C (3:26)

In terms of how we're monitoring Bitcoin, we usually look at liquidity and how that's changed over the past couple of months. And what we can see is that since the 10th of October, which was obviously a huge hit for the market, liquidity has dropped from 25 million on average at 1% from the mid price to 15 million on average. And because of that, we also see that there's a lot more volatile moves happening in the past few months. Like we saw this short squeeze rally from 60k to 72, 74ishk in the past two, three weeks. On top of that, we've seen 30%, 40% and reduced volumes. And this of course has all a lot of impact on how investors are approaching crypto right now. Is it the safe haven asset or not? We can discuss that later as well. Currently, I would say that BTC has been outperforming gold purely because gold has had a rally, has had a very aggressive rally earlier in the year, whereas now it's leveling out a bit, comparatively speaking. And yeah, I would say that in terms of infrastructure, there's a lot of good things happening in the cryptosphere. You have the CFTC and the SEC finally giving clarity as to how majors should be presented. They're not securities anymore, some of them are commodities. And that's all very good in terms of how institutions should approach crypto.

B (5:02)

Okay, yeah, a lot to kind of unpack there. So let's kind of get to it piece by piece. I want to go deeper into what you're saying in terms of, of Bitcoin and, and sort of, I guess it's relative buoyancy compared to other traditional safe havens, at least over the last week or two, it briefly touched on 76, 000 just, just a few days ago. It's obviously down since then. On my show last week we had Andy Baer from GSR and he sort of mentioned what you just discussed too, that sort of the competing narratives as to whether or not bitcoin's functioning as a safe haven because people now see it as a safe haven or is it just sort of the. A reversion to the mean from gold just surging over the last year, year and a half and bitcoin being punished along with tech stocks that had been hammered over the last few weeks because of AI fears. And again, maybe it was just things sorting themselves out. I'd love for you to just go a little deeper and sort of explain how did you see the last few weeks? And then how does that play into what we're seeing right now where bitcoin is sort of teetering? It's straddling the $70,000 line. I'm seeing some analysts predicting a drop back down to 65,000, perhaps further, especially if energy prices remain higher for longer. So maybe please just provide a little more context.

C (6:23)

Yeah, so what we also saw in the past few weeks is that when we bottomed early February, we saw open interest finally stabilizing in the perps market. And because of that a lot of forced selling, finally stealth, that bleeding that we previously saw. And because a lot of shorts also jumped into that or started betting on a breakdown in that 60k region, we, we saw funding rates going negative slightly and immediately saw whiplash back upwards, namely after the first part of the, let's say the geopolitical conflict in Iran was concluded alongside with oil prices rising and switching a lot around compared to comparative to btc. And what we could also see is that due to institutional flows kind of stabilizing us around that 60k region, with ETF flows finally flipping positive after I believe 3 months of negative outflows that has helped us stabilize in this 60-70k region. And whether or not this is the bottom liquidity metrics would say we still need to reaccumulate and slow down a little bit and make sure that things are settled properly before shouting oh, we're going back to 100k. Right. And that's going to need time to rebuild that investor confidence. Like I mentioned earlier, if you look at market depth, it's down 40 to 50%, volumes are down 30% and that all needs to increase in order for us to say like, oh hey, actually bitcoin is a safe haven asset we can use it as an inflation hatch because right now it's more functioning as a high beta tech stock rather than a inflation hedge where you can, which you can well buy to hedge inflation. And what we also see is that since yesterday after the Fed announcement, the S and P finally started moving a little bit, which obviously is because of growth fears and inflation fears. And as a result of that, BTC also sold off a little bit after seeing a brief deviation above 72 to 74K.

B (9:00)

So I'm curious, I mean, you track retail and institutional flows, but are there any notable differences or divergences in behavior geographically? Do you see more of a bit coming from Asia versus the US or are there any ways, any particular subsections of the crypto buying community that are worth pointing out?

C (9:24)

Yeah, what we saw in the past three months is that Asia used to sell a lot in the past six months in general, and that has now shifted from Asia is actually buying in the past three months with cumulative returns per session being up 0.2%. But compare that to the EU and the US session, which is down -11 to -12%. So we're seeing some buying from Asia finally after selling off a lot, whereas the US and EU are still selling consistently. However, important to note is that we are still very dependent on Coinbase flows. And whenever the Coinbase Premium comes back, we do see an uptick in BTC price and we do see that BTC moves more favorably to the upside as opposed to when that Coinbase Premium isn't present.

B (10:25)

Okay, that is interesting. I mean, we've spoken about the Coinbase Premium before on, on the show, but for people that may not be familiar with it, I mean, can you just talk a little about like what are the ranges for the numbers and, and where is it right now and what kind of is. Where does that fit contextually in history?

C (10:43)

So usually when we speak about a Coinbase Premium, what we, what we mean is that the price on Coinbase's Spot Exchange is higher than Binance or Bybit Spot Exchange that can range from $50 to $500. Currently it's only a 0.2% or it was only a 0.2% increase, I believe from Binance's Spotbooks. But we do notice that traders are actively looking at this premium to position themselves into the market, be it short or long, which is a very interesting thing to keep monitoring as well. And something I forgot to touch upon earlier as well. In terms of liquidity, if we Compare open interest six months ago, before the, before the October 10th we had 35 billion in open interest across the market, Whereas now it's 15 billion. And that also needs to recover for us to signal, okay, hey, we're recovering here, things are looking up again. Maybe we're gonna break market structure here and move back to the upside above 72 to 74k and we can take it from there.

B (11:55)

Okay, and what about long, longer dated derivatives, long term derivatives just to kind of span out to the, to the, further out into the year. How are traders positioning themselves especially I don't know if there's been any interesting or recent movement because of how volatile energy markets have been in particular over the last 12 to 24 hours.

C (12:16)

There's a 2 billion options expiry tomorrow which isn't long dated of course, but that's something that needs monitoring here because it's a big options expiry in the sense that Max Payne is at 70k and currently we're at 69k, which means everyone's losing money based on theta decay. Right. But looking at longer dated options, we can see a lot of people are still betting on BTC going to 100k over the next 6 months. Especially the December options expiry is a very interesting one to watch, which is usually heavily traded months in advance, as well as puts heavily betting on the, on us going to 40 to 50k, something we're also seeing in prediction markets even though those markets are a lot smaller. Right. So it's either 50k or 100k in terms of the price that we currently are and where we could go. It's more focused on short dated options across the market.

B (13:21)

And I know crypto markets in general tend to be highly correlated, especially during acute periods of market stress. But are you seeing any interesting behaviors for assets beyond Bitcoin, Eth, Solana, XRP or even. I know hyper liquid hype? Token has obviously been doing well because of so much activity on that platform. But are there any other assets that are worth kind of calling out that are either doing particularly well or have been struggling in light of everything going on?

C (13:53)

Like you mentioned already, hyper liquid of course, which has seen tremendous increase in terms of volumes, mainly due to equity perps launching on their hip tree block? Right. Other than that, I feel like the overall crypto market is struggling pretty heavily and everything is super correlated. People are focusing more and more on stablecoin chains. You have paradigm and tempo launching stuff on Arc is launching their circle is launching their Arc blockchain. Right. And in that layer you also have plasma, which is super interesting, but I feel like layer one blockchains are kind of moving away from this traditional way of building a chain and they're now more focusing. Okay, we're gonna build an app centric chain in the sense that we're gonna build a chain that only does st. Stablecoin payments. Are we going to do a chain that only does defi. And that's an interesting development as opposed to how crypto was approached a couple years ago in the sense that it was super cypherpunk. We wanted to be decorrelated from the financial system. Whereas now everything is converging and we're trying to get on these traditional payment rails. We're trying to use stablecoins for real world payments. We're trying to launch us tokenized Treasuries and getting guilds on chain and making sure we can use money market funds as collateral. So I would say that's another interesting development in the crypto market in the recent last, let's say three to six months, which is accelerating and I think the infrastructure for that is being built right now and we'll definitely see use of that in the future as well.

B (15:51)

Yeah, and we're going to get a lot more into stable coins and sort of the agentic payment wars for lack of a better term in just a few minutes. But I just want to tie the, I guess tie the bow or tie the knot on the, the macro markets discussion that, that we're having here as we're talking. It's been a big rate week. I mean the US held rates steady, ECB held rate steady, bank of England held rates steady. I think the Australian Central bank actually raised rates, but everyone is sort of changing expectations, factoring in or anticipating zero cuts, perhaps this year, even some rate hikes. Just given how fears of persistent inflation because of energy, heightened energy prices, it's just really kind of causing a lot of fear and panic as this war, which I think is entering its third week, is going on longer and longer and expanding geographically. Do you see anything else? Do you have any other big predictions? Are you. I know your platform, your company. You track how like the smart money is, is moving, positioning, we're going to get stable coins in a section and how people may or may not be moving into those. I know that a lot of traders, I think there was a Bank of America survey that pointed out that fund managers have moved into cash at the highest levels in, in quite a long time. Is there anything else that you're seeing related to the current market dynamics today and how they're positioning in the future that's worth mentioning.

C (17:20)

Yeah, we've had all this positive news, right like we mentioned earlier, with the CFTC and the SEC finally properly mentioning and stating what crypto assets actually are and how we should use them. And personally I expected a lot more of a positive reaction from crypto side. Like a good trader once told me, or actually a trader I still speak to regularly, is that the reaction to the news is more important than the news itself. And as of right now we haven't really reacted that positively. But to dive more into the macro aspect, what I also think is important to consider is that financial conditions matter a lot more than Fed rates and financial conditions are driven by geopolitical issues or geopolitical clarity or lack thereof, which in turn is largely driven also by market performance. And what we can also see, or what we saw is that financial conditions started tightening long before the Fed started hiking and they started loosening long before this hiking cycle was was getting into stride. So looking at CME options as well, odds of no cuts jumped to 33% from from 5% in the past 48 hours I believe. And yet the S and P is still only down, let's say a mere 4 to 5%. It was 2% prior to yesterday's Fed meeting. And I think one of the reasons of extended hold rates is that the market price long term inflation expectations they seem to be stable. But despite expectations of oil prices rising and staying there for quite a while, I still think it's quite concerning how the US market is seemingly or at least the indices like the S P are still pretending like the traders positioning into them are still pretending like nothing is happening. Like for example here in Europe rate hikes are showing up in market expectations like you already mentioned and if this causes any issues in in global stock markets, we'll probably also see any impact on on US indices as investors will just likely try to sell what they can. And banks don't really ease into oil shocks because it increases inflation and it decreases growth because spending goes down.

B (20:10)

Yeah, I mean a lot to discuss there. I mean it's kind of curious that divergence between the US and the EU that you mentioned because one of the things I'm watching too, and I'm sure you are as well, the US is is more self sufficient when it comes to energy whereas Europe is highly dependent on imported like natural gas in particular. So it would make sense that at least like US based indices might be a little more resilient than than in Europe. But I mean also just like the nature of flows, like passive flows into some of these big ETFs and stuff, it's just not sometimes they're just not as reactionary as perhaps we may want. And, and you're right, you're sort of the idea that you mentioned about like credit conditions liquidity tightening before we actually see the associated impact in in indices, that that's pretty curious too. I mean it makes me think maybe things aren't entirely related, but it makes me think of just everything that's happening in private credit, especially in the U.S. i think the bank of America actually just had to walk back a a memoir where they recommend the clients shorting, I think 17 different stocks, European stocks that were exposed to private equity, private credit, I mean, and just kind of waiting for more dominoes to fall there. But I know whenever we start looking for conditions tightening, we look for defaults, et cetera, et cetera. So that is something that was a good point that you brought up. All right, so we're going to turn the page to a few, perhaps bullish catalysts for crypto. But before we do, let's just take another quick break so we can hear from some of the sponsors who make the show possible.

A (21:44)

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B (23:02)

All right, and we're back. So for year I think really since China GPT exploded on the scene a couple years ago, people have been trying to marry crypto and AI and talk about how they go together, the the synergies, etc. But it looks like it's finally happening. We are. Coinbase made a lot of waves I think last year, November during one of their product demo days and I don't even think this was one of the big products that they were launching but with their X402 payment standard for agentic commerce. Tempo just went live with the mainnet with its own machine to me machine to machine payments protocol and everyone is talking about agenta commerce and bots transacting with each other at the best of humans for all sorts of reasons and use cases. So I'd like to just kind of throw it to you kind of open ended Lorenz, I mean what are you seeing in terms of agent e commerce? What are your expectations for how this sector can grow? And perhaps most importantly, with many different offerings now out there, what do you think is going to delineate or demarcate the winners from the losers?

C (24:15)

Great question. I would say that something very important to note here is that if agentic commerce is going to, let's say, revolutionize the way we're doing things is that they need robust pricing and proper pricing mechanisms because some of these agents, they operate at their own peril and if they start doing transactions that are worth a dollar at 3 cents, you're going to lose a lot of money or you're going to make a lot of money regardless of which counterparty you are. And in terms of how the market can grow, I think it goes hand in hand with how stablecoins are growing and how they are being used in terms of on chain capabilities. And it's a trillion dollar market. There's multiple researches also done by McKinsey. I believe there's probably more out there. We've seen Coinbase's X402 processing $34 million in volume. Google is launching a payments protocol. So everyone's trying to jump on the hype train and it's going to be very interesting to see how that converges alongside stablecoins because in 2025 we saw 33 trillion in stablecoin volume. That was all done by humans or probably mostly done by humans. So it's very interesting to see how that is or very interesting to observe how that's going to Grow as we see more agentic payments launch and how that's going to slot into tradfi as well as crypto as well as just e commerce in general.

B (26:03)

Yeah, it's one of the things that I'm trying to track and I would imagine you might be as well, is really figuring out how to get a real sense of activity like upticks in activity when it comes to these types of bots. Because if you create some basic bot on Claude or ChatGPT or whoever. I'm not a coder, so I'm not really able to go too deep into this. You might create. I'll make a task for something I'm doing in Sharplink and it'll create 10 different bots for me doing 10 different things simultaneously. And then once it's done, it goes away. We'll look at something like network addresses. That's a common metric that we try to use to understand actual usage of a blockchain like Ethereum, Solana, Bitcoin, whatever. I could see an exponential increase in new wallets, new addresses, but they're not persistent and they, they don't go on forever. And, and when it comes to the stable coins too, like you can make it quite. You could say, well, these new types of blockchains with micro payments through stable coins, a lot more payment volume but the value may like unless there's going to be new use cases that were not priorly viable before agenda commerce, like you may not necessarily see a huge surge in volume. What are you like how do you think about this problem? Like what are some of the numbers or metrics that you think will be really helpful in sort of getting a sense of true adoption of agenda to commerce?

C (27:45)

I would say looking at unique addresses, looking at how these transactions are conducted, where they're going, is it just like spam be conducted to inflate numbers? Right. I saw a paper saying recently that the volumes on, well, the unique addresses on USDT are a lot different compared to those on usdc. So that's all metrics we're looking at via blockchain monitoring, a solution we build to look on chain. But what I would also look at is how can we use these agents to actually, like you mentioned, do something that previously wasn't possible. Right. Do we really need these agents right now? Is it actually useful for us to use them? Because I might just do it myself. I might just order whatever I want to order myself. If we're talking about trading, that becomes a whole other thing. Right. Because you can start Automating your system, you can start automating strategies. You can do a lot more things on chain, especially the way blockchain interoperable is interoperable with AI. So that opens two different pathways in the sense that from a, let's say a retail perspective, is it useful for me to put an agent on this? Does that agent need to do transactions for me? And on the other hand you would have to, let's say from a trader perspective, how can I automate this strategy? How can I make sure that agent isn't going to make any mistakes for me? And how can I make my life easier and more, let's say, put it on autopilot from that point of view?

B (29:36)

Yeah, because the last thing you'd ever want is one of your agents like accidentally revealing a private key. I was reading some things about at some point the Nigerian print scam is going to come for AI agents and some, some benevolent agent is going to want to say here, I'll help here, here's $500,000 of USDC and, and, and, and what do you do then? So it is kind of fascinating. I do want to ask you a kind of a more I guess like foundational or theoretical question about, about this debate because it is coming up now. I mean we're seeing like Coinbase X402, I believe it's on Ethereum and Solana, but, but correct me if I'm wrong, where it enables payments and it actually shipped a couple of big upgrades either yesterday or the day before to sort of make it so that almost any ERC20 token can be used in these types of payments as opposed to, I think just before it was usdc. But Stripe, Tempo, I mean their protocol, it's very different, it's much more efficient, but it's sort of like batches transactions instead of, instead of settling them on a gross level. And it raises the same debates, I think that came up when Tempo was first created or ideated or revealed to the world that is it really a blockchain or is it just a permission database? And we might be seeing this battle between the permission database and then the permissionless databases or permissionless blockchains like Ethereum, Solana, etc. Going after these agentic payments. And it's not just an educational or academic debate because investors who are listening to this show and again, this is not financial advice, but they're going to wonder where should I put my tokens? Should we buy into these protocols? But how should they think about allocating assets to, in light of like this big divide in different agentic payment offerings.

C (31:42)

I think it very much depends as to what you want to use your assets for. As you mentioned, eth's permissionless. Some of these other blockchains may pose as permissionless, but actually they're fully centralized. That's a completely different debate, of course. And I think it also will depend as to how well the infrastructure of said blockchains is integrated into the financial system or into visa or into MasterCard. Right? You don't want like. I think the average retail user doesn't really care which tech stack is underneath it, they just want it to work. And I think Luca Netz mentioned it on one of your podcasts a couple of weeks ago as well. I don't care if Instagram or Twitter is built with Python or any other coding language. I just want it to work. I want to be able to use it in a very easy and understandable way. I think the infrastructure layer is very important and it needs to be robust, pricing needs to be correct. All of these mechanisms need to be in place. But once I start using the app or once I start doing payments, be it agentic payments or not, it needs to be seamless and it needs to just work. Click of a button or two, right? You don't want to be entering a complex EVM address. And also to. To your point earlier, with AI agents going rogue, right, Some of these AI agents there, they've been susceptible to address poisoning. I'm not sure if you're familiar to the topic, but for those that aren't, address poisoning is when you get sent a token that ends in the same few letters that your address ends, but the things in the middle. So the address in the middle is completely different and some agents have been able to getting tricked by that. So that's another extra layer of security you would have to add into these agentic payment bots, let's say, before you can fully ship them and start using them.

B (34:16)

Yeah, those are all really, really good points and I just want to, I don't know if correct, but update something I said before. So Stripe is a private company. It's a partner of Visa and the card networks, but it's, it's. A, it's a private company. So the choice isn't buying stock in Stripe or, or one of the other blockchains, but I guess maybe buy into Visa or some of the card networks that might utilize Tempo. But and the other point you mentioned too is, is kind of interesting as well. I mean, AIs are not going to necessarily I guess have the same type of brand loyalty or blockchain loyalty that humans will. Perhaps theoretically you could tell your AI to prefer one over over another the same way that like I I have certain preferences for for payment rails for different types of financial transactions that I agree in. But for the most part they'll probably, probably try to do it as cheaply as as possible. So perhaps like they might try using Ethereum L2 one day, then they might use Swee another day Solana etc. So I guess whatever you tell them to optimize for that, that's what it's going to be. So it's going to be really fascinating to kind of see how sort of the the wars or I guess the the winners the breakdown between the winners and losers when agenda commerce really becomes more mature than than it is now. Okay, so we just have a couple of minutes left. I want to touch base on two other topics. 11 you mentioned sort of the muted reaction to the market from sort of the interpretive guidance jointly issued by the CFTC and, and the sec. I actually have a take on that that I like to share with you and maybe you could react to. Just have the discussion. I personally wasn't surprised at much of that. The market kind of shrugged for two reasons. One, a lot of what was already in there I think has already either been common expectations, common knowledge, or has already been issued under prior guidance or through sort of the conclusion of various like legal entanglements like lawsuits against the SEC for like whether or not like ETH is a security. The SEC had already issued guidance highlighting how like sort of updating what Gary Gensler put out or the SEC understands or that staking isn't necessarily a security. So a lot of those types of things were already kind of in the, in the air supply. The same thing with NFTs that NFTs, assuming that they're just NFTs or meme coins are not securities. That also wasn't new. So I wasn't surprised by that. And then I mean as I'm sure you know, interpretive guidance is kind of the lowest level of sort of a statement that the SEC can make. It's not like a formal rule that went through kind of a a process where they solicited feedback from the, from the community. And while this was a positive step forward and it was a nice signal that the SEC and CFTC are playing nice together, although they've been doing it for for a year and a half or so at this point, everybody wants clarity, everybody wants the Law and at some and I know, I think Senator Lummis said that I believe she put out a statement yesterday or the day before highlighting or saying the clarity is going to pass out of committee by the end of April, which would be tremendously welcome news. But there's still two big issues that need to be worked out. One is the yield question, which really should have been handled under genius, but that ship sailed. And then two, I guess the, the question of whether or not President Trump, his family close advisors are allowed to participate in crypto during this whole process. And those have been longly largely intractable issues. And as you know, rules and guidance, they can be reversed like that when there's a new whenever someone new enters as SEC chair. So that's kind of my take. I'm curious if you have any reaction to that.

C (38:07)

I was particularly surprised to the muted reaction because with the current administration I feel like we've been in a, to coin it a headline super cycle. Right. The market has been very reactive to headlines. So in terms of that I was quite surprised. The market didn't really react to maybe it, maybe it was partially priced in already because we did move from 60k all the way up back to 72. 74k. Right. Which could have been that preliminary, preliminary positioning. So yeah, that would be, that would be my, my idea, my take on it. And to add on to your point of the Trump family being allowed to do what they're currently doing, I, I think we can all look at it and be like, yeah, that's not right. In a recent research report, what we did, we could see that World Liberty Financial started selling off 6 to 12 hours before the 10 October crash. So before Trump announced his terrorist back then. So from a speculative angle and also from a regulatory angle, it's very much of a gray area. It's kind of red area as to how people are operating currently or how the administration. Administration is operating. Operating currently.

B (39:41)

Yeah. So it will be interesting to just kind of see what happens with, with everything there. I know we're all hoping for, for clarity to or market structure if it's clarity or some of the bill to pass into law so that the rules of the game can't change from administration to administration and we'll just have to see what happens there. And related to your kind of like buy the rumor, sell the news point of view, it is kind of fast. Usually when I see news that people sell off of or buy into, it's almost like a surprise. Like when BlackRock filed for its Bitcoin ETF. But, but like you said, a lot of other things, like, like the, like the actual trading of the ETFs, like, just to pick one example, those are, have been priced in because they're well telegraphed. And I know that this interpretive guidance was also coming, so who knows? All right, well, we actually have to leave it there. But before I go, Lawrence, I just want to give you a chance to provide any final thoughts, anything that we didn't get a chance to discuss before we move on.

C (40:43)

I was thinking about the fact how I'm very excited about how we're moving forward from a regulatory perspective and how that's all super positive for the industry, which makes me very optimistic. Right. If we just wait for the market to slowly recover here, I think it's going to be a very exciting few years into the future. Not intraday or in the next two, three months, but all this clarity being built by US regulators, by regulators across the world. We're also seeing regulators in Korea and Japan trying to fully embrace Bitcoin and crypto as a whole, trying to integrate it into their financial system. So that's all very positive developments. And yeah, I'm excited for the future and I hope we can contribute with GEICO to build that financial infrastructure, which is something we're very busy with right now and I like to leave it at that.

B (41:43)

Okay, great.

C (41:44)

Stephen.

B (41:45)

All right. Yeah, yeah. Thank you for coming on on bits and bips. And that's it for today for, for bits and bips, but please don't go anywhere. Up next, we shift to Unchained, where Laura will speak with Adenyi Avion of Miston Labs to explore a new push to bring Bitcoin into on chain finance and whether Bitcoin can finally be used for lending credit and yield at scale. Thank you, everyone.

C (42:10)

It.