That doesn't mean that Terrence didn't encounter any entities. And who is to say that it is the mushroom that speaks? I suspect that it activates senses that we normally do not have access to in a sober state of mind, and so, we can talk to entities that we normally couldn't otherwise.

Terrence didn't lose it and give himself psychosis. Your two possible hypothesis' were not the only ones, unless you're not thinking hard enough. My hypothesis is that Terrence wasn't right exactly right about there being an alien in the mushroom, and rather, he contacted non-physical entities that the Psilocybin state gives access to.

I wasn't stating a hypothesis in the post of mine you quoted, but rather, a question of, how can you know that he "experiencing group psychosis", without having had insight into his raw state of mind during those high-dose trips? You can't. Work your way up to such an experience, based on the methodology that Terrence used:

7.5 grams in silent darkness.

Also, have a watch of this, which the author based on Terrence's methodology:

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