Bitcoin nearly flattened New York Morning trade hopes for a dovish pivot from the Federal Reserve were dashed yesterday.
Fetcher Kevin was delivering a stark message to markets.
Rates are staying high and more hikes may potentially be on the way.
And the latest stop plot revealing that half of the committee now expects at least one rate hike by the end of this year.
And after Feter wars crushed hopes for a dovish pivot and signaled that rates are staying high, the crypto market is searching for some solid ground here.
Markets immediately turned lower.
On the news with Bitcoin slipping below the 65,000 level.
And joining me this morning to tell us if we've hit the bottom of the cycle is Andy Baehr, Managing Director of Asset Management at GSR.
Andy, good morning.
We made it into the New York Stock Exchange it.
Yes, I can confirm a million people and 10,000 cops.
I think I might have passed all those 1, 10,000 people, but we made it in.
Yes, absolutely.
And you know this could be New York Knicks orange or Bitcoin orange, but when we're talking.
Bitcoin.
Tell us, is it too early to call a bottom for the cycle?
I don't like calling bottoms because I think it's an underrewarded thing to get right.
What I have noticed is that a lot of the commentators out there and a lot of the research reports seem hesitant to call last week, let's say, a bottom.
We had a 10% rebound in Bitcoin's price following the geopolitical news on Sunday.
And so everybody wants to look back and say, was that the bottom or not?
I think the observation is that ever since October of last year, any call of a bottom has been a disappointing, you know, a disappointing call, and I think that the market's a little bit conditioned to be scared to call a bottom.
And I guess just for viewers to think as you read more and more things and hear predictions that Bitcoin could go to $50,000 40,000 dollars, 30,000.
Sure it could, but pundits are kind of going to be skewed to not call a bottom right now because that's just been a frustrating activity.
So to be more neutral, maybe you'll be more bullish than most of the punditry that you see out there.
Yes, and you just highlighted geopolitics.
So this week has been quite the week, although the holiday will fall tomorrow, so it is a holiday shortened week.
So I do want to get your take on.
On stable coin yields as well as rewards and for people looking for yields, tell us about what's happening when it comes to rewards versus risk right now.
I think one of the most fascinating things about blockchain technology and decentralized finance is that as we saw yesterday, there is a monetary policy driven yield curve for the US dollar.
There is an activity-based.
Interest rate called SOFR, which is what banks use to trade back and forth with each other, and those are basically, yeah, they're linked to monetary policy.
They're linked to things like inflation and employment and policy over the long term, the shape of the old curb expectations.
Now in the decentralized finance world.
Rates are based on supply and demand.
It's very, very simple.
The more people who want to borrow, the higher rates go on a platform like Ave.
It's a very simple linear relationship.
And so these two things are really not anchored to the same activity or the same kind of process and therefore they can move around quite a bit.
You can imagine that if the Fed unexpectedly cut rates, that would be good for asset prices.
That might inspire people to go out and buy more crypto and want to borrow to buy even more crypto, and that would send decentralized rates up even if Fiat rates were going down.
So I looked at after the Fed meeting yesterday.
OK, so Fed funds targeting between 3.5% and 3.75%.
Soer's right in the middle there overnight was about 3.63%.
You go out the yield curve to about one year in Treasuries, you get almost to about 4%.
Then I looked at the decentral. finance rate.
I looked at the borrowing rate for USDC on Ave and I looked at some of the vaults which put together a lot of these decentralized rates on platforms like Steakhouse and Gauntlet and places like Morpho.
Guess what?
They're all in the high threes, right?
They're not quite as low as before the DI.
Exploits of April, but they're still razor thin above risk-free rates.
The implication there is that there's not a lot of demand to lever up and to borrow, and there's an extremely high amount of demand for yield, and that's keeping those rates compressed.
So are you really getting compensated for Defi risk right now?
Maybe not.
You might be just being compensated for Defi convenience.
Andy, what you just spoke about, I think it really highlights the importance of looking at data to understand what's really happening below the hood and not just the price action.
And given the fact that we've seen so much volatility not just in crypto across all asset classes this year, there have been a lot of product.
Launches in terms of funds.
So I do want to zoom in on what we have been seeing with BITA, which is BlackRock's Bitcoin covered call strategy here.
So for long term Bitcoin holders, do you think the tradeoff is there when it comes to rewards?
There's a ton of interest in covered call selling.
In the crypto native world, BlackRock is joining a space which has been occupied by other ETF issuers.
Goldman Sachs filed for a product some time ago.
Greyscale and places like NEOSs have had buy right strategies on for some time now, and we see a ton of it in the crypto native space.
We see it in digital asset treasuries.
We even see it for crypto foundations.
This idea that you can trade some upside for income or yield, not really yield, but for income. is a very positive idea.
Now when Bitcoin's volatility was 100, this was kind of a no-brainer, right?
The amount of premium you could take in from selling call options was fantastic.
Now Bitcoin's volatility is more like kind of a happy NASDAQ stock, right, or a happy New York Stock Exchange stock even, right?
It's it's kind of gotten down to the high 30s, low 40s.
You're getting a medium amount of premium.
And you're giving up upside.
So this idea that you're probably going to end up with around 60 to 70 to maybe 75% of the upside of Bitcoin and get this return, it's a different risk profile.
It's a different return profile.
It will be right for some people.
It won't work always, but I think it will make people feel as if the Bitcoin and the options market are working for them.
So it's a different objective.
I think it has a good place and it helps keep the option market going, so we always like to see that.
We'll definitely be keeping an eye on the performance of that fund.
And finally, Andy, before I let you go, hard to believe, but only a handful of trading days left for the first half of 2026.
So that means we will be heading into the second half of the year.
So given seasonality when it comes to Bitcoin.
What are your expectations and how do you expect to characterize or classify the first half?
This is one of the favorite themes and one of the great things about being able to work with you for so many quarters is that we appreciate that crypto and some other parts of the markets have kind of a quarterly attention span.
We've seen a lot happen in June.
Unfortunately it hasn't led To the kind of uptrend and broad market rally that we had in 2025, but you're absolutely right.
At the end of this triple witching where I'm reading that we have a record number of S&P 500 options expiring tomorrow, there's a lot of sentiment, a lot of risk changing hands as we head into the new quarter.
People square away their books for Q2.
We're hoping fresh energy comes into the market.
The fresh volatility that came into crypto over the last couple of weeks, I think, is energizing, and we'll see where we can go from there.
Catalysts can come from anywhere, so we would like to see one that helps us have an unusually bullish summer.
We'll see what happens.
Well, we will definitely be watching for the macro as well as a fundamental and technical aspects.
So thank you so much for joining me and have a great holiday weekend.
Thanks so much.
Thank you.
