Unchained - Bits + Bips: Why Josh Lim Is Optimistic on the Dynamics He's Seeing in Bitcoin

Episode Date: April 19, 2026

Bitcoin's spot-led rally looks healthy on the surface. But derivatives say conviction is thin. Josh Lim from FalconX on what the market structure is actually telling you right now. --- Thank you to our sponsors! MultiChain Advisors is an emerging technology growth firm that has helped create $50B+ in enterprise value for 80+ clients over the past 4 years. They're the partner to help navigate markets.  Build real traction today at multichainadv.com As Bitcoin's application layer, Citrea gives you access to the first trust-minimized BTC on a fully programmable platform and a native stablecoin for Bitcoin, ctUSD.  You can now participate in Bitcoin capital markets with lending, privacy, payments, Bitcoin yield, trading and predictions. You get expanded Bitcoin utility without sacrificing its security.  Citrea mainnet is live. Put your BTC to work at citrea.xyz/unchained.  --- Bitcoin is trading near $75,000, but the market structure around it tells a more complicated story. Implied volatility has collapsed to sub-50, funding rates are negative, and the options market is dominated by sellers, not buyers. Meanwhile, Bitcoin miners are liquidating holdings to fund the transition to high-performance compute, generating a persistent offer just as breakeven retail holders look for an exit.  FalconX Global Co-Head of Markets Josh Lim joins Steve Ehrlich to map exactly what is keeping Bitcoin range-bound, where the rotation into ETH and alts is actually coming from, and what signals in derivatives and on-chain data would indicate the market is ready to move.  They also get into whether the Clarity Act changes the long-term structure of the altcoin market, how Hyperliquid is being used for institutional RWA arbitrage, and what the quantum threat means not for cryptography, but for trading Bitcoin. Host: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Steven Ehrlich⁠⁠⁠⁠⁠, Head of Research, SharpLink Guest: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Josh Lim — Global Co-Head of Markets, FalconX. Repeat guest; previously covered market structure and institutional crypto flows on Bits + Bips. Learn more about your ad choices. Visit megaphone.fm/adchoices

the show where we explore crypto and macro colliding one basis point at a time. My name is Steve Ehrlich. I am the head of research at Sharplink and also your host. We've got a tremendous show for you today. But before we dive in, let's take a brief moment to hear from some of the sponsors who make this show possible. Bitcoin changed how money works. Citrae changes how Bitcoin scales. With a trust minimized BTC and a native stable coin, CTUSD, Citraea enables Bitcoin capital markets with lending, privacy, Bitcoin yield and more. Get started at satraia.xyz slash unchained.

Multi-chain Advisors is an emerging technology growth firm that has helped create 50 plus billion dollars in enterprise value for 80 plus clients over the past four years. They're the partner to help navigate markets. Build real traction today at multi-chain adv.com. If you've been loving bits and bibs, don't forget that the show is transitioning to its own feeds on X, YouTube, and your favorite podcast player. If you're not already subscribed to bits and Bips on its own channels, go there now and hit that subscribe button so you can keep up with our twice weekly live streams and MacroMeets crypto breakdowns. Bits and Bits will only be on the Unchained feed for a few more weeks. So subscribe today to be ready for launch. You can get all the links

at Unchained Crypto.com slash bits and Bips. All right, welcome back. Just one more bit of homework before we begin. As always, nothing that you say or hear on, or, Nothing that you see or here on this program is meant to be financial or investment advice. Please see Unchained Crypto.com backslash bits and bips for more information. And with all that said, I'm delighted to bring in my guest for today, Josh Lim, someone who is, I believe, a repeat guest the first time on my one-on-one show. He is Falcon X's global co-head of markets. I can't talk today.

Josh, really great to see you again. Welcome back. Yeah, thanks for having me. I know my title's a little bit of a mouthful. Not your fault for some reason. I just have, I'm having some trouble speaking today. Anyway, so I'm going to ask you questions. A lot going on in the markets.

I mean, you see this every day when you're watching what's happening at Falcon X. I mean, one of the biggest, if not the biggest prime brokers in crypto. And as I was trying to kind of prepare the show, I myself, I'm trying to make sense of what's going on. I mean, we saw some of the big indices set new records. again yesterday, but the war in Iran is not over. Even Secretary of Defense, Pete Hakeseth was talking about how the country is ready to start fire again if, I guess, an anticipated two-week delay doesn't continue or isn't, I guess, effectuated and negotiated. I've had guests on the show in the past few weeks, and I know you've seen it too, saying that even if the war is finalized

today. The damage to energy markets will take years to to recover, which will lead to issues down the line. But equities, again, are at all time highs. But that's not the whole picture that we're saying. Gold still remains elevated above $4,800 an ounce. And most like long-term yields, they're sort of staying where they are. They're not moving up. They're not moving down. And that kind of paints a picture to me of a market that has not figured out what's going to happen next. would really love to get your thoughts on that. Yeah, absolutely. And like all of us actively trading this type of market environment,

it's difficult to, you just have to be glued to headlines. You kind of have to be constantly reacting to things that are going on in D.C. And, you know, on the ground, obviously in the Middle East. I think there's a bunch of countervailing effects, right, that are affecting Bitcoin price. Some of them are specific to Bitcoin and crypto and others are related to the global kind of macro asset class, you know, just broadly all of the asset classes that people can trade in a macro portfolio. I think if we kind of step back and look at the start of the war a couple months ago, basically you had inflows back into Bitcoin and into crypto specifically because of

of, I would say, largely short covering, right? You had a lot of macro funds that had shed a lot of crypto exposures and maybe even run a bit short relative to other risk assets, also even relative to gold. And you also had a bunch of early adopters of crypto who had sold, you know, above 100K. And so generally speaking, not many of the traditional kind of long-term holder base of crypto was, you know, I would say over allocated into the asset class. And the war, I kind of changed that and flipped it on its head, right? Like a lot of people had to degross and cover positions.

And then you saw like very dramatic moves in things that were in tradfied sort of proxies for crypto, right? Things like Circle Stock. Now, there were other things that were driving that, of course, like the advancement in the Clarity Act. You also had changes in posture from, you know, different political and government organizations around stable coin yield and things like that. But I think the fact remains, like a lot of it was driven by sort of repositioning of, you know, macro and sort of equity portfolios in response to the war. So what have we seen since, right? I think since then, we've seen a couple things. going into April, there's a definite seasonality effect where a lot of retail capital becomes

available. A lot of this comes in the form of tax refunds. You generally see some positive inflows into risk assets. And I think you've seen some of the charts of just how much the differences are between this year and previous years in terms of tax refunds. And there is definitely like a bit of an excess versus. is historical this year. I think you see that kind of flow through in a couple of sectors, right? You see that in all coins. You see some all coin names that have been sort of persistent, high popularity and sentiment on Twitter names, things like Venice and Monad and Zcash. Those are some of the names that have really outperformed in the last couple of weeks.

Some of these names are 50 to 100% off the lows of the cycle. And then you also see just Bitcoin, right, find and establish a pretty good floor from the low 60s and now trading back into the mid-70s. The one surprising thing, which is actually a very strong indicator in my view of the resiliency of Bitcoin and the amount of latent demand in Bitcoin is post the quantum papers that came out. So these came out sort of late March from Google and Caltech, basically describing an order or two of magnitude. improvement in the amount of few minutes required to effectively crack the elliptic cryptography of Bitcoin. And what we saw was a brief sell-off, like very, very brief blip. But generally speaking, it was an entry point for a lot of people to buy more Bitcoin.

That coupled with what we know is just a long-term, well, we think long-term secular factor of Michael Saylor and the strike. preferred stock being used to fund new Bitcoin purchases for the balance sheet of micro strategy. Those are really the main drivers in the last couple of weeks that have kind of driven Bitcoin to recover off the lows. Like you said, Bitcoin still has a long way relative to equities, right? And other risk assets, which are effectively have erased their pre-war or their sort of post-war inception losses.

But I do think that, you know, it's a matter of time. before Bitcoin and you know it's true that some all coins have already caught up Bitcoin catches up as well. Yeah a lot to digest there. So let's just stick on Bitcoin for now as we're I guess as we're talking I haven't checked the price in the last hour or so, but I'm guessing it's somewhere around 75,000 in that range. Obviously it's a big climb up and it's encouraging to a lot of Bitcoin advocates that had really kind of latched onto the asset sort of finally fulfilling its, I guess, its mandate or its, or sort of, yeah, like its expectation of being a store of, store of value asset.

But we are hitting, I guess, what seems like a big sell wall. I mean, if you look at order books, there's there's huge sell orders. Also, if you look at some advanced analytics like those offered by companies such as GlassNode, that $76,000, $75,000 range seems to be an entry point for a lot of people that bought into Bitcoin in the last cycle, which also suggests that there could be, that could be an opportunity for some of them to say, you know what, I'm back to par, time to get out. So, I mean, what are you seeing? And you mentioned how actually, yeah, let's just stop there. What are you seeing right now? Yeah, I think you're right.

Like, there is certainly a lot of overhang. It's not just from some of this transition from retail holders that are break-even. You know, there is a whole cohort of people, obviously, that bought Bitcoin post-election, right? And saw those coins appreciate meaningfully as a lot of positive political developments emerged, especially around the U.S. kind of regulatory environment for crypto. But maybe didn't take profits. maybe saw themselves get underwater and now are very eager to get back out at flat, right? That's certainly one dynamic.

But there's actually another transition happening that's important to call out, which is the transition of a lot of previously run, as companies previously run as Bitcoin miners, transitioning to high-performance compute. And that has also come with a de-risking of the balance sheet. Generally, some of these companies, most, Most of these companies were holding some Bitcoin exposure on the balance sheet, right? Whether it just came from their natural mining operations or from an accumulation strategy. And you've seen some of that, right?

It's definitely resulted in a net transfer of assets from miners into effectively into DATs, right? And obviously the largest that's been active in the market is Sailors. And yeah, I think that's the other thing to really call out. has been that persistent kind of offer on Bitcoin. The other thing that we would note on the desk, I think, you know, just from a derivative's perspective, right, Bitcoin Wall is actually very cheap at the moment. Or, you know, it's optically quite cheap.

If you look at measures of longer dated volatility, we're trading in the sub 50 vol range, which historically has not happened for quite some time. And I think that is also a reflection of just a lack of conviction in holding Bitcoin, you know, up much further beyond here, right? There is actually a lot of overriding happening in the market and not a lot of buyers coming in to pick up those options. Yeah. Again, a lot to unpack there. So just one. I don't know if you have these numbers off the top of your head. If you don't, I don't either, but we can include them in show notes for people who want to learn. But can you maybe sort of just quantify the selling pressure coming from these Bitcoin miners?

I saw a report. I forget to put it out saying that this is the first year. I think almost like 70% of mining revenue is going to come from HBC as opposed to Bitcoin mining. And many companies are, I mean, Mara, I mean, the big ones, small ones, they're all, if they're not getting out of Bitcoin mining in their entirety, they are selling down a lot so they can build out for these massive HBC contracts that they are consuming. I know Saylor, you mentioned sort of the runaway success of stretch. I think they had raised like another billion, billion plus or something last year,

last week. I mean, so he is absorbing all the Bitcoin that's being created, plus I guess some of the self-pressure that's coming from these retail investors or these stats. So I don't know if you can sort of talk about when that overhang from the fund miners might end. but I think maybe if you are able to kind of just quantify that a little bit for some of the listeners, that would be helpful. Yeah, I think, you know, I don't have much more to share beyond just like what's publicly available in public filings. But yeah, if you look through the numbers and you look at what is being sold, it's on the order of single digit billions across all of them public minors. And if you look at what sailors buying, it's kind of roughly the same amount, right?

It's basically, like you said, billion-dollar-week type of flows. So that is actually what is driving this ring-bound dynamic, if you think about it, right? There's an offer that's working above a certain price, and then there's a bid willing to come in when there's a sell-off. And it's really keeping us trading in a very tight range. That's why I think you do get some moves that come when, Quarody pauses and why is that happening? It's really because like large headlines are hitting the tape, right? So big big sort of geopolitical news hits. Everyone kind of widens out a little bit and maybe some of these programs that we're actively buying or selling also pause.

And I think that's what's driving. That's what's driving these like large kind of 5% gap moves, let's say, and then you get sort of a reversion back into the middle of the range. And I guess just from like a systemic point of view, I mean, I don't know precisely when that actually we had a guest on John Todaro a few weeks ago from Needham. We walked through all of this, like the minor capitulation economics and the transitions and all of that type of stuff. I mean, I don't know when perhaps that selling pressure will abate, but when it does, I mean, as you mentioned, like that's a big overhang on the price.

And you would imagine that seller is going to keep doing what he's doing. Others, all of a sudden, there's a lot more bid for a lot fewer Bitcoin out there in the market. So that is interesting to watch. I want to focus a little more on derivatives because you started discussing that in your previous answer, too. One of the trends that I've been seeing is that this is in many ways spot-driven, either through some of the ETF inflows or then again, I mean, could be tax refunds for Bitcoin, some other, some other alts. But if you look at the big run-ups in the spot price, but as you mentioned, VAL is very cheap. cheap right now. Longer dated vol is actually much higher than shorter data valve, which is sort of inverse of how things are supposed to go. And funding rates are negative. All that suggests

that there is still some bearish positioning in the market, especially among the smart traders. So maybe you could expand a little more on what you're seeing and sort of how you reconcile, I guess, some of this growing spot demand with a lot of institutions and professional traders that I guess don't seem convinced that the market is really ready to surge again. Yeah, let's unpack that a little bit. So I think on the ball side, what you're seeing in Bitcoin specifically is an oversupply of overriding and basically like yield generation. So you do see a bunch of overhang in upside strikes, like basically call options.

People are selling those and willing to monetize them as the price. if Bitcoin goes higher, they're selling more Bitcoin against those call options, right? So I do think that dynamic is driving and the lower realize wall is driving some compression in the back end of the curve as well. That's why it's like historically at a low level. But at the same time, you know, there's only so much lower that December of all, let's say in Bitcoin can go, right, in the high 40s. You have to remember there's going to be a very large, probably historic midterm election happening later this year. And there is a bit of a steepness in the curve, like you said, the back is higher than the

middle of the curve because of the risk of some large event that could have a meaningful impact on the whole crypto industry, right, in the later half of the year. So I do think that's like a phenomenon. We'll have to see how it plays out. And historically, that has realized like the summer months, usually. tend to have a lower volatility. And then, you know, going into an election year, you have a large event in Q4 effectively, right?

So, yeah, that's something to watch. I would say the other points that you made around basis and the funding rates, I think that's actually interesting. Like, we have to remember how funding rates are calculated, actually. It's the difference between perpetual swaps and spot. And if you think about what is actually being purchased in the market today, it's actually all being funded by cash right up front and it's all being funded by cash from strategies sale of stretch preferred shares so if spot is what is being purchased and obviously spot is going to lead the

market higher and so you have a dynamic where perps are actually lagging like fewer people are actually taking leverage to go along uh bitcoin so um that that's you know actually a kind of a healthy the phenomenon, right? That it's spot leading to move and it's fresh cash coming into the market. So I am actually optimistic like that's a good sign rather than something that should be taken negatively. Just two more quick ones and then we'll take a brief, brief pause. One, this type of setup and sort of the divergence between what we're seeing in Spod versus the sort of like the neutral to perhaps slightly bear set up in derivatives. Are there any historical precedents in

in crypto's recent history that bring familiar. I think so. I mean, it all appeals to me, you know, I mean, crypto's most cyclical asset class of the world, right? So it feels a little bit like the post-22 crash environment where a lot of folks were still getting their bearings again and kind of rebuilding balance sheets and things like that. And that resulted in a historically low implied fall environment, like maybe, some of your listeners will recall there was a very persistent offer on Ethereum. There's like a large Ethereum overriding program. That was like actually the biggest phenomenon in liquid markets in that time period in like 2023.

But yeah, that's that's kind of the environment we're in today, right? I would say less so on youth, I think more on Bitcoin, perhaps also in Seoul. but I think, you know, there is sort of a lack of conviction or maybe just more of a conviction that will be in a range bound market for at least the immediate future until we get more, you know, perhaps more clarity on the Clarity Act and also more clarity on what happens in the midterms. I tell you, we're going to have a big problem with the Clarity Act ends up passing into law something other than the Clarity Act. Although I guess maybe it'll be easier so we don't have to keep apologizing for using the word of clarity twice in a sentence.

All right, we're going to turn to Alt and a couple of other topics in a brief moment. But before we do, let's take a pause so we can hear from some of the other sponsors who make this show possible. Bitcoin changed how money works. Satraya changes how Bitcoin scales. Satrea uses Bitcoin as both the settlement and data availability layer. As Bitcoin's application layer, Citraea enables the first trust minimized BTC on a fully programmable platform and a native stable coin for Bitcoin, CTUSD. Citrae offers Bitcoin capital markets with lending, privacy, payments, Bitcoin yield, trading, and

predictions. Citraea expands Bitcoin's utility without sacrificing its security. Citraia Mainnet is live. Get started at Citraia.xyZ slash Unchained. Multi-chain Advisors is an emerging technology growth firm that has helped create over $50 billion in enterprise value for more than 80,000. clients like Pith, MoonPay Commerce, and Wormhole. They've worked with some of the largest and most impactful companies in the space. They're the partner you want when you're navigating markets

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If you're not already subscribed to bits and bips on its own channels, go there now and hit that subscribe button so you can keep up with our twice weekly live streams and macro means crypto breakdowns. Bits and Bits will only be on the unchain feed for a few more weeks. So subscribe today to be ready for launch. You can get all the links at unchain crypto.com slash bits and bips.

All right. back, everyone. We're talking with Josh Lim, a co-global head of markets at Falcon X. I'm never going to try and say your title again. I've already messed up to 12. Anyway, we spent the first part of the discussion covering what's happening with Bitcoin and how traders are aligning from a macro perspective, given a sort of tenuous peace deal or pause in the fighting between Iran and the U.S. and Israel. I want to expand the conversation a little bit now to focus on alts. You mentioned a couple of Josh that have been doing well. But to begin, I'd like to begin with Eith.

It's typically when Bitcoin rallies, it sort of brings the whole market up behind it, and then the market surges past it once we rotate into an old season. This time it does seem a little bit different, though. Bitcoin has been grabbing headlines for finally sort of fulfilling its prophecy as digital gold or the store value, but close watchers of crypto will know that ETH and even like, I think, B&B and some of the other major alts have been outperforming Bitcoin. And I know that ETH has outperformed Bitcoin, I think somewhere like 5 or 8% or something over the last month or so, which to me, at least, is unusual in tenuous environments

where crypto is looking to find its footing. So I'd really love to kind of get your sense on what's happening. What do you see on your desk? Yeah, sure. I do think ETH is coming out of a period where there was a little bit of a hangover from the voracious dad buying last year. Right. And, you know, that did create a lot of new narratives around Ethereum. Ethereum is a substrate for stable coins in particular. That was like a very popular tri-fine narrative around Eith and how it, you know, ultimately accrues value. I think what's actually happened. now is that it's like recovering from that hangover in a very different way. And I think the different way is it's sort of like a counter positioning itself versus Solana. And it's sort of getting its groove back in a way, right?

Like Solana has had such a tremendous run in the last couple of years, especially post the issues that it had around FTX. It, you know, gained a lot of traction again as a platform for meme coins and for speculation. There were- What did it drop down to? It dropped down to like low single digits, right? Or I mean, yeah, exactly, exactly. Definitely in the teens.

But yeah, and it went all the way back to 200, about 200, right? So I think what we're seeing is just a little bit of give back there, right? And then those inflows are coming into Ethereum. That's kind of what we're seeing on our trading desk. And the question is why, right? I think the reason is you have some of the narratives starting to fade around Solana. And, you know, that is coming through on, you know,

some of the speculative applications that are building on there. And, you know, the kind of like lack of maybe retail participation in crypto today. and some of that retail capital is obviously migrated to stocks. Or even if it stays on chain, it's probably more in RWAs and tokenized equities and HIP3, PURPS, things like that. But, you know, there's still a persistent sort of undercurrent of DFI happening on ETH, right? Always. You can still, you can always count on ETH as being like a reasonable place to deploy new protocols,

new R&RWA tokens, and we ourselves have a token that we launched on Ethereum that is a tokenization of a portion of our balance sheet. And that's actually gained some good traction because it's proximate to things like Morpho and looping strategies there. So, you know, I think that's kind of what we're seeing is like a little bit of that narrative that's always been there for Ethereum, kind of get a new resurgence. and then you kind of see some of the narratives that we're driving, Solana's huge run-up, start to fade away a little bit. Now, I will say like, oh, yeah, go ahead. I was just going to add on. I'm just curious how you're seeing Solana, trading behavior,

like how usage of the network is, I guess, recovering or remaining resilient after the drift hack. Yeah, I think, like, you know, there's always going to be staunch supporters of this network. and there is always like a strong cohort of builders building on it, right? And I think the one thing that Salon has got to refocus on, I think they've done a decent job of kind of refocusing on this now is being that stable coin transport layer. And I think, you know, there were actually very strong signs of that adoption

post some of the turbulence last year, October of last year, year, Solana was actually very, very reliable as a means of transferring USDC collateral across venues. And the people who were able to move it on Solana and had stable coins on Solana benefited enormously in terms of meeting margin calls and things like that in a way that was difficult with Bitcoin, right, or even youth with some of the network congestion. So there's clearly some advantages there. I think some of the narrative and mind share has gone to things like hype and to Canton, right? Like, I think you probably were around for Digital Asset Summit a couple weeks ago in New York,

which was largely dominated by banks and asset managers. I was around for those summits back in 2015, 2016, when R3 and HyperLedger and Digital Asset first launched. That's right. That's right. Yeah, it's 2.0. But, yeah, I mean, it's... This is my third permission blockchain cycle, I have to say.

That's right. That's right. But, I mean, that narrative is stronger than ever, but it's happening on new chains, right? So I think that that's sort of something that we have to keep in mind is there are new entrants that are trying to gain market share away from existing players. Yeah. And that kind of fits into a question that I've been wrestling with too for a while. Like, people are going to wonder when's the new all season going to happen.

It won't necessarily have the same fingerprint as previous ones because, as you said, there are new places for especially retail to speculate. There's, we didn't mention prediction markets, but that, that's a big one. And then nowadays, I mean, just looking at the volume that hyper liquid is doing, like, on terms of like gold and especially some of the oil contracts, I mean, that volatility is, is absolutely massive. And many alts, I mean, they'll run up and then they'll go down and then they'll stay there. So I can certainly understand that retail traders that have gone through at least one or two of these alt cycles,

maybe they want to try something, maybe they want to try something new. You guys, I am sure, are tracking all of this. So maybe just as a way to move the conversation along a little bit, how have you seen traders on your platform leverage things like perps in traditional commodities on hyperliquid or some of the other platforms? And to the extent that you can share, I'd love to understand what types of strategies. There was a really interesting article in Bloomberg a day or two ago about some new marketing. market neutral strategies that are leveraging price disparities across platforms and things like gold and copper. And there might even be a bit more of a basis trade in commodities than there is in crypto

because it's so compressed. So how are you seeing traders on your platform use hyperliquid and some of these more like tokenized stocks or tokenized commodities? Yeah, absolutely. And this is something that is a bit of a hallmark of hyperliquid that it is transparent and on chain. So you can actually trace activities of large trading counterparties on chain for better or worse, right?

And I think that is something that gives people some comfort because it's transparent and you can control risk that way, like by understanding how much leverage is in the system and how much risk of liquidation there is. But at the same time, it's also resulting in situations where it's very visible when someone puts on a large trade and the market can kind of hunt it down, right? So I would say this. Look, there is enormous demand on our side from our client base to access hyperliquid and other on-chain venues to trade RWA assets 24-7.

That's like undeniable. That is a real value ad for hyperliquid. I mean, even not just crypto DGEN's trading, but, you know, even even trad-fi institutions are taking cues off these weekend markets. to figure out where things will trade on Monday, right? So I think that's true. I think we've seen actually inflows. We were one of the first prime broker platforms to enable hyperliquid access to our DMA clients

and also to empower them to cross-margin that across centralized exchanges like finance and, you know, utilize margin financing across those venues. And I think that has actually fueled a lot of these types of arbitrages that you mentioned. There are disparities between people who can only access D5 venues and people who can only touch centralized exchanges. And that's causing sometimes momentary dislocations, sometimes more extended dislocations and funding spreads. I think the article that you mentioned highlighted one that strategies that are effectively trading the role. And this is obviously very common in traditional markets where you have commodities indices that have to transfer some of their portfolio, you know, the basket, the reference basket from front month to later months as those front months expire. And we're starting to see people start to implement those types of strategies on the hyperliquid perps that reference these types of rolling indices.

So I think there's only going to be more of that. Not only is it going to be used as this price discovery tool, but there's ample arbitrage. opportunities for sophisticated traders and investors who have been running these strategies, by the way, and try five for decades, right? So do you think, I'm sorry, interrupt. I'm just, I just want to tie bow on this. So do you think like all seasons in the past are sort of, are we going to see similar types of all seasons again or in this new world where everything is commodit, everything is

tokenized and potentially available to trade 24-7, liquidity is going to go there? and maybe crypto focus is really going to be on some of those blue chip assets, those blue chip platforms that have more legitimate use and are not purely tools of speculation. I think it's basically the token market that has to catch up to where equities are, right? And I think with Clarity Act and with other legislation that's going to create a path for tokens to become securities, that is actually kind of the long-term future for all coins. that could be sad news to hear for some of us who've been in the States for many years and view tokens as this novel sort of capital formation tool and speculative tool. But that's kind of where the market has to go, right? There's already just a broad, the concentration of mine share and capital into a select handful

of tokens that are linked to revenue generating protocols is already happening, right? We all know that if you're a new liquid fund manager and you're not holding hype, like that's, you know, you're out of consensus for sure, right? So I think that's only going to keep happening. And that is sort of the unfortunate reality is like a lot of the tokenomic models for all coins in the last few cycles are not really conducive to positive returns on the tokens themselves, right? They're highly inflationary and things like that. So there's, I mean, that's the, this is the ultimate backlash against that is now people want to hold equities that, you know, generally have a positive drift rather than something

that has a negative drift. See, it's funny. I mean, I understand sort of the sense of nostalgia and perhaps like a bit of a like a melancholy tone for what you're saying here. But I mean, you know this and people have watched or listened to me for years. No, I mean, I spent years at Forbes and at Unchained trying to point out alt coins. and zombie coins and tokens that really had no business ever existing except to offer someone potentially a liquidity event. So I understand speculation does not have to be a four-letter term,

but speculation and capital formation are very different buckets for me and maybe just a little bit of speculation belongs in one. So it is, yeah, so I understand, I understand the sense of nostalgia that I'm sure a lot of people will feel, but this is more firm or footing for crypto to really grow will all benefit. All right, we have about five minutes left, but I wanted to save a little bit of time because you put out a really interesting post on sort of the quantum threat as it relates, in particular to Bitcoin, but as we've discussed and on the show and people have seen everywhere, the risk, it might have, it might vary to certain degrees based on blockchains,

but it is something that all major chains are going to have to deal with. And you, I thought did a really nice job of kind of encapsulating the problem as you see it. And in particular, you pointed out how it's not just like a technological issue, but it's also sort of like a communal issue. Because the tech, excuse me, the tech solutions, it's easy to see a path forward. But I think if I'm characterizing your post or your threat correctly, Bitcoin, by its very definition, is kind of remains in stasis. It's hard-coded, and that's its value proposition.

So when you have to do big things, when you have to do big things, it can be difficult. I mean, I think you referenced the block size wars and the hard forks from like 2016, 2017 when Bitcoin cash was created. I mean, I lived through all that and had no idea how it was going to go. And that seemed to kind of have a bit of a happy solution because everybody got extra coins. And if you didn't like Bitcoin cash, you could just sell it and get rid of it and thank you for the extra money and go buy more Bitcoin. But I think the case you make is that in this situation, it may not be that simple. So that very long run up, please, please share your thoughts.

Yeah, yeah. I think this isn't an easy topic, right? It requires a lot of specialized knowledge. But what I wanted to highlight in my thread is just how these things will impact tradable markets. for those of us who touch the liquid asset class every day. And I didn't see a lot of discussion around this previously, right? I think people, the general dismissal of the quantum concerns are like, it's actually very easy for the community to reach a consensus

and migrate to post-quantum signature schemes and those types of new cryptography that are quantum resistant. And that's, of course, entirely true. But like you said, and I mentioned in the threat, it's not just a math problem. It's a social consensus and political and governance problem too, right? There's like a fundamental ethos of Bitcoin around it being immutable and around it being sovereign. And the fact that you're holding your coins means that no one can take that away from you or change its fraction of the network. And the fundamental thing here that has to happen with the Satoshi coins and other sort of coins that are held in P2,

pay to public key addresses is that those coins, unless someone is actively controlling them today, are going to basically always be vulnerable because anyone could come in and crack the private key. So I think it's like it's sort of not a solvable problem except by social consensus. And we and even that will probably result in some sort of hard fork, You know, if you assume that there is still some sort of core community that believes in the, you know, the initial sort of ideological roots of Bitcoin, maybe not, right? Like, it's possible that a lot of those people have moved on to other crypto assets, other crypto projects. And it's possible that the majority of holders in the space now are institutional investors, right? And it's true, right?

that a lot of the assets are being held in ETFs. But if you think that there will be a schism, I kind of do think that there's going to be some very staunch resistance to it, that that will be negative for the price of Bitcoin. And then you have all sorts of implications for the derivatives markets on top of that. Yeah, it's a really fascinating debate because, I mean, the whole mantra, Coda's Law, that should theoretically, I guess from my opinion, mean that if Cota's law, If someone's able to crack Satoshi's private keys,

finder's keepers, I guess. It almost like harkens, even if, like, morally, they may not, that may not seem right. It reminds me a lot of kind of the debate within the Ethereum surrounding the Dow hack and sort of like what to do there. And anyone, I mean, most people watching and listening to this

will know what happened, but it was not amicable at all. And it led to a split in the chain that, I mean, Ethereum managed, Ethereum, the version that essentially returned, rolled back history, returned the tokens to the original holders, maintained its status as the dominant chain. And Ethereum Classic hasn't really sort of built up to be a real competitor. But it was very, it was a very antagonistic time there. And I remember that we weren't sure what was going to happen. So it is really a fascinating setup to see what's going to happen with Satoshi's coins. Maybe it'll force him or they to come out of hiding and do something so that those 1.1 million Bitcoin don't all of a sudden become liquid or get hacked or whatever.

Because as you mentioned, it could have an impact on the price if suddenly all those tokens become liquid and someone just decides to dump it on the market. There's a lot that we don't know. So I guess to just tie a bow on this, are you seeing any noticeable? behavior among traders on your platform to sort of derisks themselves from this. I know in one of the Google papers that was cited, I believe they mentioned Algarant as one of the as one of the blockchains that I'm not a computer scientist by any stretch of imagination, but had apparently made itself quantum resistant or quantum upgradable. Are you seeing any discrete movement into or away from certain tokens because of this quantum

threat? Yeah, I think a lot of the trading happening right now is rotation. It's really like a trader's trying to move away from things that may be perceived as vulnerable and to other you know other chains that are designed or marketed as quantum resistant Now like the reality of it is like the technology is still up for debate, you know like even people cite Ethereum as as a kind of a forward-thinking chain when it comes to quantum migration, but there are still actually probably more vulnerabilities in the smart contracts the thousands of smart contracts that exist on chain versus, you know, Bitcoin's, you know, the elliptic curve problem for Bitcoin. But that is, it's kind of glossed over, right?

Because people say, like, hey, there's more of a social consensus element within Ethereum that enables them to move faster and change quicker. So I think, yeah, I think that's kind of what we're seeing the flow. Now, I called out a couple of things that you would want to watch for. And I don't think those have meaningfully shown like red flags yet, but there are things you want to watch for. Like you want to watch for the differential between traditional markets downside protection versus crypto-native downside protection. At this point, like most of us who trade crypto traffic in crypto-native venues, right? Whether it's like purely on-chain venues like hyperliquid and and deribate or sorry, hyper-liquid and like uniswap or or centralized exchanges like Deribit, finance.

There's going to be more of a divergence in my view between those and the traditional markets, like the iBits and the CMEs and even the bilateral trading that happens between banks and hedge funds. That will reflect a different market than what's happening in crypto as we get closer to the QDA, which is when quantum computers become relevant. Because when you're hedging your exposure, you're going to want to hedge away from crypto. You don't want to face counter parties and institutions that are not entirely, you know, founded and, you know, heavy concentration in crypto. So that's what I'm watching for the most is those types of signals. Great. All right. Well, we're going to have to leave it there.

Josh, as always, thanks for joining. Always enjoy our conversations. Thank you to everybody for watching and listening to this episode of Bits and Bips, The Interview. That's it for us, but stay right there because in a few minutes, Laura will be chatting on on with Nader al-Naji about his SEC and DOG cases, how they both got dismissed and why the way they dismissed is so significant. So stick around.