Let's get to the big story.
Breakdown.
Bitcoin is holding above the 70,000 level in New York morning trade and has been finding firmer footing after days of war-driven volatility across global markets.
And against that macro backdrop, Bitcoin has avoided a major breakdown.
But recent price action does point more to stabilization than a clean risk on restart, while options data suggests traders are moving away.
From aggressive downside hedging conviction is hardly one way, and institutions are still actively managing macro uncertainty rather than blindly chasing the upside.
And joining me to talk about the state of energy, and that is in crypto is Andy Baehr, managing director of asset management at GSR.
Andy, good morning.
Thank you so much to see you.
I think you and Jane covered it pretty well.
There's, you know, you're kind of hunting for news where you can find it.
And there's a lot of news in blockchain and there's a lot of news in crypto.
The Wells Fargo news is interesting following Morgan Stanley news, Kraken News, Nasdaq news, futures trading 24/7.
The slow money continues to build things at a very deliberate pace this week.
Florida is the FIA conference where I'm sure there's a lot of things going on and a little bit of FOMO for not being down there to be on the scene, but the market is just low energy.
It's like my daughter comes and says, I need a new phone, Daddy, look, it's morning and my battery is already low, and I'm like that's just like the crypto market.
So it feels a little slow right now.
Yes, and Andy, although we were not in Miami for that gathering, we did get beautiful weather with Central Park hitting we did 80 degrees this week.
So here in New York we are continuing to monitor what's happening in digital assets and as you mentioned there are so many headlines that are coming through, it's hard to keep.
Up with everything, but what are we seeing when it comes to options and derivatives?
Well, I think there's not a lot of leverage.
You were right to point out earlier in the segment that there was kind of more assertive downside hedging in Bitcoin in particular into the fall, which is not something that we've seen historically.
Usually a lot of the options activity is on the upside with people wanting to YOLO into sort of a melt up situation and Bitcoin's return distribution kind of favors that kind of strategy, but a lot of the options activity is now kind of moving from crypto native venues like Darabit into IBT and IBT options, ETF options here in the United States.
In fact, back in October, those markets became about the same size.
And then we had our first kind of IIT and IBIT options related kind of meltdown on February 5th which drained a little bit little bit more kind of energy out of the system and ended poorly for a couple of the participants.
So we kind of have this bifurcated crypto native options and perps, regulated futures and ETF options markets that are now kind of competing for attention.
Yes, and speaking of competing for attention this week, all eyes have been on geopolitics as well as the effects on the macro picture, especially inflation here in the US and across the globe.
But what have you been seeing when it comes to this 24/7 reaction in terms of markets and what are the implications here?
Personally, I think there was a lot of reaction the weekend before last because it looked like kind of a Bitcoin sort of.
The blow during the weekend and then sort of gave the blowback Sunday night into Monday.
I thought that was a little overdone.
Things didn't move that much.
We've held this kind of 630,000 to 71,000 range in Bitcoin.
Ether has been around $2000.
Salon has been around $85.
Gyrations above and below that with perps markets as they are, it's been pretty flat, so the resilience has been pretty good.
Look, gold is priced to perfection. $5100 after its Q3 and Q4 kind of after party.
Oil is very high.
If you're looking for assets that can melt up from here, most crypto assets have now found a pretty firm foundation and for the last five weeks have held it pretty tightly despite all that's going on.
So it feels like a base camp here.
We can never be for sure.
I'm not quite sure I agree with the $10,000 call on Bitcoin, but it feels like we're at base camp.
Waiting for the weather to clear so that we can begin to ascend.
Yes, I think that's a good analogy and of course we're continuing to look at fundamentals as well as the regulatory outlook.
So of course we do want more clarity when it comes to regulation, but what are your expectations as we finally head into the final weeks of Q1?
Yes, we, you know, I talked to a couple of people who are very close to clarity Act conversations and they seemed very confident that some was going to get done at the same time the clock is ticking, so you can just look at prediction markets to know better than I exactly what the odds are.
I do think the crypto market will treat it as a positive surprise if we get good news on clarity.
We're hung up on this idea of stable coin yield.
Stablecoins just hit their all-time high of TBL or AUM, over $300 billion.
So stablecoins are here to stay.
Wells Fargo, Fidelity trying to get into the game, so.
That issue needs to be resolved.
I think the rest unlocks.
The CFTC and SEC are working together in harmony, so I think we can make a tremendous amount of progress if we unlock that one piece.
The market will take that as a surprise, and I think the layer one blockchain salon and ether should really welcome that news.
Bitcoin might find itself coming along for the ride.
Well, Andy, always great talking to you.
Thank you so much for joining us and thank you so much for all of your insights today.
Thanks.
Thank you.
