Morning trade.
We are looking at Bitcoin hovering below the 62,000 level after sliding below the critical 60,000 mark last week.
Now what some analysts are calling a silent bear market is tripping up in the sea with Bitcoin slipping below its 200 week moving average before recovering.
And this as US ETF saw over 13 straight days of net outflows.
Now even the corporate treasury model pioneered by sailors strategy did face a crisis of confidence after a rare token sale disclosed the penalty.
It's complex debt still strategy acquired 1550 Bitcoin between June 1st and June 7th for more than $101 million.
Well joining us live here at the New York Stock Exchange to give us a sense of where we stand in this cycle is Zach Pandl, Head of Research at Grayscale Investments.
Good Morning.
Great to have you here.
Thank you so much for joining me.
Great to see you as always looking forward to this conversation while you and I were talking about the price of Bitcoin, and we can't deny the fact that we saw.
Point fall below that 200 week moving average as well as below 600.
There are a lot of moving parts here, a lot happening across all asset classes.
So what are the indicators telling you right now?
Well, it has been a tough stretch for Bitcoin.
We are somewhere in the middle of the current crypto winter.
I think the dip below 60,000 was a surprise and an indication that we're still working through some things.
I think there's really two challenges for Bitcoin at the moment.
One is macro.
The Fed.
Reserve maybe raising rates.
I don't know.
It's something you're debating and it's having an effect on interest rate markets, having an effect on price of gold, on the dollar, and certainly on Bitcoin.
And as you mentioned, the other element of it is the digital asset treasuries like micro strategy, new pressure on the leveraged model for their balance sheets.
We need to see some stability there before Bitcoin finds a firm bottom.
We think sometime this summer we will see that kind of clear bottoming evidence.
I'm not.
Totally sure whether they're quite there yet, given that we're still some uncertainty around both of these items.
Yes, and Zach, you brought up an important point because earlier this morning we got the latest consumer price inflation figures and we all know that the central bank is keeping their eyes on inflation as well as labor market data.
But we are going to be getting the Fed meeting next week, so that is something all of us are paying attention to.
And on top of that we have the geopolitical situation in the Middle East.
We continue to keep our eyes on that. fragile ceasefire that is still managing to hold, but when it comes to what's affecting the digital asset space, what are the key takeaways and what are you paying attention to and why?
Yes, well, look, there's so many things to be excited about, and what I'm paying attention to, what institutional allocators are paying attention to, are really two main things.
One is regulatory clarity that continues to unlock new use cases of the technology, and we think we'll make another big step forward in terms of regulation.
Clarity with the Clarity Act that's moving its way through the US Senate at the moment.
We are optimistic that this will pass the US Senate on a bipartisan basis, hopefully signed by President Trump shortly thereafter.
So that's a key thing to watch.
And the second closely related topic is all the use cases of this technology.
So stablecoins, tokenized assets, perpetual futures led by projects like hyperliquid.
You know, these are all becoming a greater part of mainstream.
In the financial system, things that have developed in crypto but are changing the way the traditional financial system works, and that's what's really activating institutional investors.
So the bitcoin cycle, the crypto cycle, we're at a downstroke moment for sure in valuations, but a kind of upstroke moment for many of the fundamental drivers.
I think many institutional allocators look at that set of facts and say now is the time, now is the time for me to be engaging, doing my homework, and deploying capital in this space for the long run.
Yes, and speaking of capital, there are many theories about why we're seeing this bear market here in crypto.
But of course you mentioned Michael Saylor's strategy, and of course we're counting down to the SpaceX IPO, which is coming down the pike at the end of this week.
And in addition to that, there are a lot of other factors we're paying attention to, including the regulatory landscape.
It's been almost a year since the Genius Act passed, and we're looking for more clarity, but Given some of the social media rhetoric out there, what's the reality and how finite is liquidity out there?
These are all tough questions, and I think the SpaceX IPO has been a great example of one of the things that's been debated in the crypto market.
What I would like to highlight is that not only is SpaceX coming to market as of course a very large IPO, but it's coming to market with Bitcoin on its balance sheet, and I think that's something that Catch some attention when that event finally happens.
We will see.
But SpaceX will be the largest public company holding Bitcoin on its balance sheet.
There have been challenges with the digital asset treasury model, strategy, and others.
These narrow businesses really focused on holding Bitcoin.
But lots of other diversified businesses that hold Bitcoin on their balance.
SpaceX is one.
Tesla is another.
Galaxy Digital, Coinbase, Block, all of these companies hold Bitcoin on their balance sheets.
So that's the direction of travel, I think, for the industry is Bitcoin as a standard corporate treasury asset for diversified businesses, maybe fewer of these pure play digital asset treasury companies like strategy.
Yes, a lot to keep our eyes on as we head into that SpaceX IPO as well as.
Other mega IPOs coming down the pike.
But finally, Zach, before I let you go, I also do want to get your take on hyperliquid.
There's been a lot of focus.
So what is the reality?
What's actually happening under the hood?
Yes, absolutely.
Greyscale is thrilled to be able to offer a new hyperliquid ETF product, giving investors access to this innovative crypto platform, blockchain-based platform, and it's token.
Hyperliquid is, I think, one of the most innovative ideas in finance today.
It's sort of a fintech play you can think of it in that way, but it's a blockchain that specializes in a special kind of derivative called perpetual futures.
This is something that was invented in crypto but is increasingly being exported to traditional finance.
We saw the first.
US regulated platforms introduced perpetual futures just a couple of weeks ago, so something coming to traditional finance, but hyperliquid really a driving force of that market in crypto outside the US, I think one of the most exciting pieces of financial technology in the economy in my view.
So the gray scale hyperliquid ETF offers investors access to that ecosystem.
And finally, Zach, we have one more question.
So I do want to ask you, given the fact that markets have been focused on tokenization when it comes to digital assets and when it comes to the bigger financial institutions, we know that they have been getting in on this action as well.
So what are your expectations as we move forward in terms of impact stateside as well as products.
Look, we are at the very beginning of a long tokenization journey.
Tokenization will transform the way capital markets work.
Here at the New York Stock Exchange has been part of all of that evolution over 100 years of capital markets.
Tokenization is just the next phase of that evolution, something that's going to be changing the way we work, the way we invest in assets over 1020, 30 years.
We're right at the beginning of that process, so institutional allocators.
Looking at digital assets, looking at blockchain technology, understanding this tokenization vision and saying, OK, now it's time for me to start building that concept into the portfolio and things like the great great scale ETFs for Ethereum for Solana.
These are great ways to build tokenization exposure into an investment portfolio.
And because you mentioned Ethereum as well as Solana, give us your take on what we're seeing, not just with the tokens.
But also on the technology side as we move forward.
Yes, all the different blockchains are competing with different design choices to try to capture users, try to capture assets and transactions, and some of them go for maximum performance, high speed, high number of transactions, relatively low cost.
Soon optimizes for that.
Ethereum goes for a different set of priorities, really security, safety, what we call censorship resistance, which means that you Control your money at all times.
Those kind of principles.
So we're going to find out which one of those things dominates the market over the longer run.
My view is you need both of those types of things in a diversified crypto portfolios, both the most maximally safe and secure blockchains, as well as the most high performance blockchains, Ethereum and Sona, great examples of that.
Well, Zach, we will have to leave it there for today.
Thank you so much for joining us.
Great having you on the show and thank you so much for your perspective.
My pleasure, Remy.
Thank you.
