Hivemind: Surviving Market Chop, Is Crypto Bottoming & Reasons to Be Optimistic in 2026

Nothing said on The Hive Mind is a recommendation to buy or sell securities or tokens. This podcast is strictly for informational purposes only, and any views expressed by anyone on the show are solely our own opinions, not financial advice.

Hello everyone, welcome to another Episode of the Hive Mind Podcast. I am your host, Seterus. I'm head of research here at Delphi Digital. We've got Yanowitz, who is managing partner at Delphi Ventures, Jason Yanowitz, head of markets at Delphi Research, and Flip on the DeFi team at Delphi Research, also kind of like our perps expert. So we're recording this 4:15 PM. We're recording this after market close. For like the first time I think we've ever done it, which is nice. Normally we start these podcasts and we lose a few thousand bucks on Bitcoin throughout the, the first hour, that 10:30 AM Eastern time slot. It's usually a pretty— a lot of selling in that one usually. So, um, yeah, I mean, BTC $66K, ETH, uh, $1,942, SOL $81K, HYPE $2,870. Um, been more the same where the last couple weeks stocks are kind of just like kind of just grinding or like chopping around all-time highs there. Um, obviously there's a lot of Visa rumors. I don't know how much this is weighing on everything. Uh, but yeah, how are people really feeling about markets? Like, from my perspective, it kind of just feels like apathy, I guess. I don't know how other people are feeling about markets right now.

Uh, yeah, I mean I think like the, uh, the one-liner for me is kind of just like, I don't— for like allocating to risk in general at this point in time, I, I would be like, there's no real rush. Um, I think, uh, I'm pretty cautious, right? I think you, you mentioned, right, crypto down bad, equities, you know, within, you know, 1.5%, 2.5% of all-time highs. And, you know, we're clearly seeing some losses in, in momentum in trad fi, right? Like equities aren't making the, the strong impulses higher. They're kind of just like chopping around, maybe a little bit of distribution going on. You're seeing some like kind of like cracks in, in certain sectors and equities. Obviously we're seeing software names, uh, trading like our altcoins, and it's probably not just like, you know, it's not like a— it's not just a pullback, it's more of like a repricing now that everybody is kind of realizing that software is commoditized with cloud code and everything going on there. It's like, how much are you really willing to pay if you can just recreate most of it pretty easy, quickly, and cheaply? Um, so you're starting to see stuff going on there, right? Um, Scott Marcus and I recorded a Market Matters thing earlier, um, as well, and we were kind of talking about how, like, if you look at things from like a a liquidity standpoint, like, it's cautiously optimistic, but it's not like everything from, like, you know, price of liquidity and quantity of liquidity are really, like, screaming go super risk-on right now. Um, a lot of the proprietary, like, leading indicators we've built are kind of, like, showing, like, volatility is super mispriced, right? Uh, we're thinking it should be trading much higher than it is, probably, like, you know, mid-20s, upper 20s versus, you know, 17, 18. Given a lot of things we're looking at. Um, obviously you have the Iran stuff for, you know, the crypto Twitter, just like the Twitter war experts, right? All of that stuff, I don't know shit about it, but it seems like it's accelerating and not decelerating. Um, so you have like all of these things, and it kind of like, with equities trading at, you know, all-time highs, there's not really much of a buffer or, you know, margin of safety there. And so I'm just cautious of kind of like a vol spike nuking equities a bit based on, you know, whatever it is, um, and then crypto kind of taking its, its final leg lower. But like, again, like a vol spike is ultimately kind of like what I'm waiting for to, um, start tacking on like meaningful risk again. I'm kind of just— everything I've bought pretty much except like hype at the yearly open has just like not done well, and I'm just like not really in a position at this point where I'm like super, super, uh, excited to, to tack back on some risk until I see some, some other things go on.

It's kind of interesting with the Iran thing. This is probably the first of these war rumor things over the past 2, 3 years that I feel like I'm just totally numb to. Ta— numb. Yeah, like I just I see people talking about it all the time and I'm like, okay, whatever, I guess. Like, it's very hard for me to— this is what I said, like the whole apathy thing. Um, I don't know, the markets in general just feel to be very slow right now, almost like a Dog Days of Summer feeling, but it's like you know, mid-Q1.

And kind of like an interesting thing is like when you look at, um, like what is driving a lot of the buying, um, at the end of 2025 and 2026, it's a lot of— it's like it's, it's been mostly like retail positioning for the most part, um, more so than, than anything else. So like, I don't know, I'm just cautious like given where equities are, uh, and, and where crypto's trading, um, that, you know, equities could pull back 5-10%, be completely fine, right? And the year higher, uh, and everything would be fine, which is exactly kind of what happened in last year at this time. Uh, whereas crypto, um, you know, is just in a tougher spot. So like, even if crypto started looking like kind of bottomy, I would still be like kind of benchmarking to equities because we're clearly just not really correlated to upside right now and just strongly, uh, mirroring downside. So that's kind of my take. It's like I'm cautiously optimistic for the back half of the year. You know, I still think we— or the administration tries to run it hot, but like, I think there's some short-term things that I'm just like not trying to buy some crypto and then wake up on the weekend if like Trump nukes Iran or something and be down 10% immediately. Um, so yeah, I'm just kind of like waiting for that vol spike like I was talking about. Like, vol's clearly inching higher. Um, clearly something to me at least feels like it's on the horizon, at least, uh, with respect to that. And I would use that as an opportunity to, to buy the things that look good to me, whether or not that's some equity names that I didn't get exposure to last year like I should have, or, uh, you know, a few of the, the crypto names that I, I like.

Yeah. And why, why do you think vol hasn't spiked? I mean, I think you both kind of hit it on the head, Cedars and Jason, with we're all kind of numb to it. Like, we're numb to the geopolitical risk at this point. I mean, you had the Nasdaq up 80 bips today and you still had Bitcoin down almost 2%. Like, that's, that's a tough pill to swallow. Like, yeah, I'm curious, like, we still haven't seen a crazy VIX spike. Like, a few weeks ago got up to 23 intraday but still closed around 20. So it's like, we're not seeing crazy moves in the VIX either.

Yeah, I, again, I don't like, again, I don't know what would cause it. Uh, it's Usually what causes it is something external, right? If you look at like the— just like an S&P chart over the last 2 years, every time you see like big VIX spikes, it's clearly like back in like 2023, it was like, you know, the, the banking crisis followed by, you know, liquidity issues, then yen carry trade stuff. And then, you know, uh, you know, it's, it's usually precipitated by an event of some kind. Um, I don't know what that would be. I mean, it could be a, you know, a contagion from, I don't know, SaaS names to other things. It could be, um, could be, you know, retail capitulation.

On that, like, on that topic, the, the SaaS thing, there was a correlation is, uh, yeah, I think that's more coincident than anything.

Um, just I think like SaaS have been some of the bigger winners as of late. Drove the market, and Bitcoin was just kind of an equity proxy for a while. So I think it's more coincident, I guess, and they just made up a decent chunk of the index. Yeah, no, Bitcoin's in a tricky spot. It's getting minimal bounce on positive equity days. If you kind of look historically, it's usually touched the 200-week Moving average, right? And so that's kind of, um, you know, your 4-year cycle proxy to some degree and all that. Uh, I think 4-week, 200-week moving average is at like 58.

Yeah.

And it roughly goes up, I call it grand, uh, grand a month, right? So at some point the two would converge. So, um, but I, you know, it's been a very known thing historically. So to some degree, when you see these things in there and they're really known, it, you know, there's probably some degree of front running. Um, I, I do think you kind of need a, a bad blowup probably. I don't know, like if you look, last time it really broke through was the, the FTX situation, right? And so I, I don't really see something like that happening here because, you know, Sailor's fine and he's really like the whale that can kind of nuke it. Although you're having a lot of these OGs cash out for green, for like, uh, to shift, you know, for whatever reason different, to get AI exposure, Quantum. So, you know, to some degree you could have a bunch of them kind of come together and, uh, some of the parts be a comparable selling, a comparable amount of selling to a, uh, some kind of an implosion, but Um, yeah, that seems to be a bit of a magnet, I guess. Um, you're definitely seeing some strength in alts when things go well, and, and so, you know, there's, there's, there's this hot ball of money kind of bouncing around, but with each lower high on these alts, I think, um, the apathy increases and, and the rush to bid goes away, and, and that's super reflective Um, you know, historically BTC's kind of front-run pain and the bounce. So if you wanted to go glass half full, you know, you can assume that in, in a world where, um, things kind of dip, maybe the dip has mostly been felt here. Although I'd be surprised just because I think, you know, selling can come into a thin order book and you can still have the price move considerably. If there's just not a lot of appetite to bid. But yeah, it's this kind of choppy market where if historically in the past couple months you've been rewarded for just playing the chop and so that kind of will continue as a strategy until it doesn't work. So, and it becomes kind of self-reinforcing, right? People are just trained to sell these 5, 10% moves and kind of wait. And so Um, that combined with not a lot of excitement to bid, I don't know if there's any, any rush. But at the same time, you know, you have these situations where it can run very aggressively in a short amount of time because so many people are sidelined and are forced to chase. So I think with some of these revenue-generating protocols, you can, uh, bid somewhat BTC agnostic knowing that, you know, the floor isn't that far away just on these multiples. Like, yes, it can go lower, but ultimately if you think those revenues will stay or increase, then it is a good entry. And realistically, when it bounces, you probably won't have the time unless you're sitting at your desk to get that entry, right? So it kind of depends on how active you are and monitor.

I think there have been a few things recently that kind of show you how quickly things can move to the upside. If they actually develop, like, and some of these are just pure short squeezes for sure. Right. But like BearChain went from like, what, 50 cents to $1.40. And then now it's back down to like 60 cents. You've seen—

Anisha had a pretty good run too.

Anisha had a big spike. Helium's done, done well over the past week.

I mean, that's generally what you kind of look for, right? For at least like bottoming. Time periods is like generally shorts start closing and you get these little short squeezes. It's not like— it doesn't usually, you know, it's not usually the pico bottom, but it's, it's generally a good indication that you're starting to churn through positions. And, you know, people who are shorting, you know, like, like Jan said to, uh, earlier, like a lot of people have been rewarded for— like, it's, it's the same in bull markets, right? Like, if you, you long breakouts in bull markets and you're generally, you know, rewarded for it, like even if you get a pullback, you're probably fine unless you're like super degenerate. Um, and it's kind of like the same in, in these like bearish markets where like you can short breakdowns and generally be okay and get away with it because it's like the predominant, you know, trend is generally your friend, right? And, um, generally I think when you start to get these inflection points building is when the people who got rewarded for thing like, you know, lazy execution is the way I describe it, um, tend to get punished before, like, you see less of rewarding of shitty execution and more punishing of it. Um, as you know, shorts, you know, don't get rewarded for long or shorting, you know, selling the breakdown for the 50th time.

Yeah, it's usually, it's usually the end of a trend. Yeah, like when we've been turning sideways, sideways down for the last 4 to 5 months. So it's usually the first sign of the end of the trend. And then the next thing is you, you hope to see the high-quality assets start to move. Um, but this bottoming process takes time, you know, like it takes time. It's not— you're not gonna— it's not gonna wick today up back. I mean, maybe it will, but you're not gonna wake back up to $100K in the next week or two. Like, it's a— it's a bottoming process. It takes time. And I think— I think sentiment, to Jan's point earlier regarding FTX, is like being the bottom, uh, last cycle. I think this cycle is really tough for crypto natives because there really hasn't been like, yeah, you had 10.10, but there, there hasn't been like a huge event to like mark the bottom. 10.10 was, you know, closer to the top than the bottom.

Like, yeah, that's crazy. Like, you could have sold after 10.10 and you'd be so happy.

You'd be doing great.

You could have sold, you could have sold the wicks off the bounce.

There's a big bounce afterwards.

Yeah, like SOL got back to like $190 or something.

I think there was, there was a massive bounce for like the week or two after. Yeah.

And it's just— but I think it's really tough on, you know, the people who've been in crypto for years because with FTX collapse and Celsius and all that stuff, it was just like, you know, not your keys, not your crypto. And now it's kind of like, well, this sucks. Like, we can only— don't have anything to blame. Like, it's just, it's just painful. I mean, so very significant industry.

It's, it's so tough. Like, this, this one was tough, right? Like, there's a lot of qualitative things going on at the time. Like, I think Jose, you know, did a good job explaining, like, back then, like, why, like, he was generally not super bullish. But, like, when I, when I think about, you know, prior cycles, right, where, which, you know, preceded big, big drawdowns in Bitcoin, there's, there's, like, a very clear reason outside of crypto why risk was getting clobbered. Like, 2021-2022 cycle, Fed hiked rates 450 basis points in a very short period of time. The end result of that is pretty inevitable, right? Like, it's not immediate, but, like, it's probably pricking the risk, the risk asset bubble from 2020. 2020 until that point. Um, whereas like this time around, it's just like, okay, like 10/10 happened, nuked crypto completely, crypto by itself, and then equities just continue to grind higher, you know, staying within a percent or two of all-time highs. And so like, that had like— that, that was like the tough one for me. It's like when I looked at like everything outside of crypto, I was like, all right, well, like it It's not amazing, but it's not, you know, it's not justifying what I'm seeing here. And then it, you know, it's clearly crypto's trading on its own for its own reasons, um, which has made it tougher, right? Like, it, it didn't allow me to, you know, get my bias in order as fast as I would have liked. It took me way too long personally.

Yeah, yeah. I think also, like, you've seen this whole Sas Bitcoin correlation we talked about a little bit there that people are bringing up. Um, there's been rumors of, uh, what, like Brevin Howard selling iBit or something? I don't know. There's been everybody— because everybody— I know, because everybody just like, we need something. We can't bottom until we know. Yeah, it's like we gotta know and then we can bottom. And I don't know if we're ever gonna know.

Like, it's okay not to know, you know?

Yeah, ignorance is—

who's the one dude? Is Garrett or Jin? I forget the, the name of the dude.

Bullish Garrett?

No, no, recently he's like this BTC and ETH whale who's been sending hundreds of millions, if not like, and he has billions of BTC. Um, he sent like a couple hundred million bucks the other day and, and we obviously moved, um, to Binance. Uh, I forget his name, but yeah, it's like you're still seeing kind of whales pop out of the woodwork. Um, and, and they're just like selling to protect margin and it's just, you know, your, your standard kind of forced selling, which usually is what marks the bottom when people are selling because they don't want to.

Yeah, you generally speaking want to be buyers when other people are forced sellers. You generally speaking good entries, even if we haven't bottomed and you know, we've got 6 to 12 months of a bottoming period. You're buying from people who are forced to sell, you're usually, usually a good entry. But similar to Jason Yanowitz, like I'm not necessarily super eager to deploy like right now. Like, yes, I'm, I'm bidding, but like not not, you know, full porting by any stretch of the imagination. Like, small bids on assets I like with cash flows and a few, you know, small-cap on-chain DeFi tokens that I think are interesting, and I use their products. Other than that, it's kind of like stick to the majors, bid the things I think are interesting, and that's it. And you slow, slow DCA, like old school, nothing sexy.

Yeah, I agree. Um, yeah, I don't, I don't really have any, you know, too many more interesting takes. I don't even know if those were interesting. But one thing I was thinking a little bit is that, like, you know, Jan was talking about things like the 200-week moving average, and, you know, there's just like a ton of things that people look at, right, that might have some kind of predictive edge when you backtest different things. And like, the more I think about it with like Claude and all of this shit I have a feeling, like, I mean, my gut feeling is probably a, a lot of, I guess, maybe like edge or info asymmetry there probably just like goes away over the next couple years. And I, I don't know, like, my, my gut feel watching everybody build all these really cool dashboards, all these cool tools, building, you know, leading indicators and trading strategies is easier than it's kind of ever been now. And, you know, testing and backtesting things And I don't know, like, to me it kind of feels, feels like we might be moving back towards more of a valuation kind of, um, or not like that value investing is gonna, you know, be as big as it was back in its heyday, but I think we're probably moving back towards something like that. Um, in a sense, it kind of feels like that, not just in crypto but in, um, yeah, no, I don't know.

It's also like all the So many people doing all this Claude code stuff and building their own agent networks and everything. It also feels like in 6 months you'll just download like the Claude app and just like get it. You don't, you won't even need to know that level of stuff. You know what I mean?

Yeah. I mean, like, so on that note, you kind of seeing the, the agent narrative pick up a little bit in, in crypto and. So, you know, there is a world where it, like, previously it made sense, you built a useful agent and you can somehow monetize them by allowing others to use them. And, and, um, problem was they weren't that useful, but I think, you know, we're getting to a point where they are increasingly so, and, and, and that should kind of continue. So, you know, there is some argument to be made where, uh, one of the better ways to monetize them will be through crypto. And, and I think agent-to-agent interaction will, is, is best done through crypto as well. Just in terms of like how payment processors are set up versus wallet, like they're, you know, they're set up for real people and crypto's kind of set up for agents. It's with, with just a wallet is the only thing that you really need. So there, there's some growth that can happen there. Yeah, the value versus growth thing is interesting. I mean, equities-wise, it's turned into a stock picker's market, right? You've had, like, uh, never have you seen this many names, um, do like well while the market's kind of topping. Because you've seen, you know, the Mag 7 fall off and then some pretty big seismic shifts in, in narrative where, uh, Dario came on. You know, he, he kind of— it's been said before, but I think he really brought it to light, which was this proposed degree of CapEx inundates these companies with massive amounts of debt. And if expectations are off, not materially, you do have obviously not going to be solvency issues, but you definitely get into a tough position balance sheet-wise. And so you've seen as a result, Apple kind of pick up, right? They've historically been slow mover and now they do kind of own the end user. Through their devices. And so, and they have just this gargantuan balance sheet. They've spent nothing on CapEx. And so they're like, not by virtue of skill. This is the, I think they lucked out that they didn't just chase the CapEx spend, but like, yeah, they're in a great position. So you kind of see rotations happening and these things that were, it's crazy how quickly narratives or confidence changes in some of these massive companies. Where you think they're pretty de-risked. But yeah, expectations and all these things change so quickly.

I saw this chart the other day, which I thought was just like super crazy. That kind of just shows the market. You've had like, basically you're getting stocks that are falling at the most extreme levels that you would only see at bottoms, but the index is like not moving from all-time highs. Um, like 115 stocks declined by 7% or more in a single day. This was on February 12th, and the S&P was like 1.5% below. And if all the other drawdowns are like bottoms basically, and so I think that chart just kind of like— it is a stock picker's market, right? And Also, like, I don't know, the things to avoid seem— it's kind of like crypto. Crypto feels like the things to avoid are almost more important than like the things to buy in a sense. And it kind of feels that way with equities too right now.

Yeah. I think with equities though, it's pretty positive in the sense that, you know, you've basically seen value capture from AI trickling down to a lot of these other names, which is great. I think that's how you get broader GDP growth, less concentration around names. Like, you, you want that value to pass through the rest of the economy in, in the form of like margin expansion and, and just higher productivity. So, you know, I do think this is kind of the story you need to support large-scale GDP growth. Um, but at the same time, you're seeing, you know, like, I forget what Walmart and some of these names are trading at, but that's— it's massive highs relative to where they were before. So there is a certain amount of growth already priced into these names rather than it being ahead of us.

I mean, breadth increasing is a good thing. It's kept the index up and we've seen distribution among the Mag 7 who had carried the index over the last 2 years. I mean, this is something asset managers and multifamily offices and all those types of guys have been talking about for the last 3 years is it's really hard to own the index when you're that concentrated in a few names. It also made it really tough for active managers. If you weren't overweight those names, you underperform. And now you're seeing those managers actually outperform because the— their— to Jason's point, like, their deep fundamental analysis, like, that stuff is starting to pay off again. Like, as breadth is increasing, really holding the index up, because, I mean, you had, you know, Meta up 60 bps today, but you had the Nasdaq still up 80. Like, you're seeing— you're seeing breadth increase.

It's also interesting, right? I think Druck had, uh, his 13Fs recently reported, and I'm pretty sure he's, um, like rotating essentially out of Mag7 into equal weight S&P, right?

Um, kind of capturing that sentiment a bit, uh, which is what a lot of people are trying to call for a year and a half ago, two years ago.

Yeah, yeah, it's, it's not just about being right. You have to be, you know, your timing needs to also, absolutely, also be right. Um, but yeah, just a lot of interesting things going on right now. Um, tough, tough environment for sure. Definitely, definitely. I think probably— I don't know, I think this is the toughest— probably, probably the, the toughest like market environment at like, for me at least, uh, in, I don't know, recent memory. Like I said, with, with 2022 bear market, like I had like a very easy reason for why it was like building up for months and months in advance, right? Like this one, like, I don't know, just this, I don't know, tougher, tougher environment across the board for me.

Yeah, morale, morale has never been lower, I think, from crypto natives. I had a conversation with a buddy of mine who's been in crypto longer than I have, and he, he didn't hold any crypto at the moment. They're like, none. And he hasn't held some for some time. He's like, I'm just done with the industry, there's no innovation anymore, and was just tapped out. And he started well before I did, so you're starting to see signs of those guys tap out.

A few more, a few more of those and then up only, right?

Yeah, yeah. Or bag holding, back to tradfi, back to the suit and tie.

I'm—

no, I mean, I'm still— I think, yeah, some of the core primitives have been established, right? And so it's harder to, to find obvious plays, but I, I do think you still have this tsunami of capital that kind of comes on board just through increased utility of existing assets, right? Bringing equities on, on, on-chain, uh, opens up the universe of buyers, right? Because it's just harder to own them, and you unlock liquidity by using them as collateral. I think, you know, kind of a lot of these areas where crypto adds utility to existing assets that are already liquid will force more of them on-chain. And so, you know, I think stablecoin supply will continue going up. Um, but yeah, you don't have these, you're not going to have as many of these very clear zero-to-one moments for sure. Um, but I feel like space does tend to periodically surprise with, with new development. So, um, yeah. Yeah.

I mean, I don't know, maybe I'm just a perma-optimist, but I'm— it's pretty clear to me there's going to be a period where stuff just starts trending well for a while and everybody starts jumping back in. Like, this is just the way this goes all the time.

And you, you can cut—

I'm not saying everything is gonna go, but like, there's gonna be— Bitcoin's gonna come back, there's gonna be some new meta that everyone's gonna convince themselves of, right? Like Everyone who quit crypto forever is going to see stocks doing nothing, you know, or like, it'll be like 1% is boring again now, right? Like 5% yearly returns or 8%. Um, I don't know. We just need a new thing and who knows what's going to come. The thing is timing that of course is very hard. Like just holding stuff, waiting for that to come. You can bleed for a long time, right?

Um, so ask, uh, Murad how leaving is going. Yeah, it's tough. I still don't think— I don't necessarily think we need a, a new thing for things to really get kicked off again. I think we just need to compound on what we've already done.

Like, yeah, yeah, I agree.

Like, we saw them really have their moment in 2021, 2022, and it wasn't until 2024, 2025, 2026 that they really started to take off. I think— I mean, I'm biased, but I think Perp DEXs and exchanges are kind of at the same moment. Like, they just had their, their year this past year. Hyperliquid led that, and you've got others coming along that are leading the charge. And now they're going to go through the next, you know, 2 to 3 years where they're, they're going to look a little bit more, uh, centralized in some manners. You'll have a little bit more permission markets, KYC on some of these exchanges as well. And I, I mean, I think we saw that happen with stablecoins too. Like, they, they became more permissioned, they became more KYC'd, and I think we continue to see that. With, with Perp decks, especially in the US. You saw it with Hyperliquid today coming out, uh, kind of announcing they're stepping into the US in a way. Um, so I think that's, that's massively beneficial for the entire space. I think them and Lider here in the US, Architect as well, I think there's, there's some great people here in the US moving that forward in a good way. So I think, I still think we're— I don't think we need a, you know, zero-to-one moment. I think we just need to keep compounding on what we've built so far. And then things will come from that.

For those who aren't aware, do you want to quickly explain what Hype recently announced, uh, in the US?

Yeah, so they've kind of got a Hyperliquid Policy Center— HPC is what they're calling it— which is a research and advocacy nonprofit institution that's just kind of, you know, really pounding the table for hyperliquid and fair regulation in the US. That's the, that's the TL;DR for you, which, um, I think is, I think is actually really, really good. Um, you know, as someone—

well, they don't have any friends on— they don't have anybody lobbying for them, right? Not in the U.S. And so, and I think like a lot of lobbying is like kind of directly attacking their, their—

yeah, I'm not sure, trying to help them out.

Yeah, so they kind of need this as like a defense, right?

Yeah, and I think it's good for them to have a voice at the table too. I think it's good for the, the leading perp decks in the space to have a voice in DC. I think that's net positive. I think over time, I mean, similar to stablecoins, you start to see these look a little bit more permissioned, a little bit more KYC, at least aspects. I think the way in which it goes is you'll have essentially like an HLPE, like E for equities, and LLPE for equities, where as these guys can start to talk to spot market makers here in the US, they're going to need a compliant counterparty, which will be like an LLPE, which is everyone who's KYC'd. And I think that's how it'll end up playing out. I think that takes time, but I, I think that's the way in which it goes. You have permission and permissionless. So you have an LLP and then LLPE, and I think that's the way in which it goes. And I think that's actually incredibly bullish for the industry. Like, everyone's like, oh no, permission markets. That's not, you know, crypto's ethos. I think that's net bullish these businesses though, incredibly often.

Yeah, no, I'm with you. I'm still very bullish on the space, not just from a Bitcoin up, price up, everyone speculates perspective, but I just think assets will flow here, right? You know, two of the bigger reasons why people come into crypto are like to make directional bets that you can't really make elsewhere, and then, or just exposures in general, and then, and then yield, right? So I think on the exposure side, you'll have more equities, more RWAs on-chain, um, more of them can operate as collateral and unlock liquidity against them, whether they're private or public assets. And I think, you know, that's just a major draw over time for, for users, and something that you don't really have access to unless you're you know, like private banking, um, and, and doing well kind of situation. So there's that element. Um, and then the, the unique, like, you know, the experimentation that happens in crypto are, yeah, two, two of the bigger byproducts have been prediction markets and, and memes. But the whole premise is I want to get unique exposures that I can't get to in trad fi. And whether I want to speculate on the attention of something increasing or the probability of an event, I think there will be more of these, uh, protocols that enable unique exposures or people to kind of speculate on them. And so I think that'll kind of continue to draw capital into the space and, and something you can't really do much elsewhere. And then on the yield side, rates are going to come down, right? And, and so in, in TradFi, most yield is just, uh, credit spread on treasuries, right? So as treasuries come down, the yield opportunities there will come down. I think in crypto you have through the tokenization of these productive assets, yields that are a function of utility, right? If this asset is used as an HLP, or if I'm operating as the house for something, or if I'm providing liquidity, you can have these unique assets that provide a yield. And so I think you've actually seen this element kind of chatted about on CT, but like the whole premise of recursive borrowing being actually a pretty meaningful feature. And, and I definitely agree. And then the whole premise is, you know, you, you use collateral with a higher yield to borrow cash at a lower yield, and then you transfer that cash to the higher yield asset and you, it's just looping, right? And, and obviously you don't want to do that with an asset that's volatile, but I think you have a lot of these pretty low vol products. And assets that generate yield from some form of utility that you can loop. And then if you do the effective yield you're kind of getting, it's actually going to be pretty material relative to what you're getting elsewhere. And then you have, you know, pretty decent net interest margins that you can get good lending rates at. So we actually have, we did a seed deal for something that we'll share later on once the the project goes public, but it's like along that vein. And I think it can do really well, particularly in an environment when yields start to come down.

Yeah, I mean, just think about, you know, once we get equities like on-chain in an efficient manner with good liquidity, you introduce the basis trade on a lot of these platforms. And let's say, you know, Lido partners with Citadel, someone in the US to do spot equities. You can run hedge funds can then run basis trades there. Let's say markets get super efficient, let's say you're collecting 6% there, treasuries are yielding 3% if they come down a bit. So all of a sudden that's a much more advantageous strategy for these guys to do. Yes, there's risk there and, you know, more risk, more— or more yield, more risk. But I think it gets super interesting on the yield side.

Yeah, Athena's doing that on the equity side with Hyperliquid.

Yeah, they're crushing it.

Wish I could buy their token.

Do we want to talk about this AAVE thing? Yeah. So basically AAVE Labs came to AAVE and they have this proposal that like we're going to redirect 100% of the protocol revenue to the AAVE token. But we want— what was it? They want like a bunch of the treasury upfront. Right. And then there's also a clause where like Um, it's the profits after the lab's employee salaries are paid and everything. Um, so it seemed like kind of mixed reactions on it. Um, seems like Mark Zeller from Aave was like pretty against it, pretty loud. I didn't realize how bad of a relationship him and Stani have. I only came to realize this over the past like couple months or so. Um, But yeah, I don't know, uh, like the market I don't think is totally— at first it seemed like the market liked it, but then once they kind of went through and digested it more, it wasn't as interesting. I don't know what you guys think about this.

Like, Avi's been trading all right since, um, relative to the rest of the market, I guess, in particular, but It, yeah, it's, it's a, it's an alignment issue you definitely run into when, when on the investing side, especially at like seed stage where, you know, you're trying to figure out where value will accrue and, and how the two can exist. And so I think this is a cleaner system, um, for sure. And, and it, and it, it's one where, you know, you're not forced to, to buy back or, or send value to the token, which I think a lot of these projects have to do as a way to signal that they're going to continue doing it, whereas because they kind of sit in this, in this weird limbo where, you know, where does the value actually go? And if we're not immediately using it to do it as a yield or buyback, then the token won't get it. And so here you have the scenario, right, where like net income goes to the— and then you can either choose to distribute it as a dividend, buyback, or into retained earnings. And decided by the token holders. So I think it's, it's, it's interesting. Uh, I think like part the, the more interesting element is probably if it plays out. I haven't really dug too much into it, but it seems like where their next opportunity could be is, is they're trying to do a lot of this, um, solar financing. Um, basically like bringing, uh, these assets on chain and then using them as collateral and so creating ways for people to, to do RWA lending on their platform and expand their asset base outside of a lot of these crypto-native assets. Um, I think it's kind of where a lot of these markets really need to go if they want that next 10x in market size growth, where they're not purely, you know, dependent on just the market caps of BTC and others going up. It's, it's not cheap if you look at it. Like, I think they're doing $10 to $12 mil a month, right? So it's like trading at $120— it's like $2 billion FDV with, uh, and, and doing $120 in top line.

Yeah, like trades in upper 30 times. Like, it's, it's pretty expensive in my opinion for a, an asset I would consider less— not necessarily a growth asset the same way in which I view the exchanges, like Hyperliquid or Lighter. Like, they don't, they don't grow at the same rate. And I think Jan and I, we talked about this a little bit offline. I view The exchange is a little bit more like the tech companies in crypto, high-growth, high-margin businesses, and obviously still a high-margin business, but it's not that high-growth tech company. It's more of like a financial business, probably trade something— you should probably trade at some sort of premium to book value. It's kind of how I view it. I haven't— I need to do more work on that, but that's kind of how I see it.

So the only counter would just be that financials kind of trade their part because like their growth is just from, you know, user deposits and banking activity. So they just can't really get much growth. So here, if they can find new avenues to bring a lot of assets onto their platform, then they can potentially experience a good amount of growth. And, and, you know, you can, if this is the only place you can do this kind of financing, probably be a bit more extractive on the fee side and, um, some pricing power there. Yeah. So that, like, they would need to really lean into that and, and pull it off, but I'm sure that would take a long time. Um, I think they were estimating the, 'cause they, they basically also said they're gonna be sending credit card and, and other sources of revenue to the token. But I think, I think that totaled up to somewhere in like the $10 to $15 mil a year range, right? So that adds, call it $200 mil of market cap or of FDV. So not, not a meaningful amount, but, but definitely something. Um, Yeah, I mean the end goal, I think Jeff was, I forgot what, what pod he was on, but he was just, he was basically talking about, you know, the goal for Hyperliquid is just to be the everything app and, and kind of doing everything in one place and, and owning the consumer that way, which makes sense. I don't know if Aave's trying to do that, but they do have some of these consumer products that they're trying to lean into. I don't have an Aave position. For what it's worth, yes, this isn't me talking my book or anything.

Uh, I kind of have like a, like a question for you guys a little bit. Um, not really related to the Abundance article, um, but kind of related to like their, uh, Aave v4 kind of like trying to move into like more of a fixed or stable rate lending, fixed rate lending kind of thing for institutions. Do you think there's, uh, a huge demand for that? And do you think like that V4 will actually like be a needle mover or, or not? It's something I've like thought about, and obviously, you know, like fixed rate lending is a big thing in, in TradFi, so I would imagine, right, there's probably some demand for things like that. But I'm kind of, kind of curious since you guys might be a little bit closer to these things than, than me.

I'm not super up to speed on it, to be honest. I need to dig in, but I think it's probably more straightforward to do than, or more scalable at least than, uh, retail lending. Cause see, the idea here, it has to be undercollateralized, right? Otherwise it's just not gonna be capital efficient to do these. Yeah.

I'm, I'm kind of like looking into, into it more. It's supposed to be launching later in 2026, I guess. So it's probably like a Maple type product. Yeah. I think it's, it's similar to, to how Maple does it. I mean, it's like a clear thing that like you need in, you know, a, a financial system, right? Like an economy. Yeah, these types of lending. So like it makes sense. I'm just like really curious like what that traction looks like.

Yeah, I have no, no, no temp check on demand there. What was that? I don't have any temp check. Like I have no idea. Yeah, yeah. What the demand is there.

I mean, these things have always kind of run into adverse selection issues. I guess so. Or you're just lending to like crypto hedge funds. Historically, that's what it— yeah, exactly— was for a lot of it. Um, it's, uh, no, it's interesting product line though for them to try and like worth tracking everything. And if it gets more institutions borrowing on-chain, that could be good. If they're like very creditworthy, could be a good place to like, I don't know, park stables, I guess. I don't know, it's hard for me All these things are cool, but they're like, they just don't get me like crazy excited, you know what I mean? Um, and maybe that's just something, maybe we're just, crypto in general is becoming a bit more boring in that sense, right?

Um, I don't know. I mean, I think a lot depends on the type of asset, the yield on that asset. And things like that. Because I don't know, I don't think you'd want to go out the risk curve and say, hey, I want 12% on hyper liquid, like, yeah, fixed rate. I think that's quite risky. I don't know, it doesn't get me super excited either. I think it'd be great if you, you could do that. I think there's just a lot of risk, and it's not my area of expertise either.

So yeah, what if you can borrow against your HLP and expand it with some USDC that, that you borrow for 4 or 5%, and then your effective yield on the HLP is much higher until— yeah, there's a big drawdown. Um, yeah, it's like these low vol, high, higher yielding products that, that I think you, you can't really do that outside of crypto. And I, I like— I do think that's a pretty meaningful thing. It's funny, it's basically just a product of DeFi summer experimentation that stuck around and wouldn't have been possible if it— or like wouldn't— probably wouldn't exist if it weren't for that period.

Mm-hmm. Have you guys been keeping up with this base stuff? So Zora, it seems like they're full pivoting to Solana and also they're moving beyond the content thing and they're doing these attention markets. Which I think are just like meme coins. Are they? I'm not totally sure, but it seems like pretty big pivot there. Base is moving on from the OP stack. They're going with their own. They're building their own tech. So I think that'll be like a few-year transition thing. But it's interesting how like OP token didn't react to that at all. It's like Base makes up 99% of the Optimism chain's revenue. And they just announced that they're leaving and the OP token didn't even really sell off. It's like, who's holding this token at this point? Right? Like nobody, no, like that just shows me that like no liquid funds or anybody is really holding that token at this point.

That's why it's, it's one of those, it's like, it's tricky to use as a, uh, I know Flip had this great piece on, on pair trading. Right. But I think if you pick the wrong ones that are consensus shorts, like, you can actually just get wrecked pretty decent. Like, an op that, uh, doesn't sell off on news like that means you probably don't have many natural sellers left, and maybe it's better to use something else.

Yeah, it's probably time to move on to something. Yeah, good time. Or you use a basket, you still keep it in your shorts, you got OP, Eigen, Arbitrum, and, and, you know, call it Drift. And you use that as your basket short leg. Yeah, you've got less denominator effect, or like it's, it's distributed, and then you, your scam wicks don't, don't hit you as hard. Your volatility can actually still be quite high depending on what, what asset you're long, uh, and actually can, can hurt your Sharpe ratio. But it's, uh, baskets, baskets can help once, once, uh—

okay, actually it was a bit of a delayed reaction. It's down 10% now. There he goes. To be fair, I've been dying since we started this.

Bitcoin's been chilling, alts have been dying since, uh, the Bitcoin report.

Things go down, yeah, just so— yeah, but no, like, even, even pair trading in crypto, like, yeah, I just wrote a report, but it's like one of the few things I think actually interesting right now to to me, like actually doing pair trades and running that with truly like hype soul. Like as an example, I don't have that position on, but like as an example, I think that's, that's quite interesting.

What do you, uh, what do you use to put on your pair trades? You use like Pair Protocol or like—

yeah, I use Pair Protocol. Yeah, yeah, big fan of Huff. I think that they've got a great product. I'm a big fan, big fan. Yeah, it's definitely, uh And you can do baskets, you can adjust positions in live, live time. I think it's a good product, really good product.

You don't think, um, I mean, I would expect exchanges to probably eventually implement that. Yeah, yeah.

I don't know if they want to be an OEM though. Like, I think they just want to run the exchange and not actually be like an order management system. I mean, I don't think they necessarily want to do that. Like, I think a likely outcome is like acquisition, probably. I feel like that's a good acquisition hire for, for one of these teams. Would make a lot of sense to me, at least. I don't know if they want that, but like, I think that makes sense.

Like, I don't even know what the overlap is. Like, most people who don't really care about, you know, I don't—

I think it's, it's an on-chain, like, in-silico type of product. Yeah, yeah, yeah. So I mean, they could be a standalone. I mean, it depends how much they're going to charge on like institutional product, mobile app, like what kind of, what kind of fee they're able to charge. Is it going to be like similar to Insilico where they charge a BIP on everything? Probably. I think that makes a lot of sense. I think it's actually probably like a decent business, just— it's just tough because it's, it's got no mind share right now whatsoever. The product is, is great though, um, and it's, it's a bear market, so I think it's tough, tough for them. But I think they continue to ship. I'm excited for their institutional product that's coming in their mobile app. But yeah, Pair Protocol. Yeah, I've used it.

I like it too. It's, it's really good.

Um, same. Yeah.

Oh yeah, you guys have all used it? It's like, it's good?

Yeah, yeah, you're the one who recommended the, the pump, uh, Monat trade for me. It's been my best trade all year so far.

Yeah, it's good, it's really good. I mean, the token isn't going anywhere or anything, but it, it's a good product.

I think most people don't know there's a token either, like, to be fair. Yeah, like, I think it's, it's one of the, the few products very few people also know about.

Out. Well, yeah, right? Like, what's the surface area of crypto degens that are like, you know, meticulously thinking about a pair trade to put on?

Yeah, yeah, not, not many. I think, I think when they simply—

oh, how about give me a basket of D— of D-PIN tokens and let me long Helium against them?

Uh, you can do that. They've got, uh, AI Parrots in Telegram. You can actually ask that bot that and it'll create the basket for you.

Oh, that's kind of— I just feel like, I feel like, I feel like shorting D-PIN tokens is so expensive though.

Oh, that you pay a crazy amount funding, I'm sure.

Yeah, I feel like, uh, long AAVE, short ETH is probably a good pair trade here.

Yeah, like I would probably own AAVE over ETH here. I mean, I think I definitely— that chart looks pretty bottom too. But yeah, we'll see with the— I mean, we're talking about BASE. We kind of left it, but that's okay. There's not much to say there. I don't think BASE is like— I've seen some people say like BASE is like going to shut down and abandon ship. I don't think any of that's true. Obviously it's not with this new announcement they're moving to their own stack. Um, yeah, I—

but I just kind of want to touch on the pair stuff because Jason Yanowitz made a good point. It's like, I don't think there's too many crypto degens looking around at pair trades. I think the big unlock is one, an institutional-type product, and the other one is a stupid-proof product where it's, it's mobile-friendly and it looks a lot like prediction markets. It's, hey, XYZ is happening next week, which asset do you think outperforms over that time period? Is it Bitcoin or is it hyper liquid? And you tap hyper liquid. Okay, you put that pair trade on, you put that bet on. I think that, that's a big unlock for whoever can do that. I think it needs to be stupid proof and then people get interested and then they start using a more robust product.

Um, makes sense to me.

Yeah, I think I, I want it to look a lot like the DraftKings UI. Like, that's what I want it to look like. I was like, over this time period, which asset performs better? Give them a pre-canned basket, you know, maybe it's Bitcoin Cash versus Bitcoin. You know, and, and run that.

Apparently Bitcoin Cash is a quantum hedge. Yep. I'm joking, I'm joking, just in case people think I'm serious. Um, trade though, it has been for— every once in a while Bitcoin Cash goes on a nice little run. I remember in, uh, 2020 before COVID before Black Thursday, Bitcoin SV and Bitcoin Cash were just ripping to start the year. And I was like, this is not good. This is— something's probably wrong here. And then yeah, pandemic is in the charts, right? Um, I don't know, man. This, this market is like— I feel like the last few podcasts have been— I'm— the thing is, I know a lot of people are depressed and stuff, but I really, I think I just have like the blind optimism that we are making like a lot of good progress in a lot of sections. As you said, there are a lot of interesting protocols like this pair protocol is interesting. A lot of the RWA stuff we're doing.

And then also like in the option world, like Derive. Yeah, like Derive's liquidity, I think it's not great, but it's like the best product today. And this would be a great conversation I have with LTR. Because I know he's close with the Cayenne guys, like, and then maybe, maybe Robinhood Chain, who knows. But like, options at some point get a lot better, and there's, there's more yield too. You put those in vaults, you run basis trades, and all of a sudden you let these, these sophisticated traders run vaults, and you're gonna have yield, you know, ranging from 4% to 25%, you know. You'll pay for that risk, but I think those things get really interesting. I don't know, Drive's an interesting one. Liquidity sucks, but Yeah, options are still like—

it makes way too much sense for Robinhood to kill that, but who knows if they're actually going to go hard at it. Yeah, um, seems like such a natural, natural fit for them.

Yeah, and overcome the perp.

Yeah, yeah, I don't know, I like options more, but I also don't trade perps or options really, but when I ever do, when I ever do speculate such gamble, I've always liked options more.

Can't get licked, which is nice.

Yeah, it gives me, it keeps the hope, it keeps the hope.

Yeah, you can go from, you can go from a zero to a big winner real quick with options.

Yeah, yeah, I've had an option come back from the dead once, you know, and it was like I would have been liquidated.

Volatility. Yeah, really, man.

It is different expression. It's also just cleaner. I don't know, I just find it cleaner. It's like easier to express what I want to do.

I think, I think you're a rare, like, rare, like, subset of the people, because I think most people would say the, the linear perpetual future exposure is easier for them to understand. But I agree, I, I like options because what I want to express, I can actually do that. Yeah, like a more pure way, if you will.

It's also some good way to like pick up yield on the sell. So like, I'll buy this thing if it comes down here regardless. So I'll sell some puts and pick up some yield or whatever. Yeah, that's what I'm saying.

The vault strategies would be pretty fun.

The worst thing about last cycle is all the vaults and options that they advertise their like APYs and they were just running like blowup strategies. And it's like, that's also what happened to like most hedge funds. Like options. No, I know, I know. It was like that famous video of the guy right in front of his desk. Like, he starts the video like, Jerry, we go so far back, Jerry. I love you, man. Stop. 10 minutes in, he's like, so we blew up. Um, yeah, that guy also wrote the book. It was literally, he literally wrote the book on like selling options.

I don't know, when people get greedy with options, that's when it hurts you.

You can hedge really well, you can collect yield well, but when you decide, hey, well, people are doing this on Polymarket, they're calling it bonding and it's the same thing. It's basically buying sports games that are already over, but it's like 99.9% on the Polymarket and they're like, this is a zero-risk strategy. I'm sorry, but there's definitely a risk there that like some weird shit happens one time where like a game gets something happens, the resolution is like, goes, it's like, um, some dude gets done for doping and they forfeit the match afterwards. Yeah, it's like you just need one of those, right?

I don't know, I'm excited to see all these degen vaults and strategies pop up. Options are always really cool. I've always, you know, generally sucked with them. Um, you know, I kind of jumped into them before I knew what I was doing, so I was mostly a, uh, you know, a tuition expense.

Yeah, I've always felt like— what I find them— what I find them interesting for is like, if things really get crazy on the Euphoria side, you can kind of just like sell most of your stuff and then you can buy some options just as like a hedge in case it gets even crazier. And then you don't feel bad about like being on the sideline. I guess you can do a similar thing with putting like X percent of your portfolio on like a leverage trade or something, but Yeah, but then you have liquidation risk there.

Yeah, like, it's also, I think, nice if like, you know, you— there's been a big run-up and, and you don't want to put on a short, like you don't want to sell because, you know, like tax risk or whatever, you're still bullish on the asset but you think there's gonna be a pullback. You don't want to put on a short because then you have to make sure you have a stop on it, otherwise you're just like, it just runs away from you. So you can buy puts and if they expire worthless, like, you're fixed downside, some temporary—

you sleep better at night. Yeah, you don't overthink it at that point.

Sleeping better at night's important. All right, I think, uh, we're coming up on an hour now. Um, so yeah, thanks everybody for joining. We'll probably end it here. Um, 2 weeks from now will be March, which is nice. Spring is around the corner. Um, and with spring weather comes spring prices, right?

That's— yeah, spring. You know what spring is? It's another word for bounce. Yeah, it's true. Dead bounce.

The problem is like we're so dead and then summer's always dead, and so we— what, we get maybe like a month or two?

Well, maybe the Clarity Act really usually gets some bounce in the spring.

Yeah, the Clarity Act. Yeah, the Clarity Act. We haven't talked about this because it's hard to, like, us, I think, to have any real good insights on, like, the chance of it passing. But those are, um, still potential upside cases that I think have been, like, pricing pretty aggressively to the downside. Uh, like, people are not really optimistic of this stuff passing.

I mean, it kind of has to pass before midterms now.

If it doesn't, it's not—

that's not ideal.

So, like, yeah, I guess the closer you get to midterms, the, uh, the, the bigger that becomes an overhang. Because post-midterms you would expect House and stuff to flip, or, you know, be more even. So then you're probably not getting shit done on that front, right? Yeah. So yeah, I guess, I guess it's on a ticking time clock right now. We'll see, we'll see how it goes.

Anyways, we'll wrap here. Uh, thanks everybody for coming on, and, uh, we'll see everybody in a couple weeks from now.

Awesome. Thanks, guys. See ya. Thanks, everyone.