See all Web3 Breakdowns transcripts on Applepodcasts

This show is sponsored by OKEx. Want to stop paying trading fees? You can now trade for free for 2 months with OKEx. Over 20 million traders and institutions choose OKEx when they want to trade. And you can join them by signing up at OKEx.com slash landing page slash OKEx trader series to start your 2 months of fee free trading today.

This is Web3 Breakdowns. Web3 Breakdowns is a series of conversations exploring innovation in the decentralized internet. Each episode, we will focus on a different topic. We will cover NFT projects, crypto assets, blockchain-based protocols, and businesses being built with Web3 architecture. We will talk to founders, artists, investors, and influencers to understand this emerging ecosystem.

Come join us down the rabbit hole. To find more episodes, transcripts, and a library of content to continue your learning, visit joincolossus.com. All opinions expressed by hosts and podcast guests are solely their own opinions. Hosts and podcast guests may maintain positions in the securities discussed in this podcast. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.

This is Eric Golden, and my guest today is CL207, also known as CL or Cap, 1 of the most popular anonymous accounts on crypto Twitter. I have followed him since I got into crypto and like many have always wanted to learn more about the person behind the account. CL is actually academically trained in chemistry and had no finance background before he began trading crypto. He made no money for 2 years, but over time has evolved into an extremely thoughtful and intelligent trader. We start this conversation with 1 of the weirdest and most fun backstories we've ever had on the show.

We then dive deep into CL's trading journey and bring his process to life with examples. We end the conversation on a variety of topics like fashion, anonymity, virtual reality, and more. Kat is a highly original and interesting thinker. Talking to him was an absolute blast. Please enjoy this episode of CL.

So I'm very excited to have CL207, also known as Cat or CL, as my guest today. For people that are listening to the audio version, I'm talking to an animated cat in a hazmat suit, and I couldn't be more excited. The world brings you in really funny ways to what you're doing. So, Cat, the first question I wanted to ask was, we did as much research as we could, I followed you for as long as I've been in crypto, but I was trying to figure out where CL207 came from, and I believe CL20 is a explosive of some sort, a chemical explosive found at China Lake by the Navy in California. That's as close as I got to try to figure it out, and I'm not trying to dox you, but I thought a fun place to start would be, who was Kat before Kat was created?

Where were you before crypto began, and then where did this idea of creating an avatar come from?

Creating an avatar is quite a common thing amongst streamers who want to stream anonymously because a lot of them get stressed out putting out their real face because then they got to look good, they got to make sure their hair is not fucked up and if they're a girl they put makeup that takes an hour for them. So it gets quite emotionally draining to do that for hours on a daily basis. This thing started and then it's more like fantasy. It's cool. So just like the online world, I got this too.

But the origin was, I believe from 2019, another big trader called Light Crypto, you probably know him on Twitter. He once spammed in my DM a bunch of cat pictures and there's a few levels of story to this. I was like, you know what, this is what I always wanted to be for some reason. So I was like, fuck it. Let me copy paste this picture.

It's my profile picture now. It evolved over time. So COVID came and all these people were like putting on hazmat suit. I got 1 and it was yellow. I actually had, what do you call it, lab coat.

The suit swelled on me. I like it. I'm going to keep it forever. So then I got artists to draw this thing in a nicer way. And then it just kept evolving until now.

But going back to the chemical, like I used to be a, let's just say underground chemist. I don't have a degree. I don't have a certificate. I actually failed chemistry for a bunch of reasons. But at the same time I do have, I hate bragging, but I would say they're quite high level writing and actually published academic journals on topics on like, yeah, explosives, because, you know, I love to blow things up.

I was pyromaniac as a kid and I was always interested in these high explosives. I was doing a lot of research into safer and more powerful explosives because it's a direction that field was going into while I was studying. It's commonly used in like rocket fields and all kinds of stuff. It was just a passion of mine before crypto. So I did it out throughout high school and college, wrote about it.

And then 1 day on a forum, like an amateur chemistry forum, and I say amateur because no 1 there has a real name, blow shit up

85

or Some shit like that. And 1 day, someone DM me on a post I made of synthesis of a theoretical compound that might be promising. And he's like, yo, this is cool. Like, what do you do? Just to introduce myself, I've worked at China like before.

And now I'm a professor at a big school in United States. And I told him, I'm just like 18 years old, fresh out of high school. And he's like, oh, no way, like come study under my department. And I was like, oh my God, this is like my dream. I can't believe this guy's legit.

I didn't end up actually going and pursuing that PhD right after undergrad. I was like, dude, I'm poor as shit. I need to worry about what if I can still Uber Eats next month. So I was like, what can I do to make money? I've heard about a crypto maybe a year before I got into trading.

I made no money for 2 years, but I think the luckiest part throughout my journey was my mom never really pressuring me. Like, dude, son, go get a real job. The fuck are you doing? Loser. She was just like, okay, go do whatever you're doing.

And after 2 years I became consistently profitable. I found a bunch of stuff in the market. It just always worked. It still works today. I just trade based on positions and a lot of people being squeezed up and down this market.

First of all, it sounds like you have a fantastic mom who lets you kind of follow what you're looking for, which is pretty far ranging from chemical explosive expert to trading crypto. In the crypto market, as you entered, you've said it before that you were very poor, and this is all about trying to bootstrap and make money, and it didn't work for 2 years. What gave you the conviction to stick with it? I don't think you trained in finance or you didn't work for anyone. Were you just alone trying to figure this out?

Yeah, so in 2018, I got in, bought some Bitcoin, swapped to some shitcoin, trying to make more Bitcoin. It went okay, you know, I didn't lose much money, I didn't make much money. And then I was like, you know, this is some weak stuff. I bought Bitcoin at like 3, 000, it's now 12, 000. This is like mid 2019 now.

And I'm still poor. I bought like 1 Bitcoin. My net worth went from like 3000 to 12, 000 and now I got to sell this stuff so I can buy some food again. So I was like, this is not going anywhere. Like buying Bitcoin, waiting for it to go up sucks.

I need to like actually make a lot of money. Has to go to like 10 million bucks in the next month. So I can keep feeding myself. So it just sucked. I logged onto BitMEX.

BitMEX had a terrible reputation because no 1 knows what they're doing. Everyone is like, yeah, I made a BitMEX account and I lost it all. Yeah, yeah, me too. Yeah, me too. Yo, I was like, you know, let me give it a try anyways.

And I lost a few grand, whatever I deposited. And I'm like, well, fuck, this is hard. I had just high curiosity for why price moves 1 way or another. And I just kept digging like, okay, who bought today? Why did this go up?

And I was like, go through all the exchanges, look at all the trade history. Kept digging. Why every move happened? What's the deeper level? Like why did they buy?

Or where did the buying happen? Can we front run this while it's happening? Can I gain a few bips on leverage if I see like a big consistent buying? Yeah. So I kept going deeper and deeper.

And I think after a while, it just clicked where I'm like, wow, all the trading actually happens on BitMEX back then, because that's where all the volumes are, all the open interest. People are gambling 50 million, $100 million positions over if the next Coinbase buyer is going to buy a million or sell a million. So I was like, this is nuts. People are gambling a crazy amount. And then later on realized, wait, the price always go against like the majority.

If everyone was longing for like weeks on weeks, and then it tend to just start dropping because, you know, ultimately they got to close their positions and vice versa. If everyone was just so bearish, you see spot selling and then you see futures shorting and it's like, okay, more likely than not, you know, these shorts are going to close, it might just bounce a bit. So yeah, over time, I think I just learned how it works. And honestly, the best part about trading Bitcoin was that there wasn't fundamentals. There wasn't going to be like an earnings report that's like, oh, it's so bad that even though everyone shorted, it kept going down because the earnings sucked so bad.

So there was no fundamentals and the literal fundamental was only people's positioning and just general market sentiment. So I thought this is the greatest video game on earth. So I just did that all day, every day for like years. I would literally wake up, do this thing in my room and then pass out. In my dreams, I'd be dreaming about charts going up and down.

And then I woke up and do this again years go by. And I think I got better at it over time. I think ever since I started becoming quite profitable and I cashed out to buy some stuff, I've actually never had long-term drawdowns.

It's impressive. During that period, because I've heard rumors about this with you, that some people, when they get into trading, they're super curious, just like I was when I was a kid looking at like, oh, I bought a stock. And I remember as a kid, I told my father, someone bought me a stock, and I'm like, this is just legalized gambling for adults. And they're like, no, no, no, it's investing. And I ended up going to this rabbit hole, and I read all these investment books and went into finance, but it was a question to me of the differences between gambling, speculation, and investing.

And as I was listening to you waking up, going to sleep, dreaming about charts, the thing I've heard about you is that you didn't build quantitative systems or an algorithm that you literally just trained yourself to be staring at charts. And that your edge is something intuitive that you've built over time. It's not like a thing of code you're running. Is that true?

It's a bit of both, a bit of intuition for sure. I think everyone that trades, they built up this intuition over time. Something that's hard to describe, but the more quantitative part is just watching orders come in. And then I try to memorize every position that I've ever opened, which is maybe a bit insane. I would just stare at BitMEX, open interest ticks up a bit, this guy bought, okay, he fucking long.

And then like, I'll memorize that position. I'll try to imagine where he might invalidate, where he might take profit. And then I try to remember throughout the days, damn, everyone's been buying for like the last 3 days. Open interest is skyrocketing. Spot haven't bought much.

So is this rally all say futures driven? And let's say this happened before. I can back test. It's not like a real back test. It's just like a intuitive back test.

Last 4 times this happened, it haven't gone very well. So let me short it more likely than not. And I try to manage my risks. I just have a mental risk model, really. If it goes up too much, I'll just be wrong or something like that.

And I probably risk approximately this amount on this trade and that's it. So A lot of it is kind of intuitive in terms of risk management, where I should enter. But there is also the quantitative part, which is how much people are paying to keep their positions open. Because in crypto, there's no fundamentals. As too much buying happens in futures, too much selling happens on futures, They tend to drive the lending rates up and down.

How much does it cost to borrow another dollar right now to buy more crypto? Or how much does it cost to borrow more Bitcoin right now to short more Bitcoins? And These are very powerful information to have, and these are all public information. I think there's a bit of both to it.

Just double-clicking on that, because I know that as you started kind of sharing your knowledge, you were 1 of the experts or people that Others would look to about how futures worked and options markets. And so you were trying to build basically a profile of buyers and sellers, understand how the market was positioned and how you want to be positioned against it. When someone puts a futures trade on, there's someone buying and there's someone selling. So in your example, were you looking at funding rates? Everyone wants to know that information, but that's not always easily available.

So how did you put that together?

First, every long people say there's a short. In reality, people that make the market, they're not gonna be degenerates and be like, okay, if everyone longs, I'm just going to be short against them. That's crazy. They'll blow up sometime if they just took on these directional risks. So they will try to obtain the same amount of spot against their shorts.

I think most of these firms are delta neutral or if they are exposed, it's kind of short or very short amount of period. So I'm not a market maker, but I know they don't take crazy amounts of risk over like anything more than hours or days. So if you long, there is a short, yes, but that short is backed up by a real spot purchase because you bought futures, which is backed up by spot. So the buyer have invalidation, the buyer have a liquidation level or the buyer can be buying on leverage. A while ago, there was like a profile of average amounts of leverage use.

5X is popular, 10X is popular. So, you know, if everyone long 10K, if we go to 9K, you can expect a lot of people to get liquidated who's on 10X. Even if they're not on 10X, they're probably invalidated and they're just going to sell. So a lot of these is, I think, intuitive, where people get invalidated, and there's a lot of quote-unquote stop-loss hunting, whatever bullshit terms people try to come up with, but they are real. People can't take so much more loss after price go against them for a certain amount of time.

I've heard you in the past talk about invalidation, the seasoning of a position, how long or when do people own it, like what is their price? So an interesting way to ask this would be, You were in Japan on a vacation, having a lot of fun, and you didn't check the screens for a week. If I brought you back, and I said, Cat, I wanna get a pulse of what's going on in the market, where would you start to start putting that picture back together, if you hadn't seen it for a while?

I try to not just straight up trade unless it's somewhat stupidly obvious, but that's kind of rare. But I would first look at price of everything and then be like, okay, cool. Maybe the biggest caps like Bitcoin, ETH, Solana, stuff like that. And then I would pull up Binance futures, Bybit, maybe OK, X. These are some of the biggest venues right now.

I would say most price are driven by these 3 venues. For Spot, definitely also Coinbase. So I try to go back, see, look at these trading. And sometimes it's not as simple as just how much buying, how much selling, because the buying can be hidden in the form of a bid. And then on the trade history, it would show up as a sell just because they kept chasing a bid.

So it takes a while to like go through all of that and be like, okay, that was actually a bid, even though people were selling nonstop on Coinbase, but that was just bids chasing and refilling and chasing. So kind of go through all of that and then go on futures. Is lending rate jacked up? What made people go long? What made people go short lately?

Was there like some kind of narrative? Is Bitcoin getting banned for the 10th time? Or is like BlackRock falling? Let's look at a bit of everything, get an idea.

Yeah, so we had it today. So right before we were supposed to talk, the Wall Street Journal published a headline, which is a really weird headline that the SEC said BlackRock and Fidelity ETFs might have had inadequate information. The funny thing about that is, and I posted this on Twitter, if you read it, which I've never seen this happen before, so maybe I missed this, But it was kind of giving an answer to the test, which said they wanted them to declare where they were gonna trade. So I don't think it was as negative as the market thought, but the market moves rapidly. And something like that, we had to delay for you to do some trading.

Does that get your attention? And then a follow up to that is like, what is your average holding period? Is it you're in and out in a couple of minutes, hours, days, weeks, months.

Honestly, if you're trading futures, no 1 do month. If you do months, chances are a price have gotten up and you haven't taken profit and then gone against you to the point you had to close. Month in crypto is crazy. I would say the average position holding for the average traders days, weeks, which is why this market is so crazy. I believe it's similar in stocks and the analogy that people buy for a short term or midterm gain, They don't think in decades, unless it's some retirement dude that's just like, yeah, I'm just going to buy Apple for the next 10 years.

There is that kind of people in crypto, but like their flows are not strong enough to be like pushing price up 5% up and down each other day. These are all short-term traders, probably on leverage, probably spending a lot of premiums on options, just gambling on these stuff. Maybe they're gambling, maybe they're like somewhat informed. I like to think they're not super informed, which is why I'm also pretty short term where most of the action happens and where most of my money was made, just somewhat pretty short term days, hours, something like that, yeah.

So walk us through today to the extent you can share. It's a really volatile day. What did Cap's trading day look like today?

Well, I woke up and Bitcoin was already like, that move already happened. It dropped like 4% or something just because they're like, oh, this filing looks inadequate. It's a great reason to sell, especially if you saw the news first, if you're long on your own leverage, you're like, dude, no way. You're holding that risk through the next few hours. That's just crazy to hold if you were leveraged.

So it does make sense price drop and some alts have rallied after that move, which also kind of makes sense. Alts have been crushed against Bitcoin in terms of their ratios. And it's because Bitcoin just had such a great narrative for you to just hold it. Why am I bidding this shit coin if the legit people are trying to get an ETF going? So I was trying to bid ETH, and by the time I brushed my teeth, it was already up another half a percent.

I went to Cumberland, and I'm like, what are the calls right now? How much does this cost? After I code, I price went up another .2%. I'm like, dude, This is a crazy day. I kind of just gave up buying calls and I bought a bit of perps and called it a day.

That was today.

I want to talk about your track record of trading. So I know that you've done very well at this, but from following you, it seems like there were times you started with nothing and then you got to extreme levels of wealth and then maybe it was FTX or other situations that you lost a lot of it and you built it back up over time. I'm curious what you've learned from those ups and downs and then How does that make you think about risk today? The idea of using leverage or exposing yourself to a big drawdown.

First time I lost everything on whatever I deposited was BitMEX. Back then, that was where all the liquidity is and all the trading happened. So, I think in 2018, 19, I've deposited like 2 grand. You know, I would do quite well and then just lose it all again, back to 2 grand. And that's happened like 5 times.

And I'm like, Jesus Christ, maybe I'll just never make it. You know? And I noticed sometimes I just take positions randomly. I'm impatient or that kind of stuff. I'm betting on some data point that's so trivial.

Why am I betting against 5 traders when I could be waiting for like 50 big traders to short before I long? And just like giving up on your position. For a while I was like, nah, this has to go back up. Over time I've gotten to more used to like, I'm just wrong, I need to accept this and get out. Even if price bounce later, I deserve to lose this money right now for, and deciding to enter this position to not have predicted that market can be more wrong than it is.

Cause that happens a lot. Cause especially in

2021,

I would say a good amount of even retail investors where we were in a bubble, right? It was just the great, I can get another extent buying some low cap shit coin or low cap stock or Nokia can squeeze again, like come on. AMC can squeeze again. Like a lot of this people just wish some bubble lasts longer. They try to wish some extremes go more extreme.

And For the people that bet against it, they think it's already extreme. I think where people get wrecked the most is they don't think how extreme markets can get that can really hurt like someone in size. I've been giving up my positions. If there is this possibility, it can go extremely against me. I try to never take a position where I might just lose it all.

For a while there's this contract on FTX called Move, which is basically like a selling a straddle. Selling a straddle, you can lose everything. I have sold these contracts before. I'm very cautious in validating myself. If there is even a possibility a few traders can get squeezed, that might induce more FOMO buying that might start a whole trend.

I'll just shave that position off right away. Very often I try to never sell options. The power of trends and these herd mentality, it can go very far and you can get really wrecked on betting against these.

I've met traders who have started with very little and made it. I've noticed 2 outcomes, I would say. 1 is they make it and then they lose their desire to take risk because now they have something and they become really afraid. They're driven by the fear of the loss because they've worked so hard to get to that point. And there's another side which is, well, I never had this money anyways, so it really doesn't matter, so they're able to trade very freely.

Do you think that you fall into either of those camps?

More the first 1, I've never worked the job. After college, I just started trading and my mom gave me a few grand to trade. I lost half of that and I was like, yo, can I have a few more grand? They're like, come on. And then she was like, no.

So I was like, fuck, I'm selling my PC to get more collateral. So I ended up trading on a laptop backup. But yeah, so after I did all of that, I cannot imagine losing everything. Then I have to get a job, like, Are you serious? I'm not getting a job.

This is another downside though, because I think once a trader that, especially what I did, I spent years just in my room. I was an actual typical in-sell on Reddit or something. I never left my room. I don't talk to women. I didn't talk to anyone.

I was just like, this is my world. I'm doing this all day, every day. I made some amount that's not bad. You know, I started going out. I socialized, I went to parties, I flew around, I traveled the world.

I'm like, I don't wanna lose this anymore. Sometimes I think about it and I'm like, if I kept doing it, I would've been significantly more wealthy than today, but on the other hand, will I regret it if by the time I'm 40, this is all I did, I didn't do anything with my money, Why do I even have this? I can't tell what I'll feel in the future. At the moment, yeah, you appreciate that I have the freedom to kind of do whatever I want.

That's awesome. So when you tweeted in the past about losing it all or the FTX drawdown stuff, that hurt you, but it never really brought you back down to having to truly start over.

I lost a lot for any normal person, but it's close to 50% of my liquid, which is, that's a lot, so I still don't have to get a job, So I'm still very lucky for that.

You have the freedom to decide what you want to do and where you want to work, which is pretty special. So as you went through this trading growth to get to this point, now looking back on it, was there ever a point where you felt like, you're smart, you worked at a hard science. This is all just randomness, this is just noise, and you get into this analysis paralysis and you think you see stuff, but you're really hallucinating and it's all unknowable. Did you ever believe there was no edge to be found? Or were you convinced if you just kept digging hard enough, you could actually develop an edge to out trade the market.

No, there's always edge for people to be found. These are all not coincidences or anything because people see stuff in the market. In stocks, people would see like, oh, this specific time, weird buying happens and this flow comes from, I don't know where. If it happens every day, if it were like every week or like some rebound, some index related shit. I know a lot of traders have taken advantage of it until it disappeared.

And then they find another weird thing that happens in the market and They're like, yeah, let me do this now. And in crypto, it's more like just pure positioning. Yeah. I sold Bitcoin quite early on into like 2021. I sold a lot at 30 and then sold everything at like 40s.

And then I went to 60. Everyone that's profitable knows, They just know that this edge exists and it might be hard to convince the average new trader because it does seem very random. Dude, how can we just move 10% today? Nothing cost us. And then if you dig deeper, it's like, dude, a lot of people were short or like no 1 had a lot of long exposures.

There was less resistance if no 1 is to take a profit against the move, or if it was shorter than a lot of forced buying happened into like these invalidation levels. So these are all real. It's hard because a lot of smart people are on this. There's no better incentive than getting smart people and then just making hella money. So it's getting competitive, but there is still a lot of edge.

When I think about like sources of information you're taking, I know that you're really obsessed with looking at data and flow or leverage. I also think about information sources like Twitter, which are a huge part of crypto Twitter and then discord, telegrams, private chats. When you think about data, How do you think about where you get the most amount of alpha and edge from?

Oh, actually I've rarely traded off chats just because when I started, I did it all on my own. I did talk to people which helped me shape some views, but ultimately I think most of my trading is around my own mental model. Let me think how market is positioned today. And I would just go through all the exchange, check all the buying, selling, check all the open interest moving up and down, check all the lending rates on these exchanges. And that just gives me a view.

Like I don't need someone to tell me, it's not like rocket science. You might have better insights, you know, if you get a real quant, I don't have someone like that. So I do it on my own. I do think a lot of people trade on narratives, which I really hate because it just induces a lot of one-sided positioning and I'm like dude it's just really hard for me to buy into a position where everyone's also want to position into that position and then it's just like dude it's just so risky 1 bad thing happens and all these people have to fold and you're like racing against each other while prices teleporting against you. So I really hate narrative trading.

And ideally, if you do trade like these shit coins is way more narrative based than I think Bitcoin. You gotta get on these pretty early on, which I'm not gonna try to act like an expert in this. I've never made too much money off trading altcoins. My trading has always been stacking up these couple percentage moves on Bitcoin or Ether.

So when you're looking at the data, which I like, and I like the fact that you do it on your own, because it really allows you to have a clear mind to think for yourself, and you see something. You see that funding rates are offsides and you really wanna go long. Do the chats ever influence you or other people's opinions when let's say a narrative starts to pick up? Does it ever make you question your data or will you get even more conviction that all these narrative following people are idiots and I'm gonna crush them by really going the opposite way because of your process?

There is a bit when I see a lot of bigger traders talk about the ETF, I can tell from the way they're texting each other, they are not long here. So I'm like, all right, screw you guys. I'm buying some calls for now. I don't think it really impacts my decision significantly. Obviously I respect everyone's opinion.

Ultimately, I've always had this very strong belief that if you cannot build your own thesis to why you're getting into a position or you don't have your own ways of trading, then you're just copying others. It just won't go right 1 day. You can't just copy trade GCR only for the rest of your life. You need to know how to do it yourself.

It deeply resonates. This is the best advice I ever got from an animated cat that you should think for yourself. So I appreciate that. Let's move to your switch topics a little bit off of trading. As I can imagine, you were doing this basically 24 hours a day, waking up trading.

I know that a lot of people feel an adrenaline rush from it. There's the thrill, there's the money, there's the prospects of what you could do. But what other things in your life? You talk sometimes about food, about shopping, about travel. I'm curious as you progress as a trader and you've built more wealth, how has your focus and your enjoyment and that risk seeking behavior changed.

Of alts. These kept going up. So they became, let's say it was 2% of my net worth. Now it's like, what, 15%? Like Jesus Christ.

Now I wake up and say, ah, I'm up a Lambo. That's a good start. After I finished breakfast, I was down 2 Lambos and I'm like, dude, what the hell? This is crazy. That morning I was just like, this is disgusting.

Hate that I'm thinking in this way. And it was because I started going out and I realized this is a lot of money. Like, because I had no concept of money, no concept of spending. It feels really fake if you're actually always in your room. And I think it's either really good to realize this or really bad to realize this because if you were just good at trading, it might worth just to stay inside 1 or 2 or 3 more years.

Just don't realize it's real money. You might just keep making more and more. Once you do realize you can do a lot with this money, then I feel like your risk appetite really changes. And I got into like other hobbies. I think fashion's awesome.

Some art stuff is really cool. So, you know, I follow these, I hang out with different kinds of people and I realized these people save 10, 20 bucks to do something else. Or if they can walk 15 minutes, they're not gonna take a cab. And then it's like, wow, I walked to save 20 bucks. Why am I taking risk of significantly more?

So I feel like as you go about your daily life, I think actual normal life that's not just in your room, I think it really gives you this reality crisis about, Wow, this is crazy what you're doing.

You're very passionate about fashion. What is it about that that got your attention? You're kind of talking about being so focused, 24 hours in your bedroom. How did the world open up to you in that way and what is it about fashion that has got your interest?

Try to go date some girls. And then, you know, the problem was first time I meet this girl and I can't describe what I was wearing. Let's just say it's super casual and it's almost like pajamas. And I was in sandals. She didn't shit on me for it.

But later on she was like, you can definitely go buy some nice drip. So I was like, okay, okay. It may be an embarrassment to walk next to you wearing this shit. So let me go buy some stuff. I actually spent a long time, you know, like actually every few days of the week, I walked around random stores browsing.

I always had a strong intrigue into just buying weird stuff and identity because I do think what you wear makes you feel 1 way or another. I was super interested by that. NFTs were booming. People were changing their profile pictures into all that weird stuff. And they're like, ah, this is me now.

And I'm like, I don't like this. I wish people were original characters, just be themselves. And if you want to add additions to your things, that's awesome. I slightly dislike the profile picture NFT trend, but not too against it. Whatever you can do, whatever you want.

Not everyone's super creative. They make up some weird character for themselves. But fashion was like, you're still you, you're adding something, you're changing the vibe of how you feel, how other see you as. So I was super interested by that. I wasn't always into like social sciences, behavior, psychology, or like all that kind of stuff.

But that really got me interested into it because trading is a bit of behavior and why people were changing all their profile pictures into all of this kind of thing. That was a fascinating behavior. I wanted to read about, I wanted to understand it. So it's not directly related, but do you think there's some overlap in psychology of how you want to be shown to others?

I 100% agree. That's actually the part of trading that I like the most. The Data was always like checking, but that part felt as a foundation, but I was most interested in the behavioral, the risk, why people would do what they would do, and the only thing about money introducing markets to it is it made it more tangible. Someone might tell you, I really believe in this, but how much do you believe in it? And if you bet me $1, 000, and that's a lot of money to you, then I really know you believe in it.

So that was the part that I always liked about markets, and your point is interesting, because the PFP thing and people's identity, which we've talked about in the past, My profile is a board 8, but it's a custom 1 that I had an artist do for me. And I feel very similar that making your own avatar is super cool, but it's like sewing your own clothes. It's super unique, it's super original. But going to Gucci, you can feel individual, but Gucci sells that outfit or baton to everyone. But people have the feeling of individuality that they're showing stuff.

And this is me. And so I think that's amazing. It's when the PFP thing happened, I know people, because of the bull market, were obsessed with the prices and people have made a lot of money. What got me so excited about it was the notion that we're in a period of bias and not treating each other equally. If you have an avatar and you're on Twitter, as an example, and you're anonymous, I don't know if you're a man or a woman, I don't know the color of your skin, I don't know your sexual orientation, I don't know your religion, all I know is your thoughts.

And I think that is awesome and fascinating. That I could be like, I really like following this cat, or this wolf, or this ape, or whatever. And I know people thought it was so silly and ridiculous and there are parts of it but I was kind of bummed that we lost that and it was funny because this week dusted that up again. So what's your take on the anonymity piece? Obviously you've done this for a long time.

I could imagine it's tough that you might go somewhere and I won't know it's you, but how do you think about the pros and cons of anonymity in an online age?

It's a bit different for every anonymous character or person or whatever you being you are in the shape of form. A story I wanted to share was, we were in this chat and it was just some traders and fund managers. And then this girl was talking about age and I asked her like, oh, how old are you? And then 2 people from the group messaged me. They're like, dude, you're not supposed to ask a girl her age.

It's so funny that it works because you're a cat and it's not rude anymore. And I'm like, what? I didn't know that was rude. Sorry. And, uh, and I thought it was hilarious that it was more okay for me to ask than someone who had a real picture of themselves to ask that question.

But going back, yeah, there's a lot of freedom in what I can say. And I don't feel like when I go out, people be like, holy shit, it's this dude just because everyone knows him by their face. I don't get that treatment. And if they do know me, I may get a bit of a treatment where it's like, they might be nicer to me. They might be like more enthusiastic to meet me.

I once had a dinner with a big gamer who's also a big streamer called Scarra. We were in LA where a lot of streamers live. Gaming is big. And the dinner, 2 people ran up to the table we were eating at and be like, yo, please let me get a picture of us. And he's like, sure.

Yeah. And they just take a picture and leave no other conversation, nothing else. They just wanted a picture. Immediately he was like, this is super cool when it first started happening, but now it's more of a hassle.

There's a very interesting point that I've known people that went from average like everybody else to making a lot of money and suddenly being famous or they became famous and made a lot of money. 1 of the things I found was like that fame is definitely something that can help you. It can open doors, people know you, you probably can do things and open opportunities. But then there's a point where maybe you get whatever you were after and now you don't want it anymore and you want to turn it off. But the problem was it was the fuel that got you there in the first place.

The fascinating thing about anonymity is if you get there, you never have to give it back because you still have your own privacy. I don't feel odd talking to you. It's a cat with a smiling face and big eyes. It's easy, and I think that for other people, I don't think they'll ever admit that, but you know, talk to a person and you're reading their facial expressions and your brain is calculating a bunch of things. Now, maybe not everyone does this, but is this person interested?

Are they bored? Are they looking at their watch? Do they want to go somewhere? Right now, for the past however time we've been recording, you've been smiling at me with these big cat eyes in a very kind way. It's weird, but it's not as hard or stressful as analyzing all the micro expressions on another human's face and trying to react to it.

I think having this kind of avatar, it allows me to express most of the basic emotions. The face is super complex. You notice a lot of things, like you can tell someone's disinterested and I should really call it. But yeah, I think it allows me to at least express most basic emotions and maybe a bit of micro expression, but I don't think my avatar is refined enough for every micro expression, which I would love to have that made. I think the tech is getting there recently, and I've seen some higher quality, defined, really well-made ones.

I can put the base setting as 1% smiley face. It always appear more smiley. That's just another freedom. You can change a bit of how you look, change smile parameters and all that kind of stuff. So I think it's really free and it's nice.

I don't have to make my hair, make sure I look good on this interview. I don't have to be stressed.

Well yeah, there's this idea of people are always putting on masks when they're talking to people and they're presenting, metaphorically they're presenting, if you wanted to go to a job interview, you might put a suit on, or if you were going on a date, you might try to dress in a certain way. The physical appearance, but then there's also the type of person you are. You really wanna impress the person in a certain way. And there's just something about it that I find fascinating about the PFPs or the anonymity, that I think is a huge, powerful unlock that we scraped on when NFTs came out and then we just kind of moved by it maybe too fast, but hopefully we'll revisit it again. On the topic of fame, your Twitter profile is pretty huge.

You have got a huge fan base, including like Edward Snowden. And I just find it crazy that someone like that's responding to a cat online. So how did the whole Twitter thing grow? How did you become talking with Snowden? Like how did this all happen?

Yeah, I don't know how much I can share with Snowden, but I think I've been always genuine. A lot of people on Twitter has some motive. They're like, I'm gonna make 50 threads about how to make money. And then now I have 50K followers. Now I can get this affiliate shilling, this kind of collab with some weird project.

And they're gonna pay me a big bank, 50 grand for me to talk about their project for 2 weeks. So I think there is a lot of people like that and there's a lot of genuine people. But overall, I tend to think of every field having this distribution of types of people. For me, I think finance is a couple of percentage skew to like slightly more psychopaths, but you always have this distribution. There's nice people, there's bad people, there's people that are not scamming at all, but they are extractive or they're just like normal people.

I've never tweeted any project, even the ones I invested in, like some of them you get something out of like, dude, that's not what I invested in you in for, hate, that kind of stuff. So maybe that's why he once reached out to me and we had this conversation once with Snowden. He's pretty fascinating and I was surprised that he follows crypto Twitter. He first talked to like ZacXBT in his replies and then he was talking to me and then that actually happened right after FTX2. Really brightened me up a bit.

You know, I was like, wow, there's actually people that cares about people here. So that was kind of fascinating and interesting and I don't know, like very honored and thankful that there's even an audience outside that cares about us?

I think that was a question I asked when I saw it. I was like, this is crazy to me that such a big geopolitical figure is following crypto Twitter to the extent that you ended up in this niche of a niche and it's not just the same people talking to each other. Yeah, sometimes it feels quite small. The point you made about finance and the psychopaths trends more towards it's muddy and it's driven, it's very selfishly driven. Do you ever regret not staying in chemistry?

I've thought about a lot of that. I was talking to a friend. Yeah, I won't say his name, but let's say he's in crypto and he's in traditional finance. Whenever he meets someone that had a passion outside crypto, he's like, dude, I hate that you got into this. I hate it.

I hate it so much. You had a real passion for this. You could have built this for SpaceX. You could have helped something real. I do feel that way.

What are we even doing? Like, what's my contribution to society? And I think about it, I'm like, who's my counterparty?

Some of

them are probably broke. It's really a disturbing question to think about. I've tried donating some money to less fortunate or like just people who are passionate about some hobby that doesn't really make much money. In the end, that's not much effort. You know, I just click a button and some money is transferred over.

Like, did I really contribute something? Did I really help the world? I don't think I have too much power to help the world. I'm not that wealthy at all. Honestly, I can't do too much.

I've considered if I should go back and pursue like my older interests. I still love all that chemistry stuff, but yeah, it's a rough question. Ha ha ha.

I think the fact that you've thought about it shows you're definitely not a psychopath. Young people ask this question all the time. People that ended up in finance were usually 1 of 3 categories. The first is their parents pushed them really hard academically to get good grades, to get into a good job, and this was defined as doing a good job. You went to a top school and you worked your way up, and so that was like third to 40%.

And then another group joined because they just wanted to get rich. They wanted to make a lot of money. And that was the next like kind of biggest population is I want to get rich so I'm gonna go to finance. There was a tiny group that said they were like intellectually stimulated just by the idea but I was always small. And there was a group of psychopaths just really loved markets and loved trading.

And if you weren't trading bonds or stocks, you'd be trading Tic Tacs or chickens or apes. It's just into your skin that you love markets and you love trading. And the thing that would end up happening is that the kids that were pushed there by their parents, they would eventually find something else or usually end up miserable. And then the people that went just for money, they would get burnt out. All that was left is this really small population.

And I see it in crypto, but it just feels like a younger generation of people that are going through that same process. Although there's a lot of money in finance, there's a lot of people that are generally miserable because they're chasing a weird thing. And then once they get it, they have this deep reflection of like, that was what I was chasing the whole time. And so I don't think it's uncommon. I think that every person or many of the people that are in my life, I've always asked that question.

Am I just pushing numbers around? Is this really my contribution? This is what I'm going to do. Yeah, that's not uncommon.

I think I've had a lot of crisis over what the heck am I doing, really. Yeah.

That's a good thing. I think that means you're growing as a person, personally. The topic of the Vision Pro Goggles. So everyone's talking about AI and now the virtual artificial reality goggles. I think some of the stuff you've written on it has been great.

I'd say 2 of the things that you've written that I've loved, 1 was about, we can do this 1 first, 1 was about giving your kid money to trade Fortnite skins, hoping they get rugged or deceived online and teaching them how to find first principles information. I don't know if you have KidsCat. I mean, you joke about not having a girlfriend yet, but as a parent, I think that's actually really interesting advice. Where did that come from?

I don't know, I just made it up. Why not? They are gonna have to be interacting with money-related things at some point, And it's like, dude, so much economy is online now. I feel like it used to be cringe if you're like making some videos on YouTube, like you're just a nerd 10 years ago. But now, you know, if you get some views on YouTube, like you get respect.

If you're good at gaming, like you get paid to play games. You have so much status and respect in these wider communities. I do think that's where the world is going. And they just keep trending that way. I think it's really terrible if you restricted your kids into this world.

They're going to have to learn the hard way later on, 1 way or another. And I mentioned that skin example, because I try to buy skins 1 day. And I got scammed. I was buying some league accounts. I just moved to a new region.

I like, I can't be bothered getting a new account, ranking up to 30. And then finally being able to just play normal games. That takes a long time. So I was buying a bunch of platinum accounts. That was my rank in the other server.

So I got scammed and I hated this dude. What a terrible person. But like, obviously, how much does it cost for him to set up a scam online? There's no cost. Was there really any repercussion?

Come on, let's be real. I'm not gonna sue someone over a hundred bucks for a leaked account, nor can I dox them? The cost of attacking and the cost of scamming on the internet is absolutely 0 in my opinion. And the only time you really are in trouble is you did it to a scale or like you did it to a point it got viral, so viral that they have to deal with it. Otherwise it's like a societal problem.

So the cost of scamming is really low. So I really think people should get used to that and just go through this process. I think getting scammed for a hundred bucks, it's not a big lesson. Ever since I've tried to like, think about is this dude legit? It's this forum entirely legit at all.

It's a good learning process for just everyone to go through, especially if you're gonna be dealing on any money on the internet.

The Vision Pro, you've become obsessed, you're extremely bullish on virtual reality, and I get the sense that you think people may be missing the point or not understanding how much of a big deal this is. What about it has you so excited?

I've always been intrigued by VR for many years now, but I always saw it as like a very, very long-term trend. I don't know when it's gonna take off. Apple have a good chance. From what I learned their first year, they're only going to sell

400, 000

headsets because their manufacturers, Sony, doesn't have the capacity to produce a very important part of the headset. But I do believe in this bigger picture trend. But what really, really convinced me was VR chat. So my friend who's been into VR for a decade now, he's like, come check it out. His name is Jin.

So Jin took me into VR chat and I was like, this is crazy. Everyone has their own avatar. Most of them are original characters. It's just how they wanted themselves to be seen online in this world to others. And they're all kind of different.

A lot of them are anime dudes and anime girls. And I was just my own character because I got an artist to make this cat model for me in 3D. And Jin was like this cool anime dude with like a sword, wearing some blue fancy soldier looking dress. And I was like, okay, he takes me around, he shows me these worlds. It was cool.

And I met some friends and then he took me to a virtual reality club. And apparently it was super exclusive and people line up to get into that specific world because At this moment, I think the limitations of that software only allows like 60 or 50 people to get into a world at once because everyone has their own character, so they have to load all of them without lagging too hard. So I got in, thankfully to Jin, because he's been an OG there. And all these people were in full body tracking suits and I can see them dancing. I can see exactly how much they're enjoying the music.

I can see exactly their movements. And some of them were really good at dancing. Go to a club, like normal club, there's a dance floor and you just know these dudes are like good at dancing. They have a beer in their hand. They don't have a beer in their hand in VR, but he told me a lot of these people are actually intoxicated and they got an actual DJ.

So I was just like, This is crazy. I can feel the actual vibe through the body. I can see, okay, these people didn't like this song. They're not moving as much now, but like that group, they love this song. They are vibing.

And I'm like, this is insane that I can feel the amount of energy. I can feel their presence just next to me. I was so intrigued by that. Something really interested me the second time I got in was I recognized this person because of the avatar they're in. It's the same 1 but they changed their drip.

And I was like oh what are these new logos on your shirt now? Now it's blue. It was just like black and white. What's this about? And he tells me this backstory about like these logos he have on now, like how he got this artist to make this for him.

And I was like, yo, this is crazy. You're changing your trip in virtual reality because you just felt like you want a new look. And he's just so happy and passionate when talking to me about it. It did give me a different vibe of him. And I was like, you know, this is meeting someone just like in real life, except they wore something else and have strong colors.

So I started reading into this topic academically. I was so intrigued. There's no way I felt this amount of bonding experience. When I talk to someone on text, I don't have this kind of bonding experience. But I talked to this guy in this 3D world and I have this experience and I was just confused.

So I read a bunch of papers, I learned something. The academic term is presence, which means you genuinely feel someone is there because you can tell their facial expressions, you can tell their body expressions, if they're interested, if they're disinterested. And it introduces so much more. People have personal space in virtual reality, just as in real life. If someone walks really close to you, you feel slightly attacked of your personal space.

And if you hang out with someone in virtual reality, you genuinely have a sense of social fulfillment, which is not like texting someone online. So a lot of these were just like real. And I was like wondering why. And there's all these other studies. Oh, if you see a sharp object in VR, your heart rate tend to go up, just like seeing a sharp object in front of you in real life.

And I was like, yo, this is crazy. Apparently how the brain works, as long as the input seems realistic and there's depth, and it doesn't have to even be like realism graphics, like 4K and all the super real shaders and lightings. It doesn't have to be as real as the real world. As long as it's just enough, the bar is pretty low. You will interpret it as real, even though you know it's fake.

Which I thought was just the craziest idea ever, because it really just means if you enter a virtual world, there's all your like headset and your body trapped, you will feel shy, you will feel embarrassed, you will feel just all that anxiety of people you don't know that may walk close up. Everything is almost one-to-one replicate. But the power of VR is you can manipulate the environment. So I had the therapist in Eagle Capital's Discord chat that we hired. If anyone wants to consult you, pay that.

So We offered this free service for about a year or 2. And he was really into VR. So it's like, if you have a VR headset, we can do this in VR. And he would manipulate the environment to be a more peaceful environment. And then because they're behind avatars, they tend to talk about things more openly.

And there's less of an anxiety about knowing the real person. And so the sessions, apparently, according to him, went really well. And I was just mind blown by all of that. Like, dude, we can be in the room sipping tea and then in the Apple Vision goggles, we can be in the Himalayas. We don't even have to travel.

We don't have to buy a car to get out, to go somewhere, to actually feel like you're outside. You don't have to buy a car. You don't have to fly there. You don't have to even make yourself look really well. Girls don't need to put up makeup to look good.

You can just change your avatar up a bit. You don't have to go to gym to look buff. You can just manipulate the image. You don't have to like dress up well. You can just get some artists to do it for you.

So all of that is just insanity to me that this is how it works. So I think a lot of industries will be replaced by this virtual 1, maybe a decade into the future, maybe 2 decades. This is a massive trend we're talking about because we're talking about a lot of online people moving into a whole new virtual world. This is a big societal change. I think that's something really hard to predict when it happens, but I do think it is a point where it's inevitable.

So many questions, but I guess I'm curious, when you were talking about being in a virtual world and the research plus your own experience that if there's a knife, you feel it, physical space, you're triggering the fight or flight part of your brain. As you were talking about the dance floor, I was thinking about the person that goes to a club and doesn't feel comfortable. Maybe they have to have a couple drinks because they don't want to dance so they're kind of on the outside looking in. So there's that insecurity or lack of confidence. And I was comparing that to the fact that you're in an avatar, so maybe you feel safer that it's not really you, and so that perhaps in a virtual world, either your confidence increases or you feel less insecurity?

Or did you think that that was the same as the real world?

Maybe slightly less anxiety. I just remember I really regret it not having full body tracking set up. I love dancing in actual clubs. And I was like, fuck, these people can't see my dance moves, so that sucks. I wish I could be part of the energy that was going on.

The belief in it will change it. So, you've thought about those more than most people. You don't have to go to the gym to get buff, and Mrs. Cat doesn't have to spend a lot of time getting ready, you guys are immediately in your dance club, and you find someone, and you're interested in them. What does that do to that crossover of real life and this new virtual world?

I feel like it's actually quite easy to open up to someone in that kind of world, just because of this phenomenon called online disinhibition. Although it's a stronger effect if you're talking to someone text to text, like they literally don't know who you are. People tend to be way more open on text. When you go to the darker side of the internet, there's a lot of toxicity, there's a lot of racism, there's a lot of really bad things being said. You know very well if you met them in real life, they literally cannot say that to you.

So I think there is some level of anxiety where people aren't just going to be like, this country sucks. All your people sucks. I think there is a bit of barrier, but then on a personal level, there's still a lot of freedom. If you go to YouTube and VR chat stories, you see people meeting each other and someone tells a crazy story and they upload it online, the very famous YouTube series of 2, 3 episodes of a Korean chicken. So he's a chicken in this virtual reality.

And he talks about his experience when he had to do military service and what it was all like and how much struggle he had when he came out and re-entered the society, and then going overseas to study abroad in California. And he talks about the story. He seems so free to talk about all that. They literally just met, and you're talking about your worst insecurities. He mentioned about, well, they're passing away.

Like no shot someone like that, just like meet up with someone and just have this whole conversations. I thought that was a very interesting phenomenon.

That's fascinating. Kat, I feel like I could talk to you forever. This has been an absolute blast. Thank you for coming on the show. Have you again sometime.

To find more episodes of Breakdowns or to sign up for our weekly summary, check out JoinColossus.com. That's J-O-I-N-C-O-L-O-S-S-U-S dot com. Follow ssus.com