Kevin Zhou is renowned in the cryptocurrency space for his unique trading perspective and sharp market insights. Since entering the Bitcoin market in 2011, his personal account has grown at a compound annual rate of approximately 100%. The hedge fund he founded, Galois Capital, achieved a 35% compound growth rate over five years, reaching $250 million in assets. This market-neutral fund experienced only four months of losses, with no monthly drawdown exceeding -1% (excluding the FTX bankruptcy event). In an exclusive interview, Kevin Zhou shares his journey from a financially constrained immigrant childhood to becoming a legendary crypto trader, along with his deep insights and firsthand experiences during major market events like the Luna crash and the Ethereum merge.
Early Life and Background
Growing Up with Challenges
Kevin Zhou was born in Shanghai, China, and moved to the United States with his parents at the age of three. Raised initially by his grandparents, his family faced significant financial hardships as immigrants. His father pursued a PhD in mathematics at the University of Hawaii, while his mother studied for a master’s in electrical engineering. The family often struggled to make ends meet, instilling in Kevin the importance of valuing every dollar from a young age.
As a latchkey kid, he learned self-reliance early—cooking for himself and spending considerable time alone. This environment shaped his resilient and independent mindset.
A Gift for Mathematics
Kevin’s father, a math professor, recognized his son’s talent and began teaching him mathematics at an early age. By 11, Kevin was auditing calculus classes at a community college during summer breaks, studying alongside students much older than himself. He excelled in standardized tests, ranking first in Hawaii and among the top 120 nationally in the Johns Hopkins talent search.
However, his focus shifted during middle and high school. He became less academically driven, describing himself as rebellious during this period. Instead, he engaged in trading activities, such as buying and selling Pokémon and Magic: The Gathering cards on school grounds. This early interest in virtual economies extended to video games like Diablo II, where he traded runes and found more excitement in market dynamics than in gameplay itself.
Academic Path and Early Career
Kevin majored in mathematics and economics in college, graduating in 2009 amid a global economic downturn. Uncertain about his future, he pursued a master’s in economics before entering the financial industry. He worked as a quantitative analyst at a rating agency, where his role involved replicating financial models to ensure accuracy—a job he found unfulfilling.
During college, Kevin admits to lacking direction, but his curiosity led him to explore philosophy and Wikipedia extensively. It was his father’s transition from academia to quantitative finance that opened his eyes to the potential of the financial sector. Driven by a hatred of poverty and a love for strategic games, he eventually set his sights on trading.
Entering the Crypto World
First Encounters with Bitcoin
Kevin discovered Bitcoin in 2011 when the price was around $11. Intrigued by its potential, he invested all his savings from internships into it. He was drawn not only by the technology but also by the ideological underpinnings of cryptocurrencies, reading Satoshi Nakamoto’s whitepaper and works like Friedrich Hayek’s The Road to Serfdom.
Professional Beginnings in Crypto
In 2013, Kevin joined Buttercoin, a Y Combinator-backed exchange aiming to profit through market-making. However, due to limited market size and low liquidity at the time, the venture failed. He then joined Kraken, where he helped establish their over-the-counter (OTC) trading desk.
At Kraken, he faced challenges like canceled trades and volatile markets. One memorable incident involved losing thousands of dollars due to trading while fatigued, leading him to adopt a strict rule against trading immediately after waking. He also played a key role during the Ethereum Classic (ETC) fork, advocating to retain ETC for clients despite offers to sell it prematurely—a decision that proved financially prudent.
Founding Galois Capital
Inception and Early Strategy
After leaving Kraken in 2017, Kevin co-founded Galois Capital, a market-neutral hedge fund, raising $5.5 million initially. The fund’s name, inspired by mathematician Évariste Galois, reflected the founders’ mathematical backgrounds. Early strategies included OTC trading, basis trades, and yield farming during the DeFi boom.
The fund quickly gained traction, becoming one of the largest yield farmers on Yearn Finance under the pseudonym "yfi_whale." Kevin emphasized adaptability, shifting strategies as market opportunities evolved—from OTC trading to arbitrage and DeFi participation.
Navigating Market Challenges
Kevin noted that alpha opportunities diminished over time due to increased competition. Firms like Cumberland, Circle, Alameda, and Jump entered the space, compressing margins and forcing smaller players to innovate or seek less efficient markets. Despite these challenges, Galois Capital maintained a disciplined, market-neutral approach, resulting in consistent performance with minimal drawdowns.
Key Market Events and Insights
The Ethereum Merge
Kevin provided a trader’s perspective on Ethereum’s transition from proof-of-work (PoW) to proof-of-stake (PoS). He anticipated chain splits and market dislocations, accurately predicting shifts in futures basis and Lido discounts. However, he overestimated the long-term value of ETH PoW, which settled at 0.5% of ETH PoS’s value instead of his projected 2%.
His comments during this period, including a sarcastic proposal to fund ETH PoW developers, sparked controversy. However, his intent was to highlight what he saw as wasteful spending in the ecosystem.
The Luna Crash
Kevin identified fundamental flaws in Terra’s algorithmic stablecoin system early on. When UST began depegging in May 2022, he recognized an asymmetric opportunity: minimal downside if it repegged, significant gains if it collapsed.
Galois Capital profited by shorting Luna and facilitating liquidations on Anchor Protocol, earning $15 million. Reflecting on the event, Kevin believes they could have made far more by taking a larger position. During Luna’s hyperinflationary collapse, prices fluctuated wildly, with supply doubling every nine seconds at one point.
Market Evolution and Personal Reflections
Increasing Competition and Adaptation
Kevin acknowledges that trading has become more challenging over time. The rise of professional players and automated systems has squeezed out casual participants. Success now requires full-time dedication and the ability to identify overlooked opportunities—what he calls "second or third-order effects."
Balancing Conviction and Caution
Despite his skepticism toward altcoins, Kevin remains a steadfast Bitcoin believer. He attributes Bitcoin’s longevity to its unique properties, contrasting it with short-lived altcoin projects. His fund allows investors to denominate investments in Bitcoin, combining BTC exposure with market-neutral alpha.
He expresses concern about Bitcoin’s long-term security once block rewards diminish, suggesting a potential fork with "tail emission" to sustain network security.
Lessons and Regrets
Kevin advises younger generations to act confidently and avoid overpreparation. He regrets not leveraging his Bitcoin investments more aggressively early on, noting that being early often outweighs being smart in crypto markets.
He also emphasizes the importance of maintaining both confidence and skepticism—being decisive while remaining open to changing one’s mind.
Frequently Asked Questions
What drove Kevin Zhou to transition from mathematics to trading?
Kevin’s early exposure to financial hardship and his strategic interest in games shaped his path. He valued the intellectual challenge of trading and sought financial independence, leading him to prioritize practical applications of his skills over pure academia.
How did Galois Capital maintain consistent returns?
The fund employed a market-neutral strategy, avoiding directional bets on crypto prices. By focusing on arbitrage, yield farming, and OTC trading, they minimized exposure to volatility while capitalizing on inefficiencies.
What was Kevin’s approach during major events like the Luna crash?
He combined rigorous research with tactical execution. By identifying structural weaknesses in advance and waiting for optimal entry points, he maximized gains while managing risk through careful position sizing.
Why does Kevin remain bullish on Bitcoin despite altcoin trends?
He views Bitcoin as uniquely resilient due to its decentralized nature and proven security model. Altcoins, in contrast, often lack longevity and are susceptible to hype cycles.
What advice does Kevin have for new traders?
He stresses the importance of confidence, adaptability, and continuous learning. Traders must be willing to challenge consensus and explore unconventional opportunities.
How does Kevin view the future of crypto trading?
He believes opportunities still exist but require deeper expertise and specialization. As markets mature, success will depend on innovation and the ability to anticipate secondary effects.
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Kevin’s journey underscores the value of conviction, strategic thinking, and resilience in the volatile world of cryptocurrency. His insights offer a roadmap for navigating complex markets while staying true to core principles.