From: thepipeline_xyz
CMS Holdings is a venture capital (VC) firm that specializes in financial services, big data, FinTech, blockchain, and cryptocurrency [00:00:16]. Dan Matuszewski, known as “the M in CMS,” is a co-founder of the firm [00:00:08].
Company Identity and Challenges
The name “CMS” sometimes leads to confusion with other entities [00:00:46]. For instance, there is a large government agency called CMS that handles Medicare services, which frequently results in the firm receiving unrelated emails about lawsuits [00:00:46]. Additionally, another company named CMS recently went bankrupt, leading to further inbound inquiries for CMS Holdings [00:01:17].
Founding and Early Involvement in Crypto
Dan Matuszewski’s journey into crypto began in late 2012 and early 2013 [00:09:24] while working at a hedge fund with Julian, another co-founder of CMS Holdings [00:09:30]. Bitcoin was then viewed as a payments system [00:09:57]. Dan started personal automated trading on exchanges due to market inefficiencies and low aggregate trading volumes [00:10:21].
Key historical points in their early crypto experience include:
- Dominance of Mt. Gox: Mt. Gox accounted for approximately 80% of Bitcoin trading volume [00:10:51].
- Exchange Failures: Many early exchanges like Bitfloor and some Canadian platforms frequently blew up due to hacks or banking shutdowns [00:11:13].
- Mt. Gox Collapse: The collapse of Mt. Gox in 2014-2015 led to a quiet period in the crypto market [00:11:31].
- Career Transitions: Dan worked at Kraken and then Circle during this lull [00:11:51]. Circle’s initial vision was based on a payments system like BitPay [00:10:01].
- Market Lows: Around 2015, daily trading volume on Bitfinex (the dominant venue at the time) was less than a million dollars, leading many to believe the crypto market was over [00:12:37]. Circle even decided to move away from crypto during this period [00:12:54].
The market re-emerged with the popularity of Ethereum (ETH) and the ICO boom [00:13:00]. Until 2016, Circle’s entire business was focused solely on Bitcoin [00:16:04]. The shift occurred when ETH gained significant value and demand from Bitcoin traders, forcing them to include ETH in their offerings [00:16:15].
Kevin (CMS Intern) and the Early Days
Kevin, also known as “@intern” or formerly “@CMSintern,” joined CMS Holdings as an intern during the early days of COVID-19 in early 2021 [00:02:32]. At the time, CMS Holdings was a small team of about seven people and was “drowning” in information flow [00:03:00]. Kevin’s initial internship was part-time while he was still in school, eventually transitioning to full-time [00:03:56].
Kevin’s popular “@CMSintern” Twitter account started gaining traction in the first few weeks of his internship [00:04:08]. Dan was initially unaware Kevin was behind the account until Kevin direct messaged him for approval [00:04:40]. The account’s videos went viral, solidifying its presence [00:05:04]. Kevin acquired the coveted “@intern” handle by contacting a company linked to the previous owner, who hadn’t tweeted in two years, and then arranging a transfer through Twitter [00:05:48].
Crypto Market Evolution
Dan highlights several key differences and similarities between crypto markets then and now:
- Information Asymmetry: In 2015, one could conceptualize everything happening in crypto and knew most traders [00:14:17]. Today, information is monstrous and impossible to track entirely [00:17:03].
- Asia vs. US Markets: A persisting information asymmetry exists between Asian and US markets, with significant projects in Asia (e.g., Ordinals) sometimes having little discussion in the US [00:14:30].
- Altcoin Value: Early altcoins were mostly carbon copies of Bitcoin and lacked real value [00:15:10]. Ethereum’s rise and the ICO boom changed this, allowing other assets to gain value [00:15:46].
- Market Drivers: People often overstate new narratives for market movements, while assets are generally trading with their beta [00:20:11]. Assets that saw harder declines in a bear market tend to rebound faster in percentage terms during a bull market [00:20:17].
Views on Retirement and Wealth
Dan holds a controversial view on “how much is enough to retire” [00:17:28]. He argues that $10 million might not be enough, especially for younger individuals in crypto (median age ~30) who could have 60 years of life ahead [00:17:41]. He emphasizes that expenses, marriage, and kids add up, and people often underestimate their long-term financial needs [00:18:20].
Bitcoin ETF and Institutional Adoption
Dan views the Bitcoin ETF as “very important” [00:23:12] because it opens up passive flows from traditional finance products like equities [00:23:17]. It provides access to a new pool of potential buyers who were previously unable to own the asset [00:23:38].
However, he cautions against extrapolating too much from initial inflows in the first few weeks, as institutional adoption takes time [00:24:09]. He also notes that not all ETFs may get approved, and issues like Grayscale’s potential non-approval could affect pricing and market dynamics [00:25:00]. The competition among providers for assets under management (AUM) will lead to significant advertising, providing valuable non-sketchy exposure for crypto [00:26:42].
Regarding an Ethereum (ETH) ETF, Dan believes it’s likely within a year if the Bitcoin ETF sees success, but he’s skeptical of ETFs for other altcoins like Solana (SOL) in the near future [00:29:01]. The standard cadence for SEC approval seems to be CME futures trading for a year or two before an ETF is considered [00:28:40].
Institutional View of Crypto
Institutions generally view crypto as an uncorrelated asset with Alpha potential [00:30:17]. For large asset managers, Bitcoin can be “shoehorned” into portfolios as a minority position, adding alpha over time to existing fixed income and equity baskets [00:31:16].
Memorable Trading Experiences
Dan describes the COVID-19 market crash in March 2020 as the “craziest period of trading” he has ever seen [00:32:07]. During this time, venues were failing, and counterparty exposure was uncertain [00:32:50]. ETH basis (future vs. spot price) moved by over 20% within half an hour [00:32:38]. This period was characterized by extreme volatility across crypto and traditional finance, with commodities going negative and equities hitting limit down [00:33:16].
Another “weirdest period” was the 48 hours after FTX was officially shut down, where they attempted to strategically lose money in their FTX account to gain it elsewhere, trying to extract value from the exchange [00:33:53].
Trading Philosophies
Dan often cites two key trading philosophies:
- “Hot ball of money”: This refers to capital that moves rapidly between different asset classes or sectors in search of returns [00:34:41]. The concept was historically applied to the Chinese market where money shifted from equities to real estate, commodities, and other sectors [00:35:00].
- “Do you want to make money or do you want to be right?”: This emphasizes prioritizing profitable trades over being fundamentally correct [00:34:45]. The market often acts irrationally, and fighting against it based on fundamental beliefs can lead to losses, particularly in crypto where assets can fly for “no reason” [00:35:24].
CMS Holdings operates without LPs (Limited Partners), allowing Dan to be more vocal on social media without concerns about offending investors or needing to raise capital [00:35:58].
Focus on Parallel EVM: Monad
CMS Holdings has significant interest in Monad, a project in the parallel EVM narrative [00:38:41]. Many people have expressed strong interest in Monad, with a skewed positive outlook (75-80% good) [00:39:16]. Skepticism exists, particularly from Solana (SOL) proponents who might view it as a threat [00:39:33]. The pitch for Monad is “compelling and interesting,” but the market is waiting for the technology to go live and prove itself [00:39:46].
Historically, technical people tend to be skeptical of new innovations, as seen with early Bitcoin developers disbelieving Ethereum, and Ethereum proponents questioning Solana’s scalability [00:40:31]. Kevin, who joined Monad after working at CMS Holdings, saw its potential as a “really good idea that moves crypto forward” [00:42:55]. The name “Monad” (or “Monad”) has both American and UK pronunciations, and its community has embraced the “Nads” nickname [00:43:56]. Keone Hon, the founder of Monad, is highly respected, having previously led Jump’s HFT team [00:46:00].
Final Advice
Dan offers two pieces of advice:
- Avoid Excessive Leverage: Leverage in crypto markets can lead to severe losses, as seen during the 2022 downturn where lenders failed, forcing unwinding of positions at inopportune levels [00:48:26].
- Trade Less: People often “undo their own right decision” by trading too frequently [00:49:51]. Sometimes, simply holding a position is more effective and less stressful than active trading [00:49:15]. The media often highlights the few who succeed with leverage, creating a selection bias that obscures the many who lose [00:50:16].