Crypto's Long-Term Outlook Is 'as Good as It's Ever Been'

Transcript

we uh invest with the idea that like we will be in positions for you know uh you know at a at a minimum like you know call it a year right so or years right and so you know we try to be opportunistic sometimes on like the entry point but um mostly it's around okay well what do we think are the like the global the global backdrop the macroeconomic backdrop over some long period of time and I I think there's there's a there's two kind of answers to your question I think the first is well I actually think it's quite positive that crypto and and bitcoin coin held up quite well over the weekend, right? Even at a time when you knew that, you know, equity futures were going to open down or or trade down. Uh and there's, you know, there's some conversation say,

okay, well, you know, Bitcoin is a store of value and so like, you know, commodities are up, Bitcoin be up. But Bitcoin hasn't traded that way obviously for, you know, for months right now. And so, um, I think it's positive that maybe it did, you know, have have that correlation or it traded that way. And and I think it looks like, you know, the type of trading you've seen, you know, around these events recently and around the Catrini article when equities sold down, etc. implies to you that there like aren't necessarily like a lot of sellers left, right? Um, you know, there most of the people are holding now are have much more like long-term perspectives, >> right? Uh, and so I think that's a good setup for, you know, being in crypto over some period of time. Now that doesn't mean anything for like the long

tale of alt tokens because like you know there's other structural issues there around what happens with market structure and you know uh you know whether or not these things should be worth what they're worth and you know revenue and and and you know u fundamental uh value and things like that. So I I think there's there's that so that's really constructive. Now I think in the short term though you know to your point right there's so many things happening that are real risk right so like the equity market kind of rallied after Nvidia really beat our remains and they gave you know good guidance in the future and then like it faded that rally super quickly right the equity market also when the catrini article came out like a bunch of stuff traded down right away and like you know catrini I I I really like the the rating

that they do but this isn't like a household name. This isn't somebody that everybody looks at and it's like, "Okay, well, like I I definitely should be trading off of, you know, what they think." And there was a lot in that article that was like just science fiction, right? And I >> reminded me a lot of like George Orwell's 1984 type of type panic. >> Yeah. No, 100%. Right. And so I think it's it's very obvious that there's a lot of fragility in the market too, right? Um and I do expect that you know kind of the long-term setup for you know crypto is so very good with potential for market structure with the how many you know kind of institutions are adopting um but it you just it's very hard I think to bet on crypto if you think that the equity market might take

a kind of a real bath here. I think there was a couple articles out over the weekend or some sellside reports which were trying to figure out okay well if you fundamental there's some fundamental value loss around you know a increase in inflation and a slowdown in growth because of the rise in oil prices uh and depending on how long this goes on like you know maybe we're looking at something like a 10 to 15% u correction in the in the S&P and if that happens like it's hard to see Bitcoin holding up right even you know considering all the the really good like funamental value that or or fundamental backdrop that we're that we're talking about at a time when there's just all of these other things that are unclear when it comes to tariffs and when it comes to um the anything to do with, you know, AI risk

and uh etc. >> Yeah, it's it's funny. I think I saw an article in the FT over the weekend that that I think there was no better like representation of traders not knowing what to do than seeing the whole market trade down like 3% on a blog report or a blog that was published. So, um I I think that I think that kind of epitomizes things pretty well. Um, so let's talk ideas. >> I think it's important to note just to, you know, and I because I want to really uh re, you know, make this point, which is that the long-term outlook for the broader crypto ecosystem right now is probably as good as it's ever been, right? And we continue to have this like dislocation around, okay, well, what are the what's happening to Wall Street in terms of adoption of tokenized assets?

What's happening with stable coin demand? What does that mean for, you know, real economic activity on chain? like you know what you know if we get a market structure bill passed now we can talk a little bit about that but I think that's yeah uh a little bit up in the air but like all of these things are really good over the long run if you have that type of time horizon. >> Yeah. Yeah. And we'll get to all that because those are all really kind of good points and uh I know most of my listeners are are not day traders. They're they're more long-term investors much uh much like you guys are. Uh but I mean I was actually looking around Derit this morning at some of like the options positioning here and I I think it speaks a lot of what you just discussed. I

mean, by far the um the biggest open interest is I think a put at 60,000 um especially like settling over the next couple of days, but then once we kind of like span out even to like the end of the month and then we're talking about calls at um like 90 100, I mean it completely switches like there's very very very bare sentiment or at least people are trying to protect their downside over the next couple days but then then things certainly are are changing. I don't know if basically the data I laid out from Garabit etc suggests that we're mispricing the market. I mean you also mentioned too how if the rest of the market tanks even if Bitcoin is structurally better set up than other assets it's still going to go down as well. Um, but uh I mean I guess maybe do you think that the market is

mispricing some of the risk when it comes to Iran because of how messy it could become? And then again in a very not financial advice way. Um traders, people listening here might wonder how they can better protect their downside. What what do you think are like one or two ways that they could do it if they so chose? >> Yeah, I think I think markets probably pretty correctly pricing in risk to be honest. uh you know the equity market's only been down a little bit over a point uh you know I think makes sense right Bitcoin is actually up 2% over the weekend right and so it's been kind of sideways um you know obviously this you know I'm not not an expert and um a lot of what's happening on the on the option

side right now but you know it seems very clear that people are trying to protect you know de like near-term downside or long-term structurally you know bullish that all makes sense to me right uh because you know this this is happening in real time. I think when you put that in kind of context of everything else that is happening on the on the rates side on the you know the AI um you know concern side I mean obviously you know we talked about the Catrini article but you know one of the things that happened uh maybe was Friday is that block came out and said they were going to cut 40% of their workforce right that is the largest uh correction or largest layoff um in I think S&P history uh for a company of that size u of of of of a public company, right? And

like that, you know, it's not clear for sure that that will happen, you know, across all of these other, you know, all of these other companies, but it is, you know, sort of a canary in the coal mine of maybe there will be actually a lot of layoffs, right? And what does that mean for the economy in the market if it does, right? And that's a longer term risk, but it's, you know, that sign people are trying to outpric that in, right? And so I think there's just so many things happening and so many variables that's impossible to you know really isolate oh Iran risk versus you know risk of of everything else right and so it seems pretty correct to me at the moment and I think like cautious with the right you know in the near term with the right outlook over the long

term makes sense I think there's also we've been uh on the crypto side we've been trying to price in the likelihood of a market structure bill and if you look at poly market today. I I think it's, you know, 52%ish, right? Um the uh people I talked to on the hill, uh if they're not in crypto, but they, you know, happen to be close to it, um or more bearish than that, you know, call it like, you know, 354%. Um if you talk to, you know, a lot of the lobbyists in crypto, they're more bullish than that, but of course, like, you know, that makes sense, right? And and so there's just so many variables happening right now that I I think it's really hard to uh make sense of the market and it's moving so quickly,

right? >> Yeah, absolutely. Um couple more market questions and then we're going to get to clarity and and a few other topics. Um for for one, I I feel like Bitcoin for the most part, most of the time has been un unfairly punished when bad things happen over the weekends because it's typically the only asset that is trading. Um, but we are now moving into a world where there's tokenized stocks, other tokenized assets that do trade 247, gold, etc. Uh, I know especially for for stocks, it's very very early days for for them, but I'm curious if you've seen anything if you saw anything interesting over the weekend with how any of those assets are are traded. Or if not, like maybe just prognosticate a

little bit on uh how like once those markets become bigger and and more liquid, that could sort of like impact the way that assets trade over over the weekend when incidents like this occur. >> Yeah, I I mean that is a very interesting topic too because if you look at what happened on Hyperlid over the weekend, right, there there was a significant amount of trading volume. What's that? >> Oh, it's rocket. I mean, I think I think hype is up. I was going to ask you about hype. I think it's up like 12% since the uh since the uh the attacks began. So maybe maybe >> Yeah, it traded general was monade, but it was up like Yeah, it was it was up 10 12% over the weekend.

>> Yeah, it might be the safe haven asset in crypto these days. >> Yeah. Well, and and because it's clear and and what has happened, right, is these these hip three markets, which is um you know, trade XYZ, which is where they're doing a lot of the tokenized commodity pers and the tokenized stock ps and uh etc. They uh we've seen significant significant uptake in volume on the commodity side uh and on the um on you know some of the rates and like at like uh side as well. The the stock volume hasn't been quite as high. it's been much more around uh commodities. Um I think at one point silver did itself like in a 24-h hour period like a third of all hyperlquid volume, right? And so

uh oil this weekend was like absolutely one of the most the most highly traded asset. But the these these uh markets still do have like some structural issues in terms of allowing people to take risk over the weekend because how are the market makers going to hedge out that risk? like you know how there's still um you you have these uh kind of buffers put in on on trade XYZ where you know they don't want to allow these things to trade more than 10% over the weekend uh one one way or another because of the fact that um you know if you if especially if it's equities if you if you like limit open uh and things move really quickly um you could just you could have like mass liquidations right even just on that like that that bowl there and so there's there's a lot

of structural issues on it as well. But the derivatives and the per side um or the per side for the for the commodities um have been uh much easier for people to market make because of the fact that these are are markets that you can more easily, you know, rule with the sun and that they are open uh for much longer periods of time than equities. Equities is a harder problem to solve. Um and so I I think we're going to continue to see that grow. Hyperlid's doing awesome, but I um I I think there's the long-term outlook uh continues to be better for assets that have um are more highly correlated across global markets versus our you know call it individual assets and the US market or you know call it a European market uh etc. Um I also tend

to be I think relatively bearish on the current state of um spot equity on markets right uh and on on chain right now the way spot works today uh for most of the products so um you know like Kraken bought a thing called um uh stock >> yeah sorry and uh and there was you know there's and there's a few others and there's uh the way they work right now mostly is that it's some sort of, you know, SPV that, you know, somebody has a market maker has to go and like, you know, put in an order to that SPV and then that SPV goes through a US broker dealer and that US broker dealer then buys the thing. Um, and, you know,

during like off periods, you can't necessarily redeem and so there's these dislocations that happen and it's very clunky and they it's really hard to like scale that product and so I'm I'm much more bullish on the on the derivative side and I think we've we've we've seen that happen to date. I think there's a future where uh you know call it natively issued stock on chain where it's its own primary market that I think has a much better chance of growing than the current state of what has happened on these kind of like you know SPV rappers that exist on chain.