Source: TradingView, CNBC, Bloomberg, Messari
Middle East War Doesn’t Matter For Markets
Oil was up. Gold was up. Treasuries were up. Stocks and crypto were down. That’s a familiar response to a Middle East war, but it won’t last. It never does. Knee-jerk, algo-driven responses react to fear, but almost all Middle East tensions retrace within a few days. I would expect that to happen again this week, but we’ll see.
But while Middle East trades are just that, short-term trades. Fundamental value investing in crypto appears to have real long-term legs.
Over the past seven years, the digital assets space has evolved at an unprecedented rate. We've watched narratives explode overnight, capital flood into sectors with unclear long-term viability, and both retail and institutional investors chase the next “big thing.” But blockchain integration via tokens hasn’t created new forms of value – the same three forms of value still exist, regardless of what instrument you choose to invest in.
There are three forms of value:
- Financial value - Similar to present value math for bonds and equities, an asset's financial value is driven by an entity's cash flows and the promise of distribution of these cash flows.
- Utility value - The ability to spend or use this asset. For example, airline miles, Starbucks points, tokens used to pay for gas, tokens that can be used as collateral, etc.
- Social value - From meme stocks to Nike shoes to the incredible enthusiasm and staying power of blockchain communities, there is value in “being a part of something cool”. The feeling of common affection for something is a durable source of motivation, far more so than communities of critics who typically dissipate before long because it’s not that fun spending your time hating something.
While each phase of the market's evolution has played a role, it’s becoming increasingly clear: value investing will define the next era of digital assets.
Social and Utility Investing: The First Waves
For years, social investing dominated headlines and capital flows in the digital assets space. Tokens like Dogecoin and Shiba Inu gained traction not because of what they did, but because of who was talking about them and how loudly the community could shout. The speculative mania surrounding these assets generated eye-popping short-term returns, but most struggle to sustain long-term value unless they incorporate utility and financial features over time (as the TRUMP token did with the POTUS dinner).
Next came utility investing—a more logic-driven framework. Investors began pouring billions into Layer-1 (L1) blockchains and infrastructure projects, betting that broader adoption would eventually justify sky-high valuations. By late 2021, there were over 50 L1s with multibillion-dollar market caps. Many of them—like Near Protocol, Algorand, and Cardano—struggled to attract meaningful developer activity or sustained user growth. TVL (Total Value Locked) became the go-to metric, even as many platforms saw usage fall 80–90% from their peaks.
Both social and utility investing brought important innovations. But as standalone frameworks, they’ve proven to be short-sighted. Neither community hype nor unproven functionality provides a strong foundation for sustainable growth.
The Quiet Rise of Financial Value Investing
Today, we’re seeing a clear shift in mindset. Investors are asking more challenging questions and seeking assets that resemble traditional financial instruments. As such, the industry is attempting to value tokens based on traditional metrics such as cash flows, earnings multiples, sustainable tokenomics, and governance alignment.
When I first entered the industry in 2016, value investing opportunities were scarce. One of the first to break through was Bitfinex’s LEO token —a standout example of applying traditional value frameworks in a digital asset context. In 2019, following an $850 million shortfall exposed by a NYSAG lawsuit, Bitfinex issued the LEO token to stabilize its balance sheet. Structured more like a distressed debt rescue financing than a speculative token sale, LEO provided investors with real upside via revenue-based buybacks, downside protection through recovery-linked payouts, and utility benefits on a top-tier exchange. With measurable cash flows and aligned incentives, it was one of the first digital assets evaluated on fundamentals, not hype. Naturally, almost ALL crypto investors and VCs ignored this because it didn’t fit the Utility Value / Metcalf Law metrics that they had all convinced themselves mattered.
Fast forward to today, and we're seeing similar dynamics emerge with Hyperliquid (HYPE), Maple Finance (SYRUP), Maker Dao (MKR) and a host of other DeFi and DePIN applications. This isn’t a momentum play—these are fundamentally sound protocols and companies generating real, consistent revenues. Hyperliquid has built one of the most capital-efficient and sustainable business models in DeFi, and the HYPE token reflects this strength. It’s not a governance stub—it has structured, transparent value accrual tied directly to platform usage, with incentives designed to reward long-term participation. There are no inflated emissions or ambiguous roadmaps—just real economic activity, fee capture, and a clear plan to return value to tokenholders. That's value investing in action.
Why Value Investing Matters
This shift toward value investing is more than a change in asset selection—it’s a signal that digital assets are maturing. It forces teams to think beyond token launches and incentive programs. It encourages the development of sustainable business models, fosters long-term planning, and promotes alignment between investors and users. It also encourages teams to engage with liquid fund managers and large, crypto-native retail investors, rather than just venture capitalists.
It also opens the door to institutional capital. Pension funds, endowments, and sovereign wealth funds aren’t chasing the next memecoin, but they are increasingly focused on assets that generate yield, cash flows, and governance rights. Firms such as Fidelity Digital Assets, Franklin Templeton, and BlackRock have already begun integrating these principles into their cryptocurrency strategies. Their interest lies in “crypto with cash flow,” not just crypto with a community.
Regulatory Headwinds Slowed Value Investing
One reason it has taken so long for value investing to gain ground in crypto is simple: it was discouraged by regulators. Under SEC Chair Gary Gensler, the agency has aggressively targeted projects that return value to token holders, labeling many as unregistered securities. This created a chilling effect. Projects that might have shared profits or executed buybacks pivoted toward utility narratives or community-driven models to avoid scrutiny. While rooted in consumer protection, this stance slowed the development of value-aligned, financially sound protocols.
But crypto is growing up before our eyes. As the hype cycles fade and the market matures, fundamentals are beginning to matter. Social and utility investing aren’t going away—but they’re no longer enough. The next generation of investors wants more than just a story. They want assets backed by cash flows, governance rights, and real economic value.
Value investing isn’t just a trend—it’s the next phase of digital asset evolution.
