewed asymmetric as an investment firm was not as an investment firm. It's as a technology company," McCann explained. "And crypto is programmable money. You should probably be able to program if you're going to do well in this space."

This technology-first approach permeates every aspect of Asymmetric's operations, from onboarding new limited partners through automation to developing proprietary software for portfolio and risk management. By leveraging technology in innovative ways, Asymmetric has been able to gain a significant edge in the competitive world of crypto investing.

Risk Management and Trading Strategies

Another crucial element of Asymmetric's success lies in their approach to risk management. Unlike many crypto funds that are long-only and often subject to significant drawdowns, McCann emphasizes the importance of managing risk in a highly volatile asset class.

"A lot of funds in the space are long only, not me. I don't think holding an 80 or 90% drawdown is acceptable," McCann stated firmly.

Instead, Asymmetric employs a range of strategies to express their market views, including the use of options structures for fixed-risk short positions. This approach allows them to potentially profit from market downturns without exposing themselves to unlimited downside risk.

The Importance of Macro Perspective

McCann's approach to crypto investing is heavily influenced by his macro perspective. He emphasizes the importance of understanding broader economic trends and how they might impact the crypto markets. Currently, McCann sees several factors aligning that could be bullish for crypto:

1. Employment data rolling over, potentially leading to Fed rate cuts
2. The upcoming US election year, which typically sees markets getting "juiced"
3. Signs of increasing global liquidity, reminiscent of the 2016 "Shanghai Accord"
4. Political shifts in the US, with both major parties now showing some degree of crypto-friendliness

"Coupled with the Fed is going to start easing and global liquidity is increasing and it's an election year, et cetera, et cetera, et cetera. So again, we look at this probabilistically at all of these data points together," McCann explained.

Why Solana Stands Out

When asked about his focus on Solana, McCann highlighted several key factors that make the blockchain stand out:

1. Technical Advantages: Solana's focus on high throughput and low transaction costs makes it more suitable for a wide range of applications.
2. Developer-Friendly: Unlike some other blockchains where every line of code costs gas, Solana's architecture is less restrictive for developers.
3. Cultural Relevance: Solana has made efforts to engage with popular culture, appearing at events like Coachella and Lollapalooza.

"I think Solana did a very good job in the early days of embracing culture, like trying to get, you know, they were at like Coachella and Lollapalooza. And they were trying to do cool things," McCann noted.

The Intersection of Technology and Culture

McCann emphasized the importance of cultural adoption in driving the success of new technologies. He drew parallels between the cultural adoption of Twitter and the potential for crypto, particularly Solana, to achieve similar mainstream acceptance.

"I firmly believe, and I think there's plenty of evidence to support this that when culture adopts a new technology, it's a wrap. Like that's done. Like it's a, it's a thing now," McCann stated.

This cultural perspective, combined with Solana's technical capabilities, forms the basis of McCann's bullish outlook on the blockchain.

Looking Ahead: A Bullish Outlook

Based on the combination of macro factors, technological advancements, and cultural trends, McCann presents a decidedly bullish outlook for crypto in general and Solana in particular. While he's careful to note that his comments are not financial advice, the enthusiasm in his analysis is palpable.

As the crypto market continues to evolve and mature, the insights provided by experienced investors like Joe McCann offer valuable perspective for those trying to navigate this complex and rapidly changing landscape. With its blend of technological innovation and cultural relevance, Solana appears well-positioned to play a significant role in the next phase of crypto adoption and growth.

The Evolution of Crypto Investing

McCann's approach to crypto investing represents a significant evolution from the strategies employed in previous market cycles. He notes that in the past, simply investing in every Layer 1 blockchain project could yield impressive returns. However, the current market landscape requires a more nuanced and technologically sophisticated approach.

"The previous kind of VC funds that kind of became hedge funds, because all of a sudden they were like, shit, we've got all these tokens. What are we going to do? They, like in a lot of cases, and I take nothing away from those guys, like they paved the way for me, right? Like kudos to you guys doing this stuff early and having conviction. But the last, the last like real cycle of early stage investing, you could kind of just have invested in every L1 and like 100 extra fund, you know? That's not the case anymore," McCann explained.

This shift in the investment landscape has necessitated a more strategic approach, combining macro analysis, technological expertise, and cultural awareness. Asymmetric's success demonstrates the potential of this multifaceted strategy in navigating the complex world of crypto investing.

The Role of Options and Derivatives

One of the key differentiators in Asymmetric's approach is their sophisticated use of options and derivatives. While many crypto funds focus solely on spot trading or simple long/short positions, McCann's team employs a range of financial instruments to express their market views and manage risk.

"We face dealers. So this is very tradfy in nature where we have broker dealers that we have relationships with and have agreements with that we trade with. And so it's quite literally a telegram chat where we're like, we want to buy this call spread or whatever and they go back and forth and we end up putting the trade on or not, right?" McCann revealed.

This approach allows Asymmetric to take more nuanced positions and potentially profit from market movements in either direction, while still maintaining strict risk management protocols.

The Importance of Risk Management

Throughout the interview, McCann repeatedly emphasized the critical role of risk management in Asymmetric's strategy. Unlike some funds that may be willing to stomach significant drawdowns, Asymmetric has built-in safeguards to limit potential losses.

"Asymmetric, like we have the hedge fund, like it's limit is written in our limited partner agreement that we will never go above one X leverage ever, which means if we have a hundred billion dollars, the only way for the fund to go to zero is that if we're a hundred percent invested and every single one of those investments goes to zero, then the fund is done, right? We don't use leverage because leverage is the grim reaper," McCann stated firmly.

This conservative approach to risk management, combined with their sophisticated trading strategies and macro analysis, has allowed Asymmetric to achieve impressive returns while potentially limiting downside risk.

The Macro Environment and Crypto

McCann's analysis of the current macro environment provides valuable context for understanding the potential trajectory of the crypto market. He points to several key factors that could drive crypto adoption and price appreciation in the coming months:

1. Potential Fed rate cuts in response to softening employment data
2. The historical tendency for markets to perform well during election years
3. Signs of increasing global liquidity, reminiscent of the 2016 "Shanghai Accord"
4. Shifting political attitudes towards crypto in the US, with both major parties showing some degree of crypto-friendliness

"You put all this together, it's time to cut. Now, in addition to that, we wrote about this in our piece back in 2016, when Janet Yellen was actually the head of the Fed, she's now the head of the treasury, she flew out to Shanghai and sort of met with a number of the central bank governors there within the region. And even though they won't admit it, it's called the Shanghai Accord for a reason," McCann explained, drawing parallels between past economic events and current conditions.

The Cultural Dimension of Crypto Adoption

One of the most intriguing aspects of McCann's analysis is his emphasis on the cultural dimension of crypto adoption. Drawing on his diverse background in technology, finance, and creative industries, McCann sees the intersection of culture and technology as a critical factor in driving mainstream adoption of crypto.

"I've been involved in like the creative and like all art sides. I think I was the CTO at, you know, at one of the top ad agencies in New York city. Um, so having that exposure to culture and pop culture and I don't know, the creative side of, of humanity, um, is not really a thing that they teach you at business school. You know, it's, it's just not. And so I think that's actually an edge in something like crypto because crypto is this incredible, like, of culture clashes," McCann explained.

This cultural perspective informs McCann's bullish outlook on Solana, which he sees as being particularly well-positioned to engage with mainstream culture and drive adoption.

Solana's Technical Advantages

While cultural factors play a significant role in McCann's bullish stance on Solana, he also emphasizes the blockchain's technical advantages. Solana's focus on high throughput and low transaction costs makes it particularly well-suited for a wide range of applications, especially those that require frequent, low-value transactions.

"If you're going to have a technology that's going to enable a broader spectrum of applications and use cases to be built on it, you probably need something that's fast and cheap. You know, not rocket science, but like if you're waiting 10 minutes on Bitcoin or two minutes or a minute or 10 seconds or whatever it is on Ethereum, but then it's also like, I don't know, it's 50 bucks or $3 or 500 bucks. Like that's just not going to ever work. It's never going to work," McCann argued.

This combination of technical capability and cultural relevance positions Solana as a potential leader in the next wave of crypto adoption, according to McCann's analysis.

The Future of Crypto Investing

As the crypto market continues to evolve and mature, the insights provided by experienced investors like Joe McCann offer valuable perspective for those trying to navigate this complex and rapidly changing landscape. The success of Asymmetric demonstrates the potential of combining sophisticated financial strategies with deep technological understanding and cultural awareness.

Looking ahead, it seems likely that successful crypto investing will require an increasingly multidisciplinary approach. Investors will need to understand not just the technical aspects of blockchain technology, but also the macroeconomic factors that drive market movements and the cultural trends that can fuel adoption.

Conclusion

Joe McCann's insights provide a compelling perspective on the current state and future potential of the crypto market. His blend of technical expertise, macro analysis, and cultural awareness offers a unique and valuable viewpoint for anyone interested in understanding the forces shaping the crypto landscape.

While McCann's bullish outlook on Solana and the broader crypto market is certainly exciting, it's important to remember that all investments carry risk, and the crypto market remains highly volatile. As always, potential investors should conduct their own research and consider their personal risk tolerance before making any investment decisions.

Nevertheless, the success of Asymmetric and the depth of McCann's analysis suggest that we may be entering a new era of crypto investing - one that combines sophisticated financial strategies with deep technological understanding and cultural awareness. As the crypto market continues to evolve and mature, this multifaceted approach may well become the new standard for success in this exciting and rapidly changing field.

Facts + Figures

• Asymmetric was ranked as the #1 hedge fund across all asset classes globally for the trailing 12 months from March to March.
• Joe McCann views Asymmetric as a technology company rather than a traditional investment firm.
• Asymmetric uses automation and proprietary software for onboarding new limited partners and managing their portfolio and risk.
• The fund employs options structures for fixed-risk short positions to manage risk in the volatile crypto market.
• Asymmetric has a limit written in their limited partner agreement that they will never go above 1X leverage.
• McCann sees several macro factors aligning that could be bullish for crypto, including potential Fed rate cuts, the upcoming US election year, and signs of increasing global liquidity.
• Solana's focus on high throughput and low transaction costs makes it suitable for a wide range of applications.
• McCann draws parallels between the cultural adoption of Twitter and the potential for crypto, particularly Solana, to achieve similar mainstream acceptance.
• Asymmetric's trading involves working with broker-dealers through Telegram chats to execute sophisticated options and derivatives trades.
• McCann emphasizes the importance of cultural adoption in driving the success of new technologies in the crypto space.
• The fund uses non-deliverable forwards (NDFs) and on-chain trading, particularly on Solana, due to its high performance.
• McCann points to recent political shifts in the US, with both major parties now showing some degree of crypto-friendliness.
• Asymmetric's success demonstrates the potential of combining macro analysis, technological expertise, and cultural awareness in crypto investing.

Questions Answered

What led to Asymmetric's success as the #1 hedge fund?

Asymmetric's success can be attributed to their unique approach of viewing the fund as a technology company rather than a traditional investment firm. They leverage automation and proprietary software for onboarding and portfolio management, and employ sophisticated trading strategies including options and derivatives. Their focus on risk management, with a 1X leverage limit, and their ability to synthesize macro trends, technological understanding, and cultural awareness have all contributed to their top-ranking performance.

How does Asymmetric manage risk in the volatile crypto market?

Asymmetric manages risk through several strategies. They use options structures for fixed-risk short positions, allowing them to potentially profit from market downturns without exposing themselves to unlimited downside risk. The fund has a strict 1X leverage limit written into their limited partner agreement, ensuring they can't lose more than their invested capital. They also employ sophisticated risk management software and prioritize a balanced approach to expressing their market views.

Why does Joe McCann believe Solana stands out among other cryptocurrencies?

McCann sees Solana as standing out due to its technical advantages and cultural relevance. Technically, Solana's focus on high throughput and low transaction costs makes it more suitable for a wide range of applications. It's also more developer-friendly compared to blockchains where every line of code costs gas. Culturally, Solana has made efforts to engage with popular culture, appearing at events like Coachella and Lollapalooza. This combination of technical capability and cultural engagement positions Solana well for mainstream adoption, in McCann's view.

What macro factors does McCann see as potentially bullish for crypto?

McCann identifies several macro factors that could be bullish for crypto:

1. Employment data rolling over, potentially leading to Fed rate cuts
2. The upcoming US election year, which typically sees markets performing well
3. Signs of increasing global liquidity, reminiscent of the 2016 "Shanghai Accord"
4. Political shifts in the US, with both major parties now showing some degree of crypto-friendliness These factors, combined with the technological advancements in the crypto space, form the basis of McCann's bullish outlook.

How does cultural adoption play into McCann's crypto investment strategy?

McCann places significant emphasis on the role of cultural adoption in driving the success of new technologies. He draws parallels between the cultural adoption of platforms like Twitter and the potential for crypto to achieve similar mainstream acceptance. This perspective informs his bullish outlook on Solana, which he sees as being particularly well-positioned to engage with mainstream culture. McCann's background in creative industries and advertising gives him unique insights into how cultural trends can fuel technological adoption.

What trading strategies does Asymmetric use?

Asymmetric employs a range of sophisticated trading strategies. They work with broker-dealers to execute options and derivatives trades, allowing them to take more nuanced positions than simple long/short strategies. They also use non-deliverable forwards (NDFs) for exposure to tokens they can't directly purchase. On-chain trading, particularly on Solana due to its high performance, is another key part of their strategy. These diverse approaches allow Asymmetric to express complex market views while managing risk.

How does McCann view the current crypto market cycle compared to previous ones?

McCann sees the current crypto market cycle as fundamentally different from previous ones. In past cycles, simply investing in every Layer 1 blockchain project could yield impressive returns. However, the current landscape requires a more nuanced and technologically sophisticated approach. McCann emphasizes the need for a multidisciplinary strategy that combines macro analysis, technological expertise, and cultural awareness to navigate the evolving crypto market successfully.

What role does technology play in Asymmetric's operations?

Technology is at the core of Asymmetric's operations. McCann views the fund as a technology company, leveraging automation and proprietary software for everything from onboarding new limited partners to managing their portfolio and risk. They use advanced data analysis techniques, including training LLM models to provide real-time investment-related data. This technology-first approach permeates every aspect of their operations, giving them a significant edge in the competitive world of crypto investing.