Well, let's get to the big story breakdown.
In New York Morning Trade, we are looking at Bitcoin try to hold on to the 66,000 handle.
Well, we saw the crypto major close out its worst first quarter since 2018, plunging nearly 24 percent.
Now, Bitcoin is now sitting 45 percent below its record high from October of last year.
Now, escalating geopolitical tensions in the Middle East are crushing investor sentiment across both traditional equities as well as crypto.
But a massive reversal in U.S.
Bitcoin exchange-traded fund flows is actively sucking liquidity out of the market.
Well, joining me on this Thursday morning ahead of a long holiday weekend is Andy Baehr, Managing Director of Asset Management at GSR.
Well, Andy, good morning.
What a week it's been and what a quarter we saw in 2026.
You keep saying long holiday weekend, not for us.
I think we might take a little bit of a break.
It was a really notable quarter in terms of the drawdown.
But as we've been talking about, most of that drawdown happened in the first five weeks of the quarter right up until that sort of February 5th deleveraging event, which was pretty dramatic and kind of got us into this channel.
And since then, we've been bobbing up and down, right?
And we've been trying to think about how to characterize that kind of range trade because it's very frustrating.
It requires a lot of patience.
You might say it's a listless or directionless market.
The word we landed on was ambivalent.
The market has strong up conviction and maybe strong risk control conviction.
And those two things are in conflict right now.
Yeah.
And speaking about this turn of ambivalence we have to keep in mind that although it is a long holiday weekend for the equity markets as you mentioned digital assets crypto 24 7 and tomorrow morning we will be getting that jobs report.
So we'll be watching the market reaction around the globe in terms of other asset classes.
But when it comes to a major catalyst or even a data point that you're watching for the space what is it that you're keeping your eyes on.
I can't think of a time in history where there was more support for a rally, but also equally pretty good support for continued caution right here.
On the plus side, you have these continual, almost deafening announcements of integrations, tokenization and stablecoins, tokenization and stablecoins, which will increase the usage of layer one blockchains like Ethereum and Solana dramatically and over an extended period of time.
This very building is pointing towards tokenization in a way that we couldn't have even imagined about 18 months ago or two years ago.
At the same time, there's less of a favorable interest rate market.
There is less of a favorable leverage market in the crypto space following the deleveraging events that we had in October and February.
And right now, crypto is losing a little bit of its volatility, which draws traders to it.
Those traders are looking at oil right now.
They were looking at gold and silver in the fourth quarter.
Now they're looking at oil.
There's kind of plenty of volatility in equities now, too, with the VIX over 30.
So there's reason why kind of fast money has continued to stay away from crypto at the end of the first quarter.
Again, that could all change.
Yeah.
And speaking of which, we are kicking off Q2 of this year.
So I do want to ask you about the role that seasonality actually plays and what you're expecting.
Sure.
So, you know, in this ambivalent study, and I want to touch on this because it'll set up how we're positioned for Q2, what we looked at was, and you can feel this, right?
You'll feel that crypto can move a lot on any given day, but a week goes by and you kind of were on Friday where you were the Previous Friday so you can actually measure that and so in our kind of conviction gauge or ambivalence gauge in this case we look at patterns of daily movements versus weekly movements and We averaged them over four weeks and then we averaged them again over four weeks.
So what you see in the chart is basically kind of a six week-ish term of whether moves actually ended up extending into bigger moves or reverted back to prices that were there before.
Mean reversion is a very difficult thing to trade unless you're specifically targeting it.
So a lot of trading strategies are frustrated here.
Of course, investors are frustrated here because They hope that rallies will stick, and then they don't, so you kind of mean revert.
So this is a theme that we want to take into quarter two, see where we go.
I think the most interesting thing about the chart, and this chart goes back six years, right?
So we're looking at a very long period of time. you'll see that we hit these periods of ambivalence.
We're at a point now, looking back over the last sort of four to eight weeks, it's about as ambivalent as it tends to get.
Seasonality is actually a researched and demonstrated property.
We used to feel this when we had conversations about that crypto's attention span was about a quarter, but really seasonality plays a big part and the psychology and the movement of money tend to follow it.
We should be at a place now where seasonality should help be on the supporting side of digital assets.
And finally, I do want to ask you about this analogy, the fact that you're describing the current market setup as being stuck in base camp here.
So based on that analogy, how exactly should investors be allocating their portfolios as we head into the rest of Q2?
It's a great question.
You know, the way we tend to think of it quantitatively, we like to think of it as a core allocation as, you know, Bitcoin, Ethereum and Solana.
You want to have a base asset, a store of value, the the quality asset in crypto, Bitcoin, you want to be allocated there.
And you want to have allocations to the two big layer one blockchains because they're going to fuel all this tokenization and stablecoin business.
So that's a good place to start.
Not investment advice, but that's a good thing for investors to look at and research.
And, you know, we will tend to think about, well, when things get good, those layer ones are really going to catch a tailwind.
And when things get bad, you know, Bitcoin is kind of be where the market wants to swim back to, right, swimming back to shore.
So those are three names to keep an eye on, to research and to look at.
If we're at base camp, we're still in this ambivalent mode.
We don't know if the weather is going to let us, you know, go for the climb or if we're going to run out of food and have to go home.
So stay at base camp, keep your kind of core patience allocation here and look for a trend to develop, which might, you know, allow you to go a little bit more aggressive.
Well, Andy, always great having you on the show.
Thank you so much for joining us today and thank you so much for weighing in.
