Unchained - Bits + Bips: Markets Are Down Bad. When Will Crypto Recover? - Ep. 790

Episode Date: February 26, 2025

Crypto markets are down bad—but is this just a rough patch, or are we looking at something bigger? After a brutal sell-off in Solana, the $1.5 billion Bybit hack, and macro uncertainty weighing on Bitcoin, investors are searching for answers. Some think the worst is over, while others believe more pain is coming before the market turns around. In this episode of Bits + Bips, Noelle Acheson, Alex Kruger, and Ram Ahluwalia are joined by Eliézer Ndinga of 21Shares to break it all down. They discuss how institutions are approaching this downturn, why Solana has been hit harder than the rest, and what catalysts could bring crypto back to life. Is this the start of a new accumulation phase, or are we in for another leg down? Show highlights: 2:36 How the ByBit team responded so well to the hack 17:43 Why the market selloff was not specific to crypto 29:09 How institutions have become more sophisticated about crypto 31:10 Why SOL has been down so much and whether it has bottomed 34:37 Whether tariffs keep having an effect on the markets 37:23 Why the state of the markets makes Eliézer think the crypto asset class has matured 41:27 Whether bitcoin can be a safe haven and the role of diversification 45:26 What the next catalysts for crypto are 49:33 Why Eliézer is so optimistic about the long-term outlook of crypto 53:33 Alex’s spicy opinion on DOGE and Elon Musk Sponsors: Somnia Network RockWallet Bitwise Hosts: Noelle Acheson, Author of the “Crypto Is Macro Now” Newsletter  Alex Kruger, Founder of Asgard Ram Ahluwalia, CFA, CEO and Founder of Lumida Guest:  Eliézer Ndinga, Head of Strategy and Business Development at 21.co; the parent company of 21Shares Links Unchained: North Korean Hackers Are Winning. Is the Crypto Industry Ready to Stop Them? Reuters: Trump says Canada, Mexico tariffs on schedule despite border, fentanyl efforts Learn more about your ad choices. Visit megaphone.fm/adchoices

Sentiment is pretty dower right now. Sentiment is pretty dower, right? So it's a question of just time horizon. If you extend your time horizon, you should get more bullish. Hi, everyone. Welcome to Bits and Bips, exploring how crypto and macro collide, one basis point at a time. This week, we're talking about, of course, Bybit, which just faced the largest hack in crypto history.

We're recording this on Monday evening. $1.5 billion gone. Bybit seems to have failed in the game. Is the drama now over or is there more to come? We'll also talk about crypto market malaise. Again, we're recording this on Monday night after a market sell-off today. Recently, the majors, Bitcoin and Eith, they haven't been doing very much. What's going on and what could change that?

And we have to discuss what's going on with Solana, which has definitely been suffering. And there's no shortage of other big topics to address. We'll look at market infrastructure developments. Today we saw reports saying that Citadel was looking to step into crypto markets as a market maker who discuss that impact and more of first some intros. I'm your host, Noel Etchison, Highseer and Keeper of the Crypto Rism Mapper Now newsletter. And I'm here with Alex Kruger, Kruger Backpro of House of Asgard, Protector of the Realm, and Ram Al-Aloalia, Master of Wealth, leader of Lumida.

Just remember that nothing we say here is investment advice. Check unchained crypto.com slash bits and bibs. more disclosures. Today, we are joined by Elie and Dhinga, Lord Strategist of 21 Shares Key. Hi, everyone. Hi, everyone. Hello, hello. Did you know Somnia processes over 400,000 transactions per second with sub second finality and sub cent fees? Somnia is built to bring reactive mass consumer apps like gaming and socialify fully on chain. Learn more at Somnia. work. I'd like to introduce you to Rockwallet. This is a digital wallet that puts your crypto under your control. Using Rockwallet is quick, easy, and secure. Visit rockwallet.com slash welcome

slash unchained chained for an exclusive welcome offer for unchained listeners. Crypto moves fast. It's why Bitwise launched the weekly CIO memo, a jargon-free summary of what's moving crypto markets written by one of the best in the business, CIO Matt Hogan. Get up to speed in five minutes or less. Check it out at bitwiseinvestments.com slash CIO memo. Carefully consider the extreme risks associated with crypto before investing. So let's dive in by bit. Very big news. Markets were surprisingly calm throughout the weekend, despite the potential gravity of the hack. And we're seeing some sell-off here on Monday. But again, we'll get to in a minute whether that's related or whether that's something else.

But, Ellie, I want to throw this to you first. Do you think that the drama is over? for by bit or do you think we'll be seeing more news from this particular incident? This is such a great question. We don't know. I think the short answer is that we're taking it the day by day to understand the second order effects. But what we know for sure is that this has been one of the most sophisticated hacks in crypto's history.

And this happened really in three stages that I think has been quite scary, especially for the bi-bit team, from identifying the top. signers of their contracts to trying to impersonate a LinkedIn recruiter to get the ByBITs employees to complete a technical task. And then last but not least, trying to identify the weak links of the BIB employees to understand at what time they should pull the trigger and attack them specifically. And I think this is something that we haven't seen before and could happen to anyone. And of course, this led to multiple service providers and crypto companies to understand the contingent risks to see whether their assets are actually potentially at risk. And the good thing is that to me, the silver lining has been that the BIB team has been nothing but professionals to provide transparent communication about how exactly the hack happens.

And most importantly, how they were able to relate the customers whole by getting loan agreements with Binance. in over-clipped exchanges like we get, but mostly importantly as well, making sure that they can also explain the entire infrastructure the way we were able to come out really strongly in the midst of the aftermath of FTX. So there are multiple solutions

to physically protect the customer's assets from the exchanges like, you know, clear loop from copper as well as safe rule from Binance that essentially segregates the assets from the exchange to a costoray solution, which has been a, I would say, say a mitigation for multiple protocols like Athena, for example, that were relying on ByBIT for making the basis trade, right? So long story short, I would say is that we don't know, but I think

by bit has been incredibly helpful to be transparent with the help of the community as well, like Zach XBT to provide on-chain analysis in real time and also identify the hackers who we know now are essentially Lazarus group. So I think long story short, I would say, is that we don't know that the committee has been comforted with the real-time information, despite the fact of course, by-bit expense, $2.5 billion of withdrawal requests within 24 hours, which actually is the largest in history for them. But I would say that they have been really good at providing the right information, including proof of reserves that they published yesterday as well to ensure that we can see in real time the flow of funds. And I believe that the hack itself

was probably less than three, the open 3% of the entire FM supply and less than 1% of by-bit assets as well under the platform, which is today down from $20 billion to $12 billion, but they were able to make the customer's fault. To take that kind of hit and still come out swinging is really quite something. Highlight It's that good leadership, strong leadership actually has to be the number one asset for any firm. So, bear in mind, this was the middle of the night for them when it hit. And yet within minutes, within minutes, they were up there on a live stream looking groomed and well lit and was absolutely astonishing. Alex, what was your take from where you are geographically now, but what was the mood on the ground where you are?

Yeah, I didn't know the data that you just shared, Ellie, on the drop from 20 to 20. 12th, that's very significant. I didn't know it. I think we got lucky. I think Bible got lucky. I think the entire industry got lucky. The reason this is not an absolute disaster is because they have the money. So everybody got lucky because the hack could have been twice as big.

You know, they could have handled, they could have targeted multiple addresses within this. it could have been bigger. So, and if it would have been bigger and buy it would not have had the funds, it would have been an absolute disaster. That's basically FTCS all over again, without the fraud component, right? So, yeah, my main takeaway is that we got lucky.

I also don't think anything that's happening in the market today, Monday has anything to do or little to do with the, by-bit hack. We have a couple of things. This morning we had Sailor coming out and announcing quite quickly that he was basically doing $2 billion in Bitcoin. And within a few minutes, he announced that he blew his load already all at once at 97.8.

And, you know, when you have a weak, a weakish market with the NASDAQ basically pretty much dropping 1% on the open. very fast for no particular reason, as far as I know. And we have Solana and Lux, which are massive. We talked about it two weeks ago. And I would guess you talked about it last week again. Did you? Because it's so big.

That Solana is taking a very, very massive hit for the last two weeks. You could say part of it. Yeah, go ahead, please. Before we get on the full market thing, because there's so much to unpack that. I want to stay with Bybit just a bit more again because this was such a big deal. And because, as you say, Alex, we got lucky. But did we or was there some good planning and some good contingencies and Bybit's success being part of this? Ram, what's your take?

I agree with the comments that were made. Alex, I think, is spot on on how it could have been terrible. It's a weird glass-half-thing. I think there's some questions around what do we make of the fact that North Korea owns more Ethereum than Votelic? The Lazarus Group, which is one of the greatest hacking groups in the world, hack for Ethereum, right? They use Ethereum now, I guess, as a source of foreign currency reserves to finance themselves. By the way, if you want to talk about sovereign state adoption, it's called North Korea. There's your next sovereign state that adopted crypto.

Not in the way we wanted to. but I wonder what this means for the regulation. I don't think it's going to change anything, actually. I don't think Trump is going to, it doesn't matter. It doesn't matter. Yeah, because what could they do to change the regulation? Well, in fact, KYC, AML, like you could say, I think under the prior regime, you would have had a heavy-handed response to this,

which could have been around requiring an onerous burden at the, at the deeper node validator levels, at the block building levels. So, yeah, it could have been much worse on a different timeline. Think about Bybit, though, is, you know, Bybit, their customer base, are very sophisticated investors. You know, I had a lunch last week, several crypto buddies. Like, hey, what's your favorite exchange? Bybit was at the top of the list.

Can't make this stuff, right? I talk about funny timing and coincidence. And that why? because it has breadth of product offering. It's faster to have access the tokens. They don't have all the headaches and hassles of other methods to kind of manage private keys. So that's a blow to that population, which is a, you know, it's an engaged population. That's like the marginal buyer and the marginal seller.

Right. So they're kind of out of commission, at least on the east side of what they were doing. And it's going to increase some risk aversion, right? They're going to be more defensive. They have a hard conversation potentially with their family members. So there's some risk-off effect from that. Yeah, and also everyone everywhere is revising their custody procedures. Now, I imagine a positive spin on all of this was how the industry came together.

I mean, you had the other exchanges and the lenders stepping in right away with loans. I imagine on reasonable terms when they could have really charged what they wanted. There was a sense of camaraderie, as in, yes, this could have probably. happened to any of us and we got to somehow make this right because as Alex pointed out, it could have been really, really bad on that. Ellie, what do you think the regulatory fallout could have been? It could have been a lot worse. And I couldn't agree more with RAM, but I think also we don't have yet the full ramifications

of the aftermath of the BIDIDET hack, specifically because he knew that, for example, a couple of days ago that they were starting to lend the money on the seminar network to launch mimcoins at Pum.com.com. But currently, they hired a group of overhikers to create that Mimcoin. But the reaction of Pub.combe has been nothing but quite impressive. They were able to blog the tokens. They were able to blacklist specific addresses. And I think we're, as you as you have fully mentioned, we are seeing today a,

a community camaraderie to really support one and over in this time of despair on the by-bit side to ensure that they can as much as possible retrieve the funds from bounties like Arkham that was trying to really identify the hiker and as ex-BIT was able to do so

from even by-bit itself. They launched a 10% bounty for the full amount which is today about $140 million dollars, which is not a small amount to consider for a group of analysts and hackers that could find the right set of funds. It's not going to be very easy to attribute to the funds, by the way, because we're saying now, even as we speak, that the hackers are spreading the assets across multiple wallets.

They're trying to use also mixers and other solutions like that to obfuscate the transactions. But I think what we've seen today is that there is a strong power of on-chain analytics that really helps law enforcement, but even non-profit organizations like the security aliens that was built by Samsung from paradigm that really helps now the industry to get more transparency behind the scenes, and most importantly also the support from government agencies to understand how to strike the funds. And the last thing that I would say is that actually law enforcement has become a lot more sophisticated. Maybe you guys remember, but like a few months ago, the FBI, launch their own nimb coin, and they were able to then in jail some of the most fraudulent market makers in the space.

So I think we're going to see the rise of white hats on the back of this bi-bit shenanigan. And to me, this is for the better in our space. We're also going to see a lot more of exchange solutions in the market by over-exchanges that would try to segregate the customers' funds from the coastal solutions to the platform. And I think copper and violence has done a fantastic job at that, but we're going to see a lot more exchanges with custody solutions to also pursue the same solutions. And I think we're going to come out stronger than ever. But certainly we don't know yet how regulators are going to react to that, specifically, I would say, in the European Union or also in the U.S., but I would probably anticipate a tougher reaction from the EU. Yeah, but also, as you're suggesting, quite a lot of self-regulating.

as well, which is in the end. They both help the regulators as well as the industry as a whole. You touched on the speed with which the hackers were distributing the tokens. That's the double-edged sword always. Yes, they can distribute fast. And again, this is over the weekend, but the same time we knew it was happening almost right away. Zach ZBT on X started flagging some strange movements. And within 30 minutes, the CEO had put out a statement. And again, this doesn't happen in Tradfai. This level of transparent. and speed. And again, it was all fixed. The hole was plugged over a weekend by the time Monday morning rolled around. Yeah, I couldn't agree more. But also adding to your point is that, yes, there is self-regulation at the same time. It's really, I don't know if it's a coincidence that

this hack happens when Tornado Cash is no longer part of the fact list, and that the developers of Tornado Cash are no longer in custody anymore. So I don't think that the, you know, This is a coincidence. And I think to me, the hikers are getting a lot more sophisticated, but the rise of the technical education by law enforcement, they also like the consortium of on-chain analysts to me has been nothing but impressive. And we're going to see more of that as well internally at several crypto companies

to become a lot more sophisticated as well and to raise the bar to ensure that they can prevent such hacks. And most importantly, also review the key person risk as well. Because to me, what happened with Bibit is that probably there was a bunch of employees at Bibit that were looking for a job and accepted an offer from a linking recruiter installed the software that contained malware. And essentially, then they were able to control the signing authority of these laptops. So I think we also have to ensure that as a whole industry, we have the right, you know, best practices from a security perspective and from a risk-modern perspective. And I think the space is going to grow a lot from that as well. They didn't game the code.

They gained humans. And again, this for me anyway, was the most alarming part of the whole thing, that this can happen to very experienced people using Maltisig. It really does remind us that this is an evolving technology when it comes to custody. It's not like traditional finance custody as well. Custody in crypto is an evolving technology still. But you're right. We're going to be learning a lot from this.

And we should just be grateful, as Alex points out. how the cost was minimized. Unfortunately, Bybit still have to pay back the loans at some stage, and they've got quite an uphill struggle. But the markets may well be helping them sooner or later. Certainly doesn't look like it's going to be sooner. Alex started talking about some of the weakness that we're seeing, and I totally agree about Sol perhaps dragging part of it down, the malaise generally. I can go into in a few minutes why NASDAQ is dropping. There actually is plenty of reasons going on there. Reasons to worry.

But meanwhile, Ram, what do you think about the, is this a crypto drive, a crypto slump we're seeing, or is it a risk-off slump? It's a risk-off slump. I mean, you see it across markets. You know, you see the data center theme is pulled back. Pick kind of any category that's thematic. That's pulled-backed. GLP1's cracked last year.

Constellation Energy, talent energy, and the nuclear power plant theme, that's pulled back. nuclear stocks have pulled back. So it's, you know, you had an incredible 23 and in 2024 with double digit rallies in the S&P. And then thematic plays were up even more than that. And the peak of the market was when there was speculation that Trump would broker a grand deal with Russia and Ukraine. And we'd have a global peace dividend. That was the top of the market. We call that peak sentiment. And then three days later, Zelensky gets thrown. under the bus and it's called the dictator and it's the whole cycle. It's so back, it's so over. You know, we know a part of the cycle we're on that one now.

Now we're on the throwing people under the bus part of the cycle. Tariffs don't seem to be mattering that much anymore. It's like tariffs, yeah, whatever. Tariffs, you should fade the news on that. Their stocks index are tariffs that are doing fine. In fact, they're up today like GM. So I don't think tariffs matter at all. But I think this is a bit different than prior pullback. You know, this pullback could metastasize into a correction. I think you get a bounce this week. We're net 100% long as of this morning.

We were like 80% last Wednesday. That's about as low as we'll ever get, by the way. But I think you get a bounce on risk assets this week. But the question is, do you sell that bounce? And I think it's something you really need to consider. I think you probably want to from where I see things today. So intermediate term, I'm more cautious. It's like you have a lot of the conditions in place for for a correction.

We're only down about three to five percent from the old time highs and equity market indices. I think, you could get to 10 percent. You know, Stevie Cohen, Friday didn't help when Friday afternoon after market was already down. He's like, look, I think you're going to have slowdown that's that people aren't expecting. So there's some growth scare conversation out there. I personally don't share those views. That's not what matters. What matters is how people are positioned.

Relative to new information. So people are positioned for Goldilocks, which is actually the right answer. But the marginal news flow is saying growth scare and people are going to get more conservative. Some of the macro data came in a little bit weaker. But if you do get that correction, though, I would buy that. That would be absolutely, that would be viable. It's just a question of managing where we are now to that next waypoint. And the growth scare does seem to be getting more real than it has in previous data wobbles.

And it's not just the retail sales that we were talking about last week. We also are seeing some. I was looking at a global economic uncertainty index earlier today, which is now pretty close to its all-time peak, which was in May 2020. And yet we're not in a pandemic. Or again, there's also reports coming out of China that there is a new pandemic, possibly that could be a concern. I heard from several people that this is what triggered the sell-off on Friday,

because we're not going there again. But nerves, uncertainty indices throwing through the roof, inflation expectations are soaring up. The nerves are high. And Alex, do you think that this could be exacerbating the crypto nerves? Oh, absolutely. I mean, it's mainly a risk of thing. otherwise, you don't get this kind of move.

But it's at the same time. It's a combination of things as we have, as I said, the sailor thing, Solana, and general moves on equities. On the equity side, I have to say, there's a lot of reasons. I don't think there is any of those reasons is good enough. The China one is definitely not good enough. The China one is a story about a more aggressive, coronavirus being replicated in a lab, in the Wuhan lab, the same one where the virus came from

by the same, one of the doctors, the PhDs involved. And the news was stronger coronavirus replicated in a lab. Here is the paper, which is very different from, hey, we found a case in the wild. Yeah. So I think that's, yeah, it's not, that's, yeah, everything matters. matters, right? This is I like to say, it's not binary. Everything matters, but that's very small.

The Michigan expectations, inflation expectations also small. We have the Microsoft story about basically the main Microsoft potentially rumored, like interpretation of by the marketplace of basically Microsoft pulling back on CAPEX. That's major. Microsoft basically this morning before the Open day, they walked it back. But my concern actually is that I haven't seen on the Open on Friday, on Monday, haven't seen anything really major to drive, explain. And when that happens, I get concerned.

It's just basically people selling. Well, I think your Microsoft points right on. I don't think the market realizes that Microsoft walked up back. Actually, I wasn't aware of that. I'm pretty much on top of this stuff too. So I'll double click that. I think Microsoft pulling back on CAPEX was much bigger than DeepSseek. DeepSick was story and fear.

Microsoft pulling back on CAPEX spending is that undermines the most powerful theme in the markets, which is the AI theme. And by the time you're all listening to this, we probably will have had Nvidia earnings, which, let's face it, are a market-moving event and possibly could influence, not necessarily the fundamentals of all of the other companies that make up the S&B 500, but certainly one of the one that could be driving sentiment. Ellie, the clients that you talk to for 21 shares, what main factors are they looking at?

Do they look macro and then extrapolate into crypto, or do they tend to be crypto-natives and just acknowledge the macro mood? It's both. We are seeing clients looking at macro and geopolitics as a whole to understand the impact, the correlation, but most importantly also, how do they diversify their portfolios and making sure that they can actually categorize the right crypto assets within their very own strategy. They want to be a lot more risk-adverse. Sometimes, actually, Bitcoin could make sense for them.

It depends on the context. We've seen that a couple of years ago with the banking crisis, where essentially there was an inverse correlation between the banking stocks and Bitcoin. And I think here we're seeing similar conversations as well with the clients. actually they're getting a lot more sophisticated. Bitcoin has become a macro asset, but I think this is the same as well for even growth assets like Ephem and Solana and the Longtail, which are more in the bracket of, you know, the tech stocks.

And I think they are all interested in education. They're all willing to understand the difference between value and the price. Sometimes there is a huge delta between the price and the value, and that's why we really spend a lot of time on educating them on, you know, valuation frameworks and understanding also some of the other exogenous and indigenous factors that may impact also the valuation of these assets. You know, we've seen that with the China ban four years ago, but also I think there are over factors here as well when it comes to the contagion risk of certain assets.

When we look at even like stable corings that were impacted by the banking crisis, but also now when we are looking at an exchange that may have blown up like by bit, but they were able to get recovered with loans. and the support of the community and no enforcement. So I think overall, they really understand that crypto is not just an isolated asset. This is an asset class that is highly impacted also by geopolitical conflicts as well. And this is a force to be recognized and they understand that. But for us, we really want to focus on their time horizons.

Some of them are really short term because they actually have, you know, basis trade strategies or any other strategies that really make sense. in the short run, where all users are really focusing on the long tail and in the long run timeframes. We really try to adapt as much as possible to the client type and the time horizon, they invest in style to ensure that we can meet them where they are and, you know, push them from zero to one into these asset tax. What makes Rockwallet so special? Well, has the thought of your crypto being compromised ever kept you up at night? Yeah, us too. Rock Wallet is here to take that stress away.

It's built with the security of your assets as the number one priority. Rockwallet is SOC2 compliant, FinCN registered, uses two-factor authentication, and the tools just keep getting better, with more upgrades coming in 2025. Right now, Rockwallet is offering $75 in LTC for unchained listeners to give Rockwallet a try. Sign up and make your first trade by March 31st to qualify. Visit rockwallet.com slash unchained to get started. The future of mass consumer applications is on-chain, and Somnia is leading the way. Built as one of the fastest EVM Layer 1 blockchains, Somnia can process over 400,000 transactions per second with sub-second finality and sub-sent fees.

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Visit somnia.network to get started and learn more about Somnia's $10 million grant program. Hey, it's Matt Hogan, CIO of Bitwise. Every week I write a five-minute memo on the biggest stories impacting crypto. In this week's memo, I tackled the recent market pullback head on. What's driving it? How long it could last?

And what special opportunities exist for long-term investors? Find out more at bitwiseinvestments.com slash CIO memo. That's bitwiseinvestments.com slash CIO memo. Carefully consider the extreme risks associated with crypto before investing. The recent involvement of institutions in the crypto market over the past few years has largely been bucketing everything into the same category. Crypto, just get me some crypto exposure. Ellie, have you seen that change since the launch of the ETFs? A little bit, especially when now we're getting a lot of questions, I would say, especially in the US on, you know, beyond Bitcoin,

what do we have? And now we have an FM ETF as well. So it's not just Bitcoin and the rest of the world. There's also Bitcoin and potentially FM or Bitcoin or if I am. But I think for the past, you know, of seven to eight years, 21 shares. We launched the largest suite of crypto ETPs in the European market, and the conversations had not changed. It depends where the clients and the prospects are in their journey in the critical asset industry. Some of them are new, so they have to actually have a framework to classify these

crypto assets. And that's why three years ago, we came up with the geeks of crypto assets with Kone Gecko, called GCCCS, to classify all these crypto assets by sectors. and industries, but also the underlying tokens as well to understand the difference between, for example, UST from Luna and UST, which has nothing to do with it. And I think it has been really helpful to build, you know, these wires and plumbings to help them understand the classification, because then from the classification, they can actually apply valuation frameworks, whether it's relative valuation or intrinsic valuation

to basically measure whether the market is overbought or oversold. will be the potential market size as well for the opportunity. There are the same conversations I would say all over again. It depends where the clients are in the journey, whether they're beginning or advanced. And also the type of fund and the size of the fund and how diversified they can get. Alex, do you think the broader market understands what's going on with Salana? I mean, you referred to the unlock, which obviously is a very big deal. And I actually have some figures here.

Let me see if I can find them on. Yes. Okay. Salana is down 15% since the Libra scandal, 20% year-to-date, and nearly 50% off its post-Trump highs. And again, we're recording this on Monday. Who knows what it would have done by the time you hear this. But, Alex, do you think people understand that there's different stuff going on in Solano or they put it into the crypto bucket? I think they understand now, like in the last four days.

Now, everybody's talking about it now. but it was not that clear, you know, a week or two weeks ago. It's down 25%, by the way. It's like Leiber happened. We were like at 200, 205. We're at 147 right now. So a little bit more than that. Yeah, it's typical of these things.

By the time the market realizes, you know, what's going on, it's usually too late. That's why most people shouldn't be trading because by the time they realize, hey, it's a bear market. Well, yeah, but it's already is a bear market. And then they don't want to sell because it means taking a loss and we are, we don't want to do that, do me? So do you think that, Alex, do you think Seoul has much further to fall from here? I have honestly no idea because the numbers coming up are very large. And right now, I mean, Bitcoin takes everything. is wake. It's looking pretty weak right now. I wouldn't be surprised if we test 89 pretty quickly.

So it's very hard to tell. On the other hand, it's really hard. Like I wouldn't be shorting here. If you look at liquidations today, liquidations data is very large. When 150 broke, there was very significant volume and liquidations taking place on salt. So under normal circumstances, that's a bottom, like very high confidence bottom, but these are not normal circumstances because soul doesn't trade on its own in a vacuum. And we have the unlocks that are basically, like estimates are, it's about 10 billion souls. It's about $2 billion.

And that's just what's on chain. There's more, actually. So it's very difficult to say. And when could we expect to see the end of the unlocks? They start winding down. Unfortunately, they continue in size

in April as well. They only become small May onwards. Now remind you to everyone to check the tokenomics. And this is hard, especially given how fast everything. It's not about tokenomics.

It's basically what, it's basically tokens from FTX that the FTX state sold to so many different parties, by a couple of brokers, mainly Galaxy. And so, yeah, it's not tokenomics, you know. Good point, good point. Ram, what's your take on Sol? Do you think we're going to see some rotation into ETH or are people going to be buying at lower levels? Yeah, look, I think there's some risk off ahead. I think part of that also is there's some news that came out literally as soon as we started

this show, which is that from Bloomberg, if you can share it on the screen there, no well. But Trump is moving ahead with tariffs on Canada and Mexico at the 25% rate. As soon as that news hit, actually, it caused a sell-off in risk assets in NASDAQ and all other risk assets. So apparently, I guess the early read on the story was 3.25 p.m. So if you look at the indices, they all accelerated they're selling around that time, right? Now, April 1st is the date where Howard Ludnik has said he will present a plan which then Trump can choose to execute or not. And, you know, the market doesn't understand is Trump serious or not? I think if there's a correction that unfolds from this, it's going to be viable.

There's been a lot of tariff news that's impacted markets. Now, the interesting learning here, though, is this is the markets did not like the concept of universal tariffs, and it sold off on that concept like every time. But when Trump talked about bilateral and reciprocal tariffs, markets actually rallied. Marcus didn't care, right? So now you have markets going down on bilateral reciprocal tariffs. It might be the case that Marcus didn't believe tariffs were going to happen. Yeah, so much for my earlier comment that tariffs don't seem to matter anymore. I guess they do matter.

But you're right around. This is early. The deadline for that was the beginning of March because he said in February, okay, they seem to have made some concessions. They've got 30 days. And then we'll apply the 25%. This is not 30 days yet. Yeah, it goes back to the melez and the anxiety.

I mean, it is exhausting to keep up with the news headlines. Have you guys seen the meme of the World War II guys? He goes out and he comes back three years later. He aged 80 years. It's like that when you read the news. Right? It's exhausting. I mean, it's so much to process. So that's just weighing on people. It's a, yeah, and that caused people to just pull back a bit more. So I think it's viable. You know, Trump identifies as a stock market president. You know, maybe next week we can talk about, when do you buy it?

Did we buy it? Do you buy it in the future or not? It's hard to say right now. It's all unfolding. Yeah. And if indeed Trump is a stock market president, he sure seems to be trying to get things volatile, not only talking about tariffs unnecessarily, but also the geopolitical grandstanding is disconcerting. Ellie, what's your take on the outlook for volatility as it could impact crypto portfolios, again, seeping in from the macro world? I mean, when we were looking at the long-tail assets, when we look at the figures and especially the indicator of the current price compared to the previous all-time high. Some of them are trading down by more than 50%

for the all-time high, even 60 or 80% for certain long-tale assets. So I think we're in a phase of the cycle that for certain sectors and industries, we've seen significant drawdowns that, to me, really resemble a fair market. And I think it shows, again, that the asset class has become a lot more mature

where we now have isolated bare markets, across specific sectors, like, for example, AI coins, but it could also be, for example, also some Solana defy tokens. Probably you've seen that over the past 24 hours. Radium dropped by more than 30% within 24 hours on the back of the fact that POM. DotFund was able to launch their own decentralized exchange on the platform. So essentially moving away some of the capital from Radium to Pum.com. ton. So I think, although we're seeing this isolation of multiple bear markets or corrections

and very large corrections for certain sectors, and I think, again, to the question that you asked me previously, I think the investors have to also recognize that the asset class has so many sectors and industries similar to the gigs. And we have to adapt to that as well. We have to adapt to the narratives. But I would say, though, that what we're going to see is almost like a regression to the mean to fundamentals to really understand some of these valuations. Sometimes we had multiple products with a crypto that had the $200 or $300 or $500 million valuation

without a product that came out and with just pure speculation. And I think one of the best books that I read this year was from Howard Marks. And the book is called Mastering the Market Cycles. And this is such a great book when you're seeing a lot more fluff in the market where people cannot justify a valuation,

and they may think that the numbers will only go up. And I think we've seen such a phase right now for certain long-tale assets, and now we're seeing a regression to between for specific sectors. And I think the correlation with the macro market is going to be also incredibly important. Of course, if we have a black zone event,

any assets in the short run is going to drop significantly. We've seen that with the collapse of the markets back in March 2020 when we had the first case of COVID-19 in Italy. So I think any black 20 events, of course, would have a major impact on the market itself in the short run. But I think in the long run for us, which is something that I personally look out for, is more about what would be the best value creation for this asset class

and where we're going to see significant improvement. People talk about the rise of AI agents, and this is fantastic. We're excited about it. But I'm looking forward. to see cybersecurity products that would basically help to solve the hacks in real time because, of course, Zach XBT and over cybersecurity firms are not available 24-7. Unless they have a team of researchers and analysts to cover these acts in multiple time zones.

Otherwise, it would be very difficult, right? So I think the conversions between AI and crypto where we can solve the most fundamental problems that we have in this space, I think it's something that I'm incredibly excited about. And I think that should not, like, you know, the recent price action should not divert people away from focusing on the beautiful fundamentals and the use cases that we hadn't seen before. And I think you see where we're focusing on right now. So greater adoption, greater security, and deeper understanding of the narrative, speaking of which, tying this into the uncertainty that we've been talking about, gold continues to climb. Earlier today, became really close to hitting 3,000 and yet Bitcoin. coin, the digital equivalent, is going in the other direction and behaving like the risk asset

that we know it sometimes feels like behaving like. Alex, what's your take on the safe haven narrative? Are we just going to be holding onto our hats and hoping for the best meanwhile? Or do you think safe havens, especially given what's going on out there, are going to have their moment? Safe haven for whom? For what? Diversified portfolios. I'm not a big fun of diversified portfolios, to be honest. Cryptoferst, right?

You have dozens of positions on any time, Alex, right? Yeah. That's diversified, although cryptoferrous. What I'm trying to get at is if gold is rallying, given the uncertainty and given the geopolitical drama, then why is Bitcoin not doing better? I think that's a better way of putting what I'm trying to get at here. Ram, what's your take there? Well, I think Bitcoin is just part of the risk-off concept from animal spirits, weakening

and micro-strategy rolling over. and you know, you see this in other categories. If you see like a Palantir stock, that's down. You know, Reddest stock, Robin Hood. You know, think about this way. People that buy Bitcoin want a lottery ticket. That's it. The psychology of that lottery ticket's broken now because it hasn't gone.

You know, the funny thing is Bitcoin is now a store of value. It's gone nowhere in three months and people are pissed. Well, now it's actually hitting down a little bit. We'll see. You're right. We get tired, as you said. It's exhausting. just waiting and waiting and waiting, but then that leads to the capitulation that we all

know is a necessary part of setting up for the next rebound. And then we get market infrastructure news. Ellie was talking a bit about catalysts, and we see today that Citadel is looking at entering into the crypto market as a market maker. We saw many of the big names leave the market after the 22, 23 crash. That's one of the reasons it took so long to recover because institutions want liquidity and institutions also bring liquidity. Is this the type of catalyst that could get institutions involved

and could bring in the new funds that we know are going to be necessary to get the bull run going? It makes it easier for institutions to engage, but the infra is there, the SEC is there, you have constructive. You know, they called off the lawsuits against Coinbase, for example. But I don't think Citadel is going to change investor-eastern, appetite for institutions, right? That's one about a role in the portfolio.

Yeah, it's a role in the portfolio. It's, yeah, look, I think people are just deflated, right? It's just too much. And it's not just in Bitcoin. You've seen a lot of asset class. This is an interesting point around I actually disagree with Alex on the diversification. Like, I also have dozens of positions like Alex, but they are across asset classes. So if I have a loss in one category, I can tax off harvest if I like you.

it, I can double down. My psychology is never compromised. It's a very important point. And I'm looking for good risk to just return opportunities. And if I have multiple uncorrelated return streams from different thematic ideas, then I think you can do well. So I think if you're concentrated right now, you're in a really tough position. Because what happens when the tide goes out, you don't know what boat you're on. The tide is going out. Well, I want to say that that's for people who are very active in the market. That's my case. That's good point.

I wouldn't recommend what I do to absolutely anybody. Yeah, that's fair. That's a fair statement. Like, or very few people out there. Very few people pull off. Yeah. Yeah. I agree.

Alex, what would change your mind about the market mood? What sign would you, what sign would make you sit up and pay attention? Right now, there is nothing really right now. I mean... Just waiting, right? Just waiting. It's just price, maybe the news on the tariffs front, the news on, okay, NVIDIA earnings being stellar,

some earnings guidance about basically the state of the industry. I don't, maybe a surprise on the Zelensky putting Trump novel. Trump could basically roll back there. The tariffs that he just basically pushed. an hour and 55 minutes ago, he could basically roll back that narrative, postpone it again. I don't know. I don't know. Unfortunately, I don't know.

What about you? Me, similar. I'm with Ellie. I think long-term things are looking really exciting for a setup here in terms of infrastructure, in terms of interest, in terms of longer-term education, and waiting for the institutions to bring the new money in that we know we're waiting for. for. And, you know, Ellie works with institutions. You know, they take their time. They also tend to move as a pack. They're waiting for other people to jump in first. But I'm not convinced

that they're looking at the short-term factors that we get hit with every single day. I'll give you some hopium. Everyone needs some hopium. I can feel it in the air. Here's some hopium. Number one, Trump executes a global peace deal with Ukraine and Russia. They're working on that right now. People aren't discussing that. So Trump's negotiation strategy, is to pummel the other party to make a deal easier to get to, to soften up the target. Okay, that's one. That would cause a rise in risk assets.

Number two, GROC AI is amazing. It is better than Open AI. It's better than all these other tools. I'm using it every day. It's a joy to use. There's not a single misplaced word. I use it for research. I have a conversation with it.

So the AI story is real. You are now seeing greater adoption of that. The ad story hasn't really turned off. As Alex pointed out, Microsoft walked back to that comment. So there are good news items out there. You know, and they'll report. They'll do fine. They'll be and be like they always do.

That doesn't mean Naviote necessarily react on a certain way. Navidia, it never really moves when they report, actually. It always stays within the implied volatility bands, right? And, yeah, sentiment is pretty dower right now. So, and tibate is pretty dower, right? So it's a question of just time horizon. If you extend your time horizon, you should get more bullish. Time horizon and stamina.

Like you said, we've been exhausted, but then again, there are the signs. I was very optimistic last week. I even wrote about this, about how peace is peace. And it's not going to be ideal, and there's always going to be some losers in the agreement that piece is peace. But given what we've seen over the weekend with a division now between the United States and Europe, it's going to be a messy piece. And while that's better than no peace, it still is going to be highlighting some of the big fractures that we have coming not only on the geopolitical landscape, but also on the financial landscape.

And this ties in to my interest in the whole safe haven narrative, because I do believe that longer term, they are really where you want to be with this level of uncertainty. But the risk sentiment so far is depressing. Trump goes to Fort Knox and they find the gold. Of course the gold is. Treasury Secretary Besson said the gold is dead. there. He's responsible. That creates anxiety. That creates anxiety. We're not sure whether Fort Knox has the gold. It doesn't help. Trump and Elon are masterful at media and playing the attention game. When anxiety becomes the norm, when anxiety becomes the backdrop,

are we even going to be capable of recognizing the change when the mood does turn? And we're even trusting it when the mood does turn? It will be a, it's a bounce that's sell into it. It's a, it's what you said earlier, Noah, like, in the worst case, if you get a capitulation, as long as you're not on leverage, you don't get liquidated, you'll define. One way or another, you know, it's just a question, it's just a question of timing. I would want to know is Trump's family are they trading on this stuff? Oh, God. Yeah. You're like going short because Trump is going to go visit the Fort Knox and I want to see their disclosure statements. Anyway, as we start winding up here, Ellie, what do you think we're not paying enough attention to? I think people,

pay too much attention to prices and the new cycle and not spending much time on on chain data, much time on paying close attention to the innovation behind all the developments that we're seeing today across multiple chains. We're seeing the evolution of Bitcoin as well as a platform. For example, there is this proposal called OP CAT that would probably enable zero knowledge verifications on the beacon protocol. We're also seeing, of course, multiple institutions coming into the space, tokenizing the products, Apollo, BlackRock, and the others as well, looking at this asset class very seriously. And as we become a lot more accustomed to use blockchain powered applications, like Fully Market, for example, my mother is using Fully Market,

but she doesn't even realize that this is powered by Polygon. She doesn't even care about falling on, right? And I think the fact that we're crossing the chasm across several items in crypto, to me, is incredibly powerful, and I think, yes, prices could be incredibly distracting. But we're talking about

Bitcoin at $93,000 per coin. If you've been long enough in this space, and I've been 10 years in crypto, this is a pretty blessing to see Bitcoin at this price. There is actually a lot more when you look at the entire iceberg. Price is just the tip of the iceberg. There is a lot

more that is incredibly exciting and there is never a dull moment in this space to get intellectually stimulated. You can leverage Groch as, as Rob mentioned, to actually build up Dune dashboards, which is incredibly helpful if you want to understand the on-chain economy behind Solana and the other networks that we use for education as well, at 21-Quare and 21 chairs. And I think the more people pay attention to the fundamentals, the more they're going to be excited about the future prospects of his asset class. And that's why to me, even the case of, you know, Bitcoin as a safe haven, of course, it makes a lot of sense, but I think it depends on the circumstances.

It depends on the time horizon. We've seen that again. In March 2020, Bitcoin was not a safe haven, but nor was gold. But, you know, March 23, yes, Bitcoin was a safe haven against the banking crisis. So I think it's going to depend on the circumstances. It's going to depend on also. the probabilities of an outcome to happen as well. I don't think it's always binary. I think people need to think more in trenches of probabilities to look at the market in the short run. But if you're

looking then in a long run, you should be incredibly excited about how this asset class is moving forward incredibly fast. With an infrastructure that is faster, cheaper, and better than it used to be a few years ago, that should be a lot more secure. And it could have been a lot worse with ByBitts, for example, if we didn't have solutions at KierLoop, as well as SIFU from Binance. So, yes, probably people could feel that we were lucky, but actually the FTCS collapse was incredibly helpful to build the foundations for stronger solutions to help ourselves to get stronger and better. And I think as corporations and institutions are coming more into this space and millions and billions

of people are going to use this technology without realizing it is going to be incredibly important to make sure that they have the same web to, experience that we could provide with a decentralized infrastructure. And that's what I'm incredibly excited about. I appreciate that the market infrastructure is stronger than ever. And at the same time, the education, that all the ETF issuers such as 21 shares have been contributing to. And with a variety of ETF proposals now before the SEC, I know to anyone shares has

quite a few of them. And the diversification of the ecosystem is going to become increasingly obvious to the investors who want to take the time. Alex, what do you think we're not paying enough attention to you right now? That's a very good question. I thought, yeah, it's tough because basically, I mean, by definition, we are always looking at everything. And I used to think until recently that the market is not paying enough attention to the efforts of Dodge and Elon Musk and the ability to bring the deficit down. but that was two weeks ago in the last or a month ago in the last two to four weeks is

all over the place and in fact I have concerns that Elon Musk may be flying too close to the sand right now it's really giving those vibes to me hopefully not the case because he taking a step aside would be very very shaking. What do you mean by that flying too close to the sun you're saying that he's overstepping his bounds and could be He's losing it. He's losing it. I can see ego.

I can see ego. An ego losing control of itself. Having expectations that are too high that cannot be fulfilled. Like when you said, we can find hundreds of billions of saving and fraud waste and social security. As well, there is some very good studies out there that I bet you've seen. I don't have them in front of me. I haven't, I don't have them fresh in my mind.

but it is very hard to get to the numbers they're talking about. At the beginning, it didn't matter because they were not being priced in at all. But yeah, it's very hard to achieve what he's pitching. Actually, impossible. Right. Yeah, it is. I agree with that. The government is loaded with waste and is not very competent.

You have to believe a lot of things to get the level of incompetence that Elon is seeing right now. and he's only there a few weeks. Like his initial read might not be the correct read. I think most of the spending is military, social security, is things you can't really cut. It's not inefficient government officials, which are definitely inefficient and they should be kicked. The new budget proposal is 8% cuts for the next five years in defense,

from Hexeth, by the way. Yes. And this brings in the inflation conversation, Because if he's not really going to be able to make a dent on the debt, which is, let's face it, what matters for the outlook for yields, then there is inflation is going to have to inflate part of it away. But, you know, we touched on this a bit last week. We'll have many, many opportunities to talk about this a bit more. Ram, what do you think we're not talking about enough at the moment? Look, I think the future is still bright.

You know, you're this incredible technology called AI that enhances real-life use cases. the people are wondering, where's the use case? The use cases are here. Productivity growth is here. Company earnings are growing. Walmart reported sold off despite growing earnings and despite revenue going up. The fundamentals are still sound. The fundamentals are still sound. You want to zoom out. You have a deregulatory agenda. The basic economic machine is working. Trump has the right strategy of front load as much as he possibly can. You need to do that. If you want to get any impact done, you've got to front load everything, and it feels overwhelming. But there are benefits to this.

In the back half of this here, we're going to talk about tax cuts. I do think they'll get at least $100 billion, maybe a couple hundred billion savings. So that's the other side of it. And, you know, you're seeing real AI applications now. The AI space race hasn't stopped. So, you know, you should still be optimistic. Like, this is just more kind of tactical issues over the next, you know, call it two to, you know, six weeks, let's say. Yeah.

And but, you know, as we've pointed out, many investors do have that. Is there a time horizon while those that don't have to be more strategic with the allocations? On what Alex was saying about Elon Flying 2 goes to the sun, there's also some political pushback coming out. Several federal departments have been told to not respond. to his email asking people what they did last week, which again comes down to territory, which, again, there's a mission. They seem to be on a mission. You're right in that the noise in the early days of the administration could be inflating expectations, which aren't going to be met because they're not really practical. But at the same time, improvement is

improvement and the results are going to speak for themselves. What I think we're not talking enough about amidst the regulatory changes is the emphasis that the SEC seems to be placing on staking at the moment. They've had many meetings over the past week on trying to understand staking. They're on a webinar. They've asked industry insiders for a document on the pros and cons of staking. And there are some proposals in, Elie's firm is one of them, to enable staking distribution on the ETH ETS. And I think that would be not only a game changer for ETH, but would also be a game changer for institutions to start to play around with DFI. and on-chain yield and things that we know the blockchain community or the blockchain ecosystem can offer tradfi that they can't get elsewhere.

I just want to add, by the way, we just had the largest aggregated liquidations for Seoul since June 2023 right now. How much down today? I don't have it on my screen. How down is Saul today? I think 12%. 12%, yeah. Ouch.

Yes, that's a lot. Yeah, the tariffon news pushed it over the edge. Yeah, along with most of the market. Yeah, Eath is down, according to my trading view screen here, it's down 8% so far today. Ouch, that is a very big adjustment. Of course, by the time you hear this podcast, by the time it drops on Wednesday, who knows what will happen. Markets are moving fast.

Things are changing fast. There's a lot of noise. really exhausting. Good luck to everyone out there trying to keep track of what's going on in crypto and in macro. And if you're doing both, well, you have my condolences. I want to thank everyone for joining us today. Ellie, thank you so much for being here. It's been so much fun talking to you. Alex Ram, great chatting to you as always. Thank you everyone for listening. We're going to be back next week with more macro and crypto commentary. Join us then. Thanks.