Let's get to the big story.
Breakdown the crypto market is facing a critical test as competing geopolitical headwinds as well as regulatory shifts collide in the nation's capital.
In New York morning trade, we are looking at Bitcoin extending losses down below the 72,000 level.
Now keep in mind that this does come after Bitcoin tumbled to a seven week low to close out May and this does come despite a robust broad equity market rally.
Keep in mind that BlackRock.
IBIT fund recorded its second largest daily outflow last week while all spot Bitcoin ETFs extending an eight day streak of net outflows totaling over $2.5 billion since mid May.
And of course on the regulatory front, the CFTC has just issued groundbreaking guidance to bring the perps market onshore.
And of course the Clarity Act continues to face heavy banking opposition ahead of a critical Senate vote.
Well joining us as we kick off a new trading week.
As well as a new trading month to break down this divergence is William Quigley, co-founder of Tether & WAX and Managing Director of Magnetic.
William, good morning.
Thank you so much for joining us.
It's hard to believe, but we are nearly at the halfway point of 2026, and we are looking at Bitcoin lower New York morning trade, and this does come as the equity markets continue to see a record winning streak.
So what does the sharp divergence tell you about crypto's relationship with traditional risk assets?
Well, I think, uh, what we've seen certainly since the, the latter part of 2025 and now for most of 2026 has been that um Bitcoin sort of cycled through its traditional post-haning process where about 18 months after the happening, in this case that was November 2025.
Um, what we've traditionally seen is a lot of capital leave the crypto space for a number of years until the next happening.
And it looks like that has happened.
Also looks like there are other places where people are earning extraordinary returns, and the attraction of Bitcoin was that you could earn multiples in several years, which is normally not possible in traditional financial markets, but we've been seeing that.
Spurred on by the AI growth, all of the AI equipment companies, the semiconductor companies, power companies, businesses related to the buildout, the $2 trillion expected buildout of AI data centers.
I think that's provided a very attractive alternative to the high returns of crypto, and that has seen some value shift out of crypto and into those other assets.
Yes, and William, as you mentioned, there are a lot of moving parts here, and I do want to get your take on AI.
But before we get to that, tell us what's happening with stablecoins since they do actually look like they're holding steady.
So would you say we're actually looking at a quiet risk off trade playing out inside crypto itself?
And is that the real story that most of the market might be missing right now?
Um Well, stablecoins, as far as how they work with crypto, they're principally used to allow people to trade.
So most exchanges use stablecoins as one side of a trading pair.
They don't use cash or directly.
They use, they use stablecoins, and stablecoins have been around since, since Tether in 2015.
They are the most traded assets.
It's not, it's not Bitcoin.
It's not Ethereum.
It's Tether and the other bundle of stablecoins out there.
So I think they are incredibly useful, particularly for applications like decentralized finance.
You must have stablecoins to do that, and that's why they remain popular even when Uh, the, the markets within crypto overall aren't, aren't driving a lot of returns.
And I do want to pivot to the nation's capital.
Of course we're looking for guidance regarding geopolitics as well as the digital asset market, but the CFTC last week issued staff guidance opening the door for regulated crypto per futures trading in the US.
So how big of a shift would you say this is for the trading landscape?
It's huge because the vast majority of trading of crypto on exchanges is not in the spot market, it's in the futures and perpetuals.
That's mainly because you can get a lot more leverage in some exchanges, 100 to 1 leverage, and so.
The main reason why the volume in crypto was lower in the US than other markets was because perpetuals weren't accessible.
With this change, I think you will see the US begin to dominate the global trading markets for crypto.
And of course while I have you here, I do want to get your take on what we're seeing in artificial intelligence.
When we look at the headlines this morning of videos in the spotlight after making its announcement for super chip for AI agents in PCs, but as a venture investor who invested early in PayPal and as a co-founder of Tether as well as a founder of Wax, tell me why you believe AI is the opposite of the early days of the internet.
Well, I suppose you can pick an argument how you think about it.
I think the main difference between AI and, and let's say 1994 to 1997 or 10908 was, um, The large institutional investors did not find the internet attractive at that time.
I mean, you look at a company like Amazon, it went public in May 1997 at about $600 million market cap.
There just was a lot of suspicion about these companies.
It wasn't clear how they were ever going to make money or if they were ever going to make money.
And so you didn't have massive amounts of capital flowing in.
In the case of AI, it's, it's reversed.
There are trillions of dollars of institutional capital globally that want to participate in AI infrastructure buildouts, and there's a lot of interest in the capital markets and these companies going public, so it's, it's. dramatically different from the perspective of how much the capital markets have an interest in these two things.
And I do want to expand on this and also talk about the economics of AI companies, especially at a time when 80% of the S&P 500's 11% gain to date is coming from a handful of companies here, and this r is being fueled by, of course, strong corporate earnings as well as upbeat forecasts for the rest of the year.
But based on your thesis that you just explained to us, the stakes are high.
So what do you think will unfold as we look beyond 2026?
Uh, the, the, uh, the buildout plans are multi-year buildout plans for, for data centers, and, and the vast majority of the capital that's going into, uh, AI is around data centers and of course the semiconductors in those data centers.
Um, so, if there does become a slowdown in that, in that area, it's going to be, Less abrupt, I think, than you would see in, in other spaces because the, the lead times are so long, uh, but I, I don't see right now, I don't see any, Evidence that people are slowing down their build out plans.
There are debates about whether LLM models can scale and should be scaled.
Those are not just random voices.
There are some very smart people in, in the.
Technology world who make those those arguments, but right now it doesn't seem to be stopping the market's acceptance of LLMs as the way to get to AGI.
Whether or not, you know, you agree with that is, is, you know, is up to how much you know about the area, but I am not seeing any hesitation in the in the capital markets.
I think we will see.
The large AI companies starting to go public and um.
Through, we're halfway through 2026, it doesn't look like anything's changing, um, for 2027.
Mr.
And finally, William, before I let you go, speaking of the capital markets, there are many highly anticipated mega IPOs on the horizon here.
So tell us why you think going public could potentially spell trouble for some of the unicorns out there, including OpenAI as well as anthropic.
Yeah, well, anytime you go public, it's a, it's a risk, uh, especially when you're a young company, and these companies are all less than 5 years old.
Um, so the challenge is going public before you have a, a solid and, and consistent revenue model.
I will say I would be, I would be hesitant to be a CFO of one of those companies because there is a lot of uncertainty about how they're ultimately going to reach profitability.
Um, you, some of the rounds that they're doing, tens of billions of dollars.
Is likely going to be far greater, the private rounds would be greater than what they would raise during their IPO, and then once they are public, um, you know, every day there's a barometer of how well the market thinks they're doing, and it, it is hard to raise capital if a stock has dropped below its IPO price, which we've seen many times.
So the nice thing about being private is uh the valuations are much less volatile.
They're only updated when you do another round.
So I would say it's risky, particularly because we're not talking $600 million valuations like Amazon when it went public in the 90s.
These are going to be at potentially $1 trillion.
And if you look at the other companies that are worth $1 trillion and traded publicly, they have far longer operating history and far more reliable revenue.
And so that's the real risk, going public at extremely high valuations without revenue models fully baked.
Well, William, we will have to leave it there for today but always great talking to you.
A lot of food for thought here so thank you so much for sharing your insights as well as your perspective.
Thank you.
