Key Trends Shaping Institutional Crypto Market Strategy

Transcript

Uh hello everyone. Uh we're going to speak about u key trends for uh crypto institutions. I'm going to invite my panelist to join me over. Uh Catalin Dominic, come over. [Music] Close to you like so. Swap. Oh, no way. You're going to you're going to be so confused. Ants in the brain. No, let's not confuse. All right. First things first, um we're going to want to to have some introductions. So, who you are and what

you do. Uh starting off with Dominic. Yeah. I'm Dominic Vible. I'm heading the research division at Bitcoin Swiss. Uh my background is actually in material science and aerospace engineering. And then I went down the rabbit hole uh a couple years back. Um yeah, I'm here for Bitcoin Swiss. Um I guess Bitcoin Swiss doesn't need a deep introduction. We have like more than a decade of track record Swiss DNA. Uh we operate a full service um crypto crypto agnostic platform across brokerage, staking, um custody, peer-to-peer lending, and asset management. Uh the research team sits in the in the asset manager. We

preparing uh quite a lot of like exciting products right now and the research team itself um is covering everything from macro to crypto vanilla assets. Yes. So just as Bitcoin Swiss I I would like to hope especially in Switzerland that signum needs no introduction. uh uh uh full service, one of the oldest cryptonative banks actually in the world offering the the full spectrum of banking services um accounts, lending, custody staking tokenization brokerage, investment products and also uh unicorn status now one of the Swiss

crypto unicorns and myself 20 plus years on Wall Street and 10 years in crypto. So, I'm of that generation that came into crypto with a lot of idealism. Um, thinking that that this revolutionary technology will change the world for the better, which, you know, I think it might. Yeah. All right. Um, and head of research at Signnum. Very good. Thank you for the introduction. So, we're in a very good company. Um we've seen recently that central banks uh have started to cut and there's uh more interest rate cuts on the on the horizon. We've seen also quite a lot of macro uncertainty out there. So

everybody's asking now in crypto are we risk on or are we risk off? Uh what what is your take? Uh Kataline want to start? Yeah I I I think I'm very clear on this and very positive. I think the environment is the macro backdrop is very good for crypto o over the medium-term obviously sort of short-term perturbations or black black funds aside uh for two reasons and one is liquidity which you slightly alluded to and the other is instability and the way I would put it is that bad news is good news um basically we see um a global slowdown and and and more of that to come with

the tariffs and also with the tariff uncertainty. So, it's not just that that the tariffs slow global trade and hurt a number of economies, but the fact that we don't know how this is going to work out uh yet means a lot of companies are on hold. In fact, most of them or almost all of them delaying investments and so on and so forth, which in itself, the uncertainty in itself is slowing global growth. Central banks respond to that with with stimulation. Um, I think rate cuts maybe when it comes to the US are a little bit of a red herring. I think if the Fed cut rates that would be counterproductive and negative, I think bond yields would go through the roof.

Um, it's more about a a much more because because of the potential inflation uh that could come in the US. Um, I think it's more about liquidity in a more holistic sense. And the reason why I I think that's so very important is is because since 2008 in my opinion the system has been on life support and and finan risk assets have the number one driver of risk assets has been global liquidity. All right. So liquidity is bullish for the market.

Okay. Can I can I just say the you know just the other point is that the instability which which increases demand for for safe haven assets like gold all the all the instability. So the for crypto it's a double whmy. It's both the liquidity and then for Bitcoin it's also the the second driver that the the demand for gold, Swiss Frank and and Bitcoin. We've also seen it in in the past that actually even worse are um good for for markets. So markets tend to go up whenever uh there is uh some systemic event. Um and I I would be interested to hear your your take. Are we risk or are we risk off? I would say we are inching closer to full risk on. I would actually say we are a little bit

closer to um forcing the Fed's hands to be honest. Um yes, I sign up for this notion of uh yeah uh global liquidity is improving throughout 25. We know Bitcoin is uh maybe the most sensitive uh liquidity sponge out there. Um then we have the tariff overhangs are easing. Maybe there's some more volatility um once we approach the the July and August deadlines when it comes to these pauses. We saw two very uh lower than expected CPIs CPI prints in the US. Um and then I guess the the Fed and power really don't want to want to avoid a policy misstep especially since the the housing market is uh shows some forms of weakness and

also uh consumer confidence is not super super bright let's say. Um I guess the elephant in the room here is uh the the looming debt crisis in the US, right? Uh we know uh Trump's biggest mandate was lowering the the bond yields. They clearly failed on this uh both trying with tariffs uh and with Doge. Um u nothing worked so far. Also, if you followed the bromans between uh Elon Musk and and Trump is breaking up right now. Um so the depth crisis what treasury uh secretary Besson says is how do they solve this? Uh they want to outgrow it. Okay. So the only possible solution to outgrow it. It's not via

GDP. It's via debasing the currency. And two important facts and then I stop uh that we observe is uh there's dollar weakness while at the same time bond yields are rising which should not be the case. And the second similar dynamic is uh gold is on a continued upward move while the real weight rates are elevated. This is like unheard of and I think this all points to this like structural reserve allocation towards hard assets. So there's this hard asset pivot. Um gold on on central bank balance sheet is at a 30-year high.

Treasuries is at a 25-y year low. And I think all of these reallocation dynamics really resonate with Bitcoin. Yeah. So we you've heard it from from Dominic uh uncharted territos. Dominic, what's the timeline for uh for digital assets to to to go up? The timeline I mean we are still at least in terms of Bitcoin still in bullmark territory. We uh we published our outlook um basically deriving a lot of um let's say performance predictions from different risk models and they they are telling us we should like have some form of uh new all-time highs latest in Q3 Q4 uh in our outlook based on these risk models we

called for 180k this year and maybe 120 might be in the books uh in the next couple of weeks or months but no financial advice. Yes. All right. Very, very good. Very good. Yeah. So, you you've heard it from from Dominic. Uh bullish on Bitcoin. Um how about alt season? Are we going to have an alt season? Um it's it's actually quite a complicated question because there is that sentiment and psychological effect where the smaller cap higher beta assets move faster in a hive cycle and that that happens in all asset classes and mic market psychology is is fairly reliable and predictable in that regard.

But I think the nature of the alt season could be really very different from previous and anybody who remembers the ICO boom alt season if you said blockchain crypto crypto something you were going up that was enough true in in the 2020 2021 odd season it was use cases that had real actual growth like defy gaming you know if you remember the use daily active players years of AXI infinity and so on they were going up crazy and these were the use cases that were driving that alt season and not everything that said crypto crypto blockchain blockchain so already we we

saw that maturing and I think now it's maybe not even maturing but the market's kind of a bit jaded after these use cases stalled and reversed and now it the market seems to require a hell of a lot of not just growth in percent we grew from one to 200% % growth, but but to to also show absolute big numbers for for for the user basis for these projects and and I think that's that's kind of a tall order still although it it could change for various reasons which you might you know ask me about later but if if the old season is hype and sentiment driven then it's of course a bubble burst kind of a situation if it's not really very fundamentally

driven and in that case I think it's still quite likely I mean we'll have to see but that it goes into the really worthless meme coins rather than, you know, the useful projects because they're the fastest horse in that sort of a Okay, I want to hear some examples. So, what are some some of the projects out there currently in 2025 that actually have traction and that you think are are a fast horse or are going to be a fast horse? Pointing to me. Yeah, both of you. Yeah, I mean obviously the biggest success story uh and it's no surprise is Hyperlquid, right? Uh they had an incredibly um attractive launch. They distributed a token to um to holders

that uh where they all actually saw user retention. What what I fully sign up for is back then in the ICO cycle I feel like it's was like uh very spec speculative, right? And I feel like the even the altcoin market is somewhat maturing right now. We see this uh if you think about the ICO era, we had like large distributions. Then we went choked by the Biden era hostility. We went into um into this lowflat high FTB tokens like all retail got wrecked and we got and then we transitioned into this memecoin mania. But now with the deregulation happening in the US, I feel like more projects are keen to uh switch

the fee right to to trigger the fee switch. So I'm talking about we there are like a lot of emerging projects where you can actually see um uh prospects of value and growth investing such as uh hyperlquid or you can think about ar that also does a lot of buybacks. I think in the last month they bought back um 10 million. Hyperlquid for instance retargets 97% of their fees into buybacks and if you think about they are doing like 6 to 800 million in annualized fees. That's a large chunk of money. So maybe you are now ready to apply some DCF models or things like that in order to get an idea on how to value value these tokens. Yeah. So you

say buybacks are uh are a good way uh to to actually see that a project is is is doing well. Actually we did some some research with Msari and we've seen that buybacks and burns in dipens especially are positive for price to sales ratios. Um so not a surprise there. Catalin give us the the other side of the coin. No, you know on this one there isn't really you know another side. um um there you know there might have been earlier a couple of things that I would have argued with but you know we have to keep going but on this one I I'm actually really on the same side and um the changes in US regulation um which are not yet finally concluded but we already know what what their

thinking is what the direction is going all sorts of statements on for example that staking is is not the securities transaction or that probably most crypto assets as the peers said that recently are not securities is and and that they want to put into place regulation that is with feasible paths to compliance and so on and so forth. I think this goes back to that it it allows projects to have reasonable tokconomic models that channel the value to the token. previously that that was kind of impossible because you you either got sued or you were scared of getting sued or you know so a lot of coins traded detached from the actual fundamental economics of the project and that

relationship is now getting established which I think is both hugely positive and also I hope that it would also lead to the market further maturing as in distinguishing between a valuable project and a worthless token and I think we're headed in that direction. A couple of steps to still still to take, but but it's going in in in that direction and I'm really I'm really optimistic about this trend. All right. So, if projects are not afraid anymore to uh be sued, um then I would like to hear from you. What are some of your unpopular opinions? So some of the things you think about and they're like are counter trend or you can't read them in the news and it's something that you

that you hold dearly to your heart. Um I can I can start if you if you like. Um I guess um some um context maybe we know this is like a super bitcoinheavy cycle. It's kind of like this uh bitcoin is becoming a mature asset class. It like checks all important um properties for institutional portfolios or portfolio allocation in terms of it's decorrelated the low volatility is coming down it performs uh very attractive right um and we also see that the ownership structure is changing so it's tilting more into the institutional corner ETFs are buying up a lot like 90,000 year to date

corporate treasury strategies uh soaking up 220 20,000 year to date. Uh I think there's like a large uh demand influx. At the same time as uh basically the relevance of Bitcoin deepens, I feel too little people talk about the elephant in the room uh which is kind of Bitcoin security budget to some degree and also its quantum resistance. Um which are both topics uh that we might face in the next 10 years. Um, and as we know like Bitcoin is a highly oified protocol, meaning it's very hard to find consensus. Think about small things that take ages to to integrate. So I think um, in my view, I think it's a topic

that should be way more present, figuring out how to deal with it. And maybe the second slightly unpopular opinion, I'm not like solely bullish on all of these corporate treasury strategies soaking up the so much supply because in my view I'm not sure if all of them are like bulletproof uh for 50% drawdowns. They might become like forced sellers. There's some uh vibes of equivalency in terms of GBTC from last cycle. Um on the depth side however I think fears are overblown. I think the first step becomes mature in like two plus years. So there's still some time but I think there's a there's some looming forced sellers let's say. Mhm.

Okay. So point number one uh quantum security actually Nick Carter agrees with you so you're in good company on that. Um and for the second one for the corporate treasury Katalene what is your what is your take there? Yeah um I you know I I actually agree. In fact, I would go even further. I I think that they they they cause so what they do is they channel demand for Bitcoin from sources that cannot buy Bitcoin. So they can buy equity, they cannot buy Bitcoin. It's it's like grayscale. It's it's like a conduit for demand. But I think there's a lot of risks that are completely overlooked and a lot of drawbacks. I I would you know I agree with with what you said and I would even add to that a couple of drawbacks. one is that um

the fact that a private company owns I I think just in the case of micro strategy getting close to 3% of all Bitcoin ever issued and in terms of the percent of liquid supply way way way higher than that when it gets to a point that a private company owns a huge percent of the liquid supply it undermines Bitcoin aren't we there already or maybe you know like obviously we're not there yet in terms of the market what the market is signaling but it undermines Bitcoin's safe haven nature. It at some point it's no longer an appropriate safe haven asset. So that's one other thing I I don't like about it. Another thing I don't like about it is that it's not a treasury strategy.

It's an investment strategy and because it's labeled as a as a treasury strategy accumulating a lot of money whether it's fiat money or bitcoin money is not what a company needs to do. A treasury needs to safeguard the cash cash flow have reserves. However, Bitcoin in corporate treasuries makes a lot of sense as a small allocation of the cash reserves and insurance. Same as for central banks or governments, a safe haven asset, especially in this very unstable glo global um uh macro environment, right?

Geopolitical geoeconomic instability. It makes a lot of sense. and the fact that it's described as a treasury strategy actually stops treasuries from doing something that could be a huge source of demand for Bitcoin and and a very reasonable use case uh for um for Bitcoin. So that's you know that's another thing that I find so I get that it's good and bad. Well, it's I mean it has it has a lot of risks and the way it's done for if it if it were described as an investment strategy that would negate some of them also if if it stopped short of how far you know I think micro like to me how much micro strategy owns is is already a big risk

to the market in terms of concentration risk like it's not gotten to the point yet where um um you know it's in the public domain and and central banks say no we're not going do the central bank reserve because they own too much. Like it's not in the narrative, but I I already think it's too much. You know, if we saw just a headline, nothing needs to happen. Just a headline. Michael Sailor might have to, you know, Micro Strategy may have to sell Bitcoin. It would crash the price of Bitcoin. Just just a headline, right? Because of the size of their holdings, obviously. All right. Uh I'm curious what the audience uh um thinks about this. Uh we have one time for one question. Um who'd like to to ask something? Um yeah, we have

someone over there. Um also liquidity where you have strategy basically how do you see that having an impetail in those indiv Bitcoin.

How are we now as well as buy? All right. So, the question is, does retail still have a share of the Bitcoin after the the corporates buy it all? Does what? after the corporates buy it or I guess for the for the retail investor I think uh still like education is absolutely crucial. Um I mean it it should not have like a large impact on its fundamental uh properties obviously. So say if some of these corporate uh treasury strategies blow up it might just buy uh provide a nice buying opportunity for the average retail investor. I would say at the same time uh something that we observed recently if you think about the

traditional 60/40 portfolio in our view this is completely changing what we did is we um crafted some model portfolios where we took away some part from the equity and put it into bitcoin with incredible uh like results but what is actually happening right now is that uh all of these long duration risks in in terms of government depth this is becoming the risk factor right now if you check TLT, which is uh Bloomberg's uh 20-year Treasury bond. It's down 50% in the last 5 years. So, it's it's not risk-free anymore. And there's a complete change in regime where we might see like and there's also still 7 trillion in money markets. Um so, I

think this is a a huge aspect that is like not on everybody's radar yet because it's so new. Uh so it's it basically for the retail investor it's very important to have this on the radar and maybe think about at least allocating some into Bitcoin and gold. As Lynn Alden put it very uh nicely. She said the only allocation in Bitcoin that does not make sense is 0%. All right. What what makes sense in terms of a percentage? So 6040 is dead uh for institutions also for retail.

What what does it make sense from a retail standpoint to to have it's hard to put precise numbers here. We know what what Black Rockck and so forth like basically pitch it's they started very conservatively with one and 2%. Uh honestly like I'm cryptonative. I'm also more risk tolerant. Um my allocation is way way higher. So you know just in terms of I I do see I do see a I guess drawback or potential risk to to to Bitcoin becoming a central bank reserve as much as that would get the price up. So I think by now because that would get the price up. Of course

it would be a multiplier on the current Bitcoin price obviously totally repric Bitcoin but of course it would remove so much liquidity. And I I agree with Dominic that corporations doing certain things that may blow up. That's a temporary thing. So that that's kind of more a will that cause a bare market will accelerate a bare market kind of question. But in terms of central banks it if it goes towards gold like status with central banks then it will go it will go towards gold gold market like liquidity liquidity situation which is extremely illquid for physical gold and then what happened is it's paper gold that has all the liquidity but that's of course what you know is the against the

ethos of bitcoin that should never happen so it it could be that liquidity becomes really really squeezed it becomes very volatile. ile again world is structurally coming down that could then reverse so there there are these kinds of but I mean we're so far from that but if we look very far ahead there could be you know questions around that yeah okay so looking far ahead uh watch for liquidity this is what uh Catalin was uh was was saying we have to wrap it up but the dialogue with these two gigab brains uh will will continue so they're available uh for for chats in in the lobby afterwards uh thank you so [Applause]