Welcome back to Market Movers. The opening bell as we kick off October in the final quarter of 2026, Bitcoin is hugging the flatline in Q3 digital assets posting their strongest summer performance in nine years with a 43% gain in Bitcoin and an even bigger rally in East and Solana. While macro headwinds like high treasury yields and fed interest rate hikes created a late quarter pullback, on chain, metrics are flashing some green shoots and from surging open interest to rising DeFi borrow rates, how can we be prepared for the final months of the year?
While joining us live here at the New York Stock Exchange to break down the market signals is Andy Baehr, managing director of asset management at GSR. Andy, great to have you back. What are your thoughts, Ben? And what a quarter.
What a quarter. I mean, one of the most frustrating things in investing is when you sort of really lose faith after a while and you capitulate and dump out and say, this isn't for me. And then right after that, things tend to rally. And this is why we try to zoom out with crypto, look at things quarter over a quarter so that people can look for broader trends and not get sucked into what can be, you know, very listless conditions.
So that quarter was monstrous. The funny thing is, everything happened in the second half of that, right? The lowest prices of the year, the lowest volatility of the year. All happened around August 15th, right before we, ironically had bad news about the Clarity Act. And, you know, no less concerns about the interest rate picture.
And then our rally began. It's notable that volatility, not only prices were really at their nadir right there in August 15th. So now we've had some fantastic strength, higher volatility, higher prices. And some of these other metrics that we're looking at are also quite encouraging.
Yeah. And Andy as you mentioned, you're continuing to monitor the health of the market and looking at on chain metrics. So what are they telling you right now.
So um, you know a couple of them are I like seeing more open interest in perpetual contracts. Some of that in fact most of that is just because prices are higher. Right. Open interest is measured in dollars. If Bitcoin uh you know is costs more dollars, that open interest is going to go up. And exchange volumes have also kind of been stable, but not at least decreasing anymore.
The things that we enjoy seeing, we've talked about this many times before. On chain borrowing, rates of borrowing rates are starting to go up. Part of that is because sulfur is going up and you know the fed is hike rates. But it's good to see more demand for money unchanged. It's good to see more stablecoins being being minted.
We saw $3 billion of stablecoins being added to the pile. That indicates money coming on chain is money that is likely to be deployed. It's also good to see that we're back to where we were with respect to ETF flows. Yes, ETFs really had a lot of pretty heavy duty outflows in quarter two. A lot of people losing faith right.
And you know we want people to stay in the game. The longer they stay in the game the more chance they have to experience quarters like we just had. So the inflows have been following prices back up and we are back to where we were. So, um, higher volatility, higher funding rates for perpetual on Bitcoin. Uh higher minting of stablecoins, hopefully followed by higher exchange volumes, um, and even higher DeFi funding rates.
All of these will be signals of energy and health returning to the crypto markets, attracting capital from, you know, other sources of return.
Yeah. And I understand you're saying this is a time when we're seeing signs of spring in autumn. But given the performance that we've seen, not just in Bitcoin, but also ETH as well as Solana and altcoins, you just mentioned fund flows, but what do you actually see and what does it mean for your outlook for the rest of 2026?
I think, you know, one of the things you hope you hear in a, in a, in a, in a crypto market, uh, you know, pundit is is consistency. We've always said we like ETH led rallies. ETH have the strongest performance amongst the majors. And that means that the story of tokenization and stablecoins, decentralized finance is being adopted.
And that message is taking hold. And Ethereum being a very trusted network, of course, along with Solana, means that that narrative that is pretty separate from Bitcoin is taking root, and investors are finding ways to express that by by buying the token and driving up prices. So that brings better breadth with it.
We've had fantastic performance by Solana. Fantastic performance. XRP has been up 50% since since mid-August. So breadth is good. New token issuances is a good we and I hear from my market making colleagues at GSR that a little bit of energy is returning to that space as well. So more activity is great.
It will it will breathe further life into this idea of capital raising by a token, tokenizing other ways of raising capital like stocks and bonds and payments through stablecoins. So it's been a quarter where the the fast money has kind of caught up to the slow money.
Yeah. And finally, Andy, before I let you go, today is October 1st. And I was talking to somebody earlier and they were saying about 90 days until 2027, which is hard to believe. I'm not ready for the holiday season just yet, but we have to keep in mind that midterms are right around the corner as well as seasonality here.
So give us your take on what we can expect when it comes to the crypto market. I know you mentioned tokenization, but from regulatory as well as catalysts. What is key here?
I think the market seems to be enjoying the response of clarity failing, but regulators coming in to write rules which we feel will be durable enough to get momentum, enough that things will be in place and harder to dismantle if other regulators replace the current set and want to dismantle them. So basically, kind of squatter's rights on on good business and good technology.
Um, again, the breadth of the rally is, is a is a pretty strong signal. We love the quarters. Right. And regardless of which quarter it is, there is there are seasonal effects which will at the beginning of the corner you feel fresh energy. I feel fresh energy. That energy tends to express itself in the market.
On the other hand, we have a ten year at 5.3% with no ceiling in sight. We have big numbers coming out tomorrow. We have midterms, after which we'll see if promises, you know, get kept into the end of the year. And we have a stock market which is hanging on there. It was kind of flattish in September. And it's hard to escape the gravity or the or the, you know, the weight of a stock market that's heavy even for crypto.
So there's a lot of things that could temper the picture. But if we can maintain the momentum that we built in the second half of Q3, both in terms of our the crypto native business, the tokenization stablecoin business and crypto investing for tokens, again, I'll say what we said a couple of weeks ago, we'd much rather be here than in mid-August.
Absolutely. Andy, well, appreciate your time. Thank you so much for breaking all of this down. And as always, thank you so much for your analysis.
Thanks, Remy.
Thanks.
