The Breakdown - The Real Forces Moving Bitcoin Now | Marc Arjoon

Episode Date: March 12, 2026

Marc Arjoon joins the show to discuss how institutional flows, ETF market structure, and the changing economics of Bitcoin mining are reshaping the market. As always, remember this podcast is for informational purposes only, and any views expressed by anyone on the show are solely their opinions, not financial advice. – Follow Blockworks Research: https://x.com/blockworksres Follow Marc: https://x.com/marcarjoon Follow David: https://x.com/dcanellis — Nexo is the premier digital wealth platform. Receive interest on your crypto, borrow against it without selling, and trade a range of assets. Now available in the U.S with 30 days of exclusive privileges. Get started at http://nexo.com/breakdown Get top market insights and the latest in crypto news. Subscribe to Blockworks Daily Newsletter: https://blockworks.co/newsletter/ — Timestamps: (00:00) Introduction (01:34) Do Halvings Still Matter (03:45) Miner Supply And Profitability (08:06) Will AI Shift Move BTC (10:15) Nexo Ad and DAS Promo (11:28) ETFs Treasury And Custody Risk (20:06) Nexo Ad (21:03) Blockchain Not Bitcoin Debate (24:24) Governance And Quantum Risk (31:12) Bitcoin As Separate Asset ⸻ Disclaimer: Nothing said on The Breakdown is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only, and any views expressed by anyone on the show are solely our opinions, not financial advice. Host and guests may hold positions in the companies, funds, or projects discussed.

Bitcoin's had four months of negative net ETF outflows for the first time ever. But even though there's net negative outflows, we're still seeing inflows into it because net outflows doesn't mean that there's not positive inflows also coming in. And these tend to come from the longer term allocators. We still have some pension funds. We still have some asset managers purchasing this. And they're there for the longer term. And they're probably holding up the structural floor, but not enough to get us a quick V-shaped rally.

The following conversation is an extension of a recent episode all about the Bitcoin halving and how the new wave of institutional participation promises to shape the four-year cycle moving forward. For the best experience, be sure to go back and check it out if you missed it. And don't forget to hit like and subscribe so you don't miss any more. And with that out of the way, let's start the show. This episode is brought to you by Nexo. Step into a new era of digital wealth. Earn interest on your digital assets.

Borrow against them without selling and trade all in one platform. Get started at nexo.com slash break. Nothing said on The Breakdown is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only and any views expressed by anyone on the show are opinions, not financial advice. Host and guests may hold positions in the company's funds or projects discussed. Okay, welcome everybody to The Breakdown. I'm your host, David Canellis. With me is my special guest, Blockworth's Research Analyst and host of the new Infliction Point podcast, Mark Aujon.

Thanks for joining us today. Thanks for having me. Excited to be here. Yeah, I kind of wanted to jump off straight away into this whole thing about whether the Bitcoin Harvings are really mechanically relevant to supply and demand dynamics because to me I feel like that ship has like sailed a long time ago because there's like a lot of things in the Bitcoin space and the Bitcoin market that outweigh how many Bitcoins are mined every day and like a lot of a lot of people like to bring it up that oh we're buying more Bitcoin than can

be mined and all that kind of thing and then well if you look at even just the top the top volume on exchanges then even the buying pressure on exchanges outweighs how much Bitcoin supply has been released. So I'm just wondering like your take there. Like am I way off base there in thinking that the amount of Bitcoin mined every day, it doesn't really matter anymore in terms of the market or am I kind of underplaying it there? It's kind of like a two-sided coin because in one sense, it never, it should have never really mattered because everybody knew what the supply would be and for the next until the year 2100 and something.

So, you know, and that's one of the brilliant points about Bitcoin is that it's very transparent and programmatic. And because of that, you should have, you know, whatever valuation model that you use, it should have all already been priced in. But on the other side, it never seems to be the case. Every time it comes around after the happening, I think the narrative picks up. And because Bitcoin is one of those instruments that had a retail base, before the institutional base, I think that the attention around it is what really matters for like near-term price action. So in one sense, yeah, I agree that it shouldn't matter, especially because the changes from

an absolute perspective are smaller and smaller each time. But because historically it has mattered and, you know, for, you know, many investors looking at the past is, you know, the best way to look at the future. and, you know, we've seen this Bitcoin halving upside sewage play out many times before. There's still some level of relevancy to it. I checked this morning just before we jumped on, like the supply that is still being held by Bitcoin miners. And it has been going down and down and down. But it is still around 10% of the supply is being held by Bitcoin miners.

So, you know, to me, it just feels like that whatever the miners are doing and maybe would to talk about AI, you know, later on in the conversation. But it feels like Bitcoin miners themselves might be more relevant to the supply dynamics than even the halvings. Are you paying attention to how much Bitcoin miners are holding or is that not really a really a big deal? Yeah, I definitely pay attention to that. I write about those dynamics in our Bitcoin monthly newsletter. And I think now one of the other reasons for some of this down pressure, I mean, it's reflexive, but because of this, because of the downward movement in price, obviously some of the larger Bitcoin miners will use hedging instruments like futures to offset some of their risk. But their supply, they're mining at negative economics right now. If, you know, if we take aside any kind of hedging, which we're not privy to those

informations, they're mining at a loss because right now, you know, the hash rate continues to climb on a quarterly basis, but the price isn't matching suit and also Bitcoin fees, REV, just from transacting on the network, are a six-month low. And so the miners are becoming more and more reliant on the block subsidy. and with, you know, with the having a year and a half ago, I think, two years ago now, and the reduced fees, I think they are one of the more important haulers to look at, especially now. Yeah, it's one of those things.

And it's because, I mean, it's the same thing. It's like left over from even the 2021 ball run when a lot of the miners were, you know, very over leveraged in order to acquire a lot of assets. And then, you know, there was a question. whether they could even turn those assets on. And then so you have all this kind of leftover asset supply that, you know, they've already paid for, but is still being priced into what they're able to do in terms of their own overheads and everything like that.

Is, are you seen a lot of over leveraged action in the Bitcoin mining space anymore? Is that kind of pulled back between cycles? I think it's definitely pulled back. I think after, I think the ones now, especially publicly treated. ones. I think they have a lot of more for the share responsibility. They have a lot more experience. So those levels of leverage

don't really exist anymore, especially when it comes to purchasing the different ASIC miners. One trend I do see happening, and we've also written about this, is the shift, and you mentioned it a few minutes ago, to

AI. So a lot of these miners are actually starting to sell some of their BTC supply in order to fund these new gigawatt production facilities for data centers for those customers who want these AI capabilities because as you know and listeners may know we're kind of in a data center shortage as crazy as that sounds given how fast they're being built out and so you know companies like iron which is one of the largest bitcoin miners they're they're not holding on to any of their bitcoin anymore essentially but this is not an across-the-broad across-broad phenomenon

I mean, there's other Bitcoin miners who are trying to become almost like a Bitcoin treasury, where they are taking short-term losses to increase their Bitcoin per share, their Bitcoin nav, so to speak. And so we have these two ender the cycles, but the ones that have been pivoting towards AI and funding it through the sale of BTCs, their share price has performed better. So the incentive is kind of aligning to put more of that downward pressure to kind of expand capability to give these Bitcoin miners optionality in the future such that if the current economics continue that they have an alternative pathway. And it's tough because a lot of those dynamics that are so relevant to each individual. And we're just talking about like public mining companies and but to each individual stock.

So it's like it's worth saying that even if even if the hash rate was to, was to collapse by 30% or something like that. Bitcoin, the network is still fine. But what happens to those individual miners, obviously cascades over into Bitcoin's price at some point. What is your threshold for that? Like, how contained is the AI shift to just the individual entities and the companies? And how far does it have to go until it actually affects Bitcoin's valuation?

There's a lot of data showing a strong correlation between hash price and BTC's price. And I think that's probably a correlation, not a causation. It's more a symptom of Bitcoin becoming more valuable, so more people wanting to mine it, so hash power going up, which is literally the intended purpose of how Bitcoin works. But on the flip side, with the pivot to AI or maybe the transition, we've seen it been happening since maybe the middle of summer 2025. And hash rate is still going up. So, I mean, that shows that this transition is still smooth. When when one minor probably comes offline, it makes it easier. And so, you know, Bitcoin is working perfectly. If we start to see this

pick up a little bit more, conversely, I think that would actually be a positive thing because, you know, we've had two months of pure miners operating at a loss assuming hedging aside and if hash rate were to go down it's come down in the past couple of weeks then this would actually be a positive thing because then it wouldn't put as much

economic pressure on the miners to be forced to sell their Bitcoin or to be forced to even buy further in out of the money hedging instruments or even any money hedging instruments So I think it could actually loki be a good thing for the miners. Get started today at nexo.com slash breakdown. Quick break before we continue, Blockworks' flagship institutional conference, digital asset summit is back in New York City this March 24th through 26th.

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Learn more at blockwurst.co slash events. Now, back to the show. As always, investments in blockchain technology involve risk. Terms and conditions apply. Do your own research. Cool. We're going to shift gears now into talk about institutions. And, you know, like institutions is such a broad term.

But, you know, as I kind of unpacked in my monologue, like there's really two. main players like in my view when it comes to institutions and that's like the ETFs or the ETF issuers and then then there's the Treasury companies and we can at least see like Morgan Stanley is pushing to have their own Bitcoin ETF now so at least Morgan Stanley believes that there is going to be more demand for ETFs from ETF investors moving forward and you know we're talking about risk and you know it was only two weeks ago that that Coinbase had to file with the SEC and they mentioned that they are custody 80% of Bitcoin and ether ETF assets.

You know, so at what point is, so if ETFs are going to, let's say, continue to gain steam and gather up more Bitcoin and same thing with Treasury companies, like at what point is Coinbase the centralization risk? And at what point is that risk going to be priced in? Like, is that something that is really on institutions' radars that Coinbase really does custody all of this Bitcoin? The ETFs are definitely changing the dynamics. I can talk more on that later, but in terms of the centralization for custody, right now from a risk management perspective, you are an issue, you're a BlackRock or AAC or whoever it may be. And you know, you've seen on

the headlines how many times exchanges have been hacked or gone down. We have multiple examples of this over the years. And so from a risk management perspective, safest bet is to have a trusted, regulated, publicly listed American company, hold on custody your BTC for you. And remember, this is the, these issuers first enrolled into crypto. And so, you know, I wouldn't be surprised as, you know, they build out their other operations. I think ETF's starting point and maybe, I mean, like spot ETSD's starting point and then maybe we see staking ETFs and a little bit more exotic ETFs and active managed ETFs to get

different sources of yield. I think when AUM hits a certain level, then maybe the risk management formula shifts and you can start to maybe custody your own. And also as the AUM also starts to grow, other custody solutions will pop up. I mean, I believe fidelity custody is their own PTC. And I, And I think that's a symptom of them being in the crypto game for a longer time than some of those other institutions. So I think it's more matter of time than anything else. And I, and Coinbase has a pretty strong record. I mean, I don't want to be the blight on this episode. But I would trust them.

Yeah. Yeah, it's interesting. The influences on the Bitcoin market are just, they're so rapidly changing. especially, you know, and I just sound like a boomer all the time bringing up 2016, 2018 and 2021. But the playing field is just so drastically different. And I think that's really like the genesis of what I was trying to get at with this episode was that, you know, the old rules of the halving and the four-year cycle. Like they do feel relevant only because, you know, Bitcoin started when it did. So, you know, it's just a fact of the matter that, you know,

the first halving was, was when it was. And then the next halving was then. And then over time, we're seeing an increased correlation between Bitcoin and equities. So, you know, and that kind of goes up and down. And I suppose this is a good opportunity to start unpacking your thesis for inflection point, your new institutional focus podcast. But how much of the harvey, cycle and the four-year cycle does still come up with institutions. Because it feels like such a boomer thing to bring up that this is like a thing. Are they looking at that and going, well, that was nice back then, but for now, we're going to appreciate this asset for what it is and what we think it is right now.

Yeah, that's a good question. And we briefly discussed this in Infliction Point podcast as well. I think when we say investors, let's break it down into three types. So first, let's say the hedge funds, right? The hedge funds, their exposure to BTCs through the ETFs, mostly Ibit because it's the most liquid and it has the highest option volume on it. And so, but their trade on it isn't directional. know, they use the basis trade to get yield, which is basically when you short the futures

contract and go long spot. And the futures contract tends to be in Contango, i.e., it's higher than the Bitcoin spot price because people believe that Bitcoin will go up in the future, as it always has. And so that's why it's almost always in Contango. And so no matter how Bitcoin moves, you're capturing that spread between the spot and the futures. If Bitcoin goes down, your profiting from the short of the futures and vice versa. And since 10-10 in October, the 10-10 crash, which is ironically around the same time as the four-year having with support bear market was supposed to start, I think that had some deep market structure changes as well as probably reinforced amongst retail the belief in the four-year cycle. And the reason why Bitcoin's always been in

contango is because even Even with ETFs, if we look at 13-filings of the institutions buying it and the different hedge funds, pension funds, endowments, we're not getting the full picture of it, which probably means a lot of these purchases are happening in retail accounts or SMAs or between wealth managers and client relationships, which is still technically retail. And so their risk appetite still plays a large part in the basis trade, which has now since and since, since 1010 collapsed. And because it's collapsed, you know, we're talking about, in 2024, 2025, we're talking about double-digit yields on this low-risk trade.

And now we're looking at only single-digit yields. And when you go down to low single-digits, we're looking at T-bill interest rate numbers here. It just doesn't become attractive anymore. And to unwind this trade, because, you know, you're not just taking futures contract one week out, one month out, you're probably laddering it up one month, one, two months, three months. And so if we look at CME futures, we see that since October that every single month,

the CME futures open interest has declined by 20%, 25%, 20%, 29%. And so this is a symptom of these hedge funds exiting their BTCB, basis, their carry trade position, and, you know, we're seeing it in ETF flows as well. And so whether that comes back is whether the basis trade starts to expand again and become fat and juicy and everybody wants to leverage up on it again. But I mean, that might in itself be a function of retail or some other catalyst. And then I think the second investor there will also be just be the attention traders, the ones who, you know, love to speculate long term these asymmetric bets and are probably now putting their money into AI or energy or metals like gold and,

you know. But the last point here, the last type of investor would be the long-term allocators. And, you know, if we look at Bitcoin, Bitcoin's had four months of negative net ETF outflows for the first time ever. Three months would be the first time ever. Four months is still the first time. So that's historic. But even though there's net negative outflows, we're still saying, inflows into it because net outflows doesn't mean that there's not positive inflows also coming in and these tend to come from the longer term allocators we still have some pension funds we still have some asset managers purchasing this and they're there for the longer term and they're probably holding up the structural floor but not enough to you know get us a quick v-shaped rally let's take a

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If you're ready to approach digital assets with a more structured wealth strategy, visit nexo.com slash breakdown to get started. As always, investments in blockchain technology involve risk. Terms and conditions apply. Do your own research. What I find super compelling is this relationship between retail belief and then institutional execution on that belief. And that in of itself, it feels very unique to be.

Bitcoin. But at the same time, it just feels so flimsy. And maybe this is like it's a, it's like, it's the perfect like left curve, right curve thing, the Bitcoin halving is real. And then there's me in the middle unpacking that maybe it's not real. But, but yeah, it's super, super interesting. And so I mean, like, another thing that I'm, that I'm kind of seeing and I mean, everyone else is seeing it too. Like Ray Dalio's out here, bear posting about Bitcoin. I'm, Shama. is also bare posting about Bitcoin. And so it feels like that we are almost headed towards, you know, blockchain, not Bitcoin 2.0 or 3.0 going throughout the bear market.

And I, what my surface level read there is is that, you know, Bitcoin feels like it could become less attractive in, in favor of institutional friendly blockchain or, you know, institutional compliant blockchain in terms of like stablecoin settlement and then maybe even, you know, more private blockchains like Canton and kind of operating there. Are you seeing, like, can both those worlds exist as bullish as each other? or is it, does the institutional blockchain narrative take away from Bitcoin or do they coexist? I'm going to lean into the camp of they coexist.

I don't know if this is Cope or actually rooted in logic, but you know, you mentioned blockchain, not Bitcoin 2.0 or 3.0. Like we've heard this many times before and Bitcoin continues to, you know, outperform. And so it, you know, just, I mean, if this is the cycle repeating itself, then for the fourth time, then we, you know, this should be a positive thing for Bitcoin all and all. I do think that you're as an institution, your introduction to crypto, I think the education out there is still very low. And your introduction to crypto only will make you more bullish on the asset class and of itself. And so as these corporations look at maybe, you know, you say Canton or maybe stripes coming out with tempo and Circles Ark, these are Trojan horses into the crypto ecosystem. You, you know, you start off slowly and surely. I mean, JP Morgan, they launched their private blockchain network years ago.

I think it used to be called Onyx or Quorum and, you know, they change your name now. But now they are launching their JP Morgan. deposit token on base, on what is kind of like public infrastructure. And so I think all of these are just gateways for these institutions to start to feel more comfortable within this ecosystem and probably a longer term tailwind for Bitcoin. I kind of want to talk about Bitcoin governance because we, you know, Bitcoin has gone through this transition because around 20,000. 2018 or all of the, you know, the Bitcoin world was splintered off.

You know, you had Bitcoin cash, and then you had BSV. And then it feels like that those camps have kind of all come back together under Bitcoin. Like post-ordinals seem to be kind of a migration back under the Bitcoin flag. And then that in itself has made the whole thing much more contentious all over again in terms of the spam filtering and stuff like that. And I'm wondering how much institutions or even like hedge fund sovereigns, this demand that is meant to flow into ETFs and all of that, how much governance is on their radar? Because we're seeing in real time the Bitcoin community come to terms with, I mean, I don't want to outright bring up the Epstein files. but you did see that there is a lot of information that wasn't readily available about

the early days of Bitcoin development funding. That has become like a lightning rod for debate about how Bitcoin should be governed all over again, even outside of the context of the spam filtering and all that sort of stuff. And when I think of institutional demand, I only think of Bitcoin through an asset lens. I don't think of it from an open source development lens or a software lens. How are you squaring those things when you're thinking about what institutions are looking at in terms of risk to Bitcoin? Because I mean, I know that when you look at SEC filing statements and risk disclosures that at least someone at BlackRock gets it in terms of what the hard fork

risk is and whether that risk is real, you know, who's to say. But do institutions really care that Bitcoin is software and that there is these open source off-chain governance models and all of that politics? My honest answer is from all of the conversations I've had, nobody is not with institutions. When I used to work at coin shares and go around Europe and sell ETFs and in America, no, not one wealth manager, private bankers, ever asked about governance. I don't know if it's even on their radar. I don't even know if it's on most retail investors' radar

or even just most Bitcoin investors' radar. Like how often do you think about governance? I mean, Bitcoin is so slow-moving that, I mean, most people think it's basically ossified. I mean, I think there are some risks. I mean, even just last month in February, one of the core developers, Gloria Zhao, she submitted a pull request to remove herself, and she's been there for three and a half years. And it's kind of what you brought up earlier. And there's none of this is confirmed, but there's allegations around toxic environment.

And, you know, things can get very heated in the Bitcoin community about certain topics. I think one of the real, one of the probably the only real governance risks, the Bitcoin, is the risk over quantum. I do think right now it's overblown. I'm not a believer that we'll have quantum cryptography breaking encryption by in the next, by 2030 or the next five years. I think we're way, a well's way off from that. I think headlines may make people believe otherwise. But even on that front, the first, there was BIP 360 last month, yeah, in February. It's a proposal.

It's a pay-to-mercalaure proposal. And it's probably it's the first one. that kind of starts to address the quantum risk, even though that's not its main objective. So I do see governance as something that will probably come into the spotlight a lot more. And I don't think Bitcoin should change their governance because part of what keeps it decentralized is this messiness, is this no centralized coordination, is this very slow-moving, you know, paradigm. I think that's very important. And we don't want this asset to become taken over by the streets, so to speak.

Kind of like how ITEF flows and maybe these basis trade strategies are doing. So, yeah, that's my two cents. Bitcoin is in its own world. And then we are also witnessing the institutional demand for projects, coins, and chains that do have more centralized governance models, that, And do thrive on that as well. So, I mean, it's just, it's very convenient that there are all these different assets that have all these different profiles in terms of governance.

And it is, it is nice to think that at least that Bitcoin can stay messy like that. It's funny because they're Bitcoin developers like, you know, a lot of them if you, if you press them on it, they might not even really care that Bitcoin even has a price and that there is a valuation because it is about being totally neutral, neutral software and a neutral settlement layer. But I just, I still can't square all of these worlds together. And maybe it's just because I believe in Bitcoin on like a fundamental philosophical level rather than a financial asset level and that your belief in Bitcoin as an important thing for the world almost cancels out the importance of other assets that institutions are almost valuing them.

I wouldn't say valuing them equally, but treating the innovation of all of those things equally. Are you seeing a world where that the more, I don't want to use the term centralised, but the more closely governed chains do take inspiration from Bitcoin and kind of lessen that control because when I hear institutions are moving into crypto, that means that they want to have more control over the networks that they have. So I mean, crypto has many wolves and maybe it's impossible to square them all at once. But do you consider Bitcoin to be in the same world as all the other chains and all the other projects that institutions are looking at or is it a completely separate team? I think it's viewed as I view it and I think it's viewed as a

completely separate thing. I think it definitely has more of this store value, if not more so speculative monetary premium behind it, more so than any other chain. I think it's probably very difficult for any other chain to achieve that same kind of story narrative, store value, monetary premium. You know, like these other chains have ICOs and VCs funding them. You know, like how can you look at gold or silver? Like, how, how, how, How can something that was created by VC money be a store value or decentralized store value for the world? Those stories don't add up. And I don't, it's not, you can't recreate big Bitcoin story.

You can't, you know, people have tried to be anonymous and fork the code. It just doesn't work anymore. There was something pure about the initiation of Bitcoin back in 2008. And that's impossible to replicate. And so I think it's, I think it's in its own, its own asset class. And even though it hasn't been performing as well as gold, I think the bright side is, it shows you that the total addressable market for store value has gone up considerably because of goals rise. Mind you, goals rise has only been through central bank buying. And if we look at Bitcoin, we're what, 2026, we're 18 years in?

Wow. the 20-year roadmap for Bitcoins rise as that digital store value. The thesis is stronger than ever if we just zoom out a bit. And so, you know, I do see a future where central banks around the world in the longer term will be also allocating a portion of their reserves towards BTC as well. Cool. Bullish. I think we're going to leave it there.

Thank you so much for joining us today, Mark. And please, everybody go out and check out the new Inflection Point Podcast. for more on the institutional side of the crypto space. Thank you so much, Mark. Yeah, great. Thanks all with me, David. Cool. My pleasure.