Podcast Summary: Unchained

Episode: "Why Bitcoin Is Down, Plus the Rare Bright Spot in Crypto: Hyperliquid"

Host: Laura Shin
Guest: Joshua Lim, Global Co-Head of Markets at Falcon X
Date: February 6, 2026

Episode Overview

In this timely episode, Laura Shin speaks with Joshua Lim about the recent dramatic downturn in Bitcoin prices, the broader malaise across crypto markets, and a surprising area of growth: the decentralized derivatives platform Hyperliquid. The conversation explores why traditional macro dynamics aren't boosting crypto the way they have in the past, the interplay with gold and other risk assets, the fate of crypto-related equity vehicles (DATs), and what structural shifts are underway that may realign the industry in 2026.

Key Discussion Points and Insights

1. The Current State of Bitcoin and Crypto Markets

• Bitcoin's Decline:
  • Bitcoin fell below $74k, giving up much of the gains made prior to the Trump election despite underlying growth and innovation in the ecosystem.
    • "These levels are obviously distressing for anyone who's worked in the industry for quite some time." — Joshua Lim [00:42]
  • Major altcoins and governance tokens are trading below their net asset values, exacerbating bearish sentiment.
• Divergence from Risk Assets and Gold:
  • Unlike previous cycles, crypto has decoupled from traditional risk assets and gold, which are at or near all-time highs.
    • "Bitcoin is the only chart that's pointing downwards while everything else is up." — Joshua Lim [01:35]
  • Central banks, especially China, are buying gold, not bitcoin.
  • The "quantum threat" to cryptography is seen as an overhang muting investor enthusiasm, even though the industry could adapt.
    • "It's the quantum question ... a lot of asset allocators and investment committees have to answer when they're deciding whether they want to invest in bitcoin versus gold." — Joshua Lim [03:04]

2. Market Cycles and Structure

• Four-Year Halving Cycle:
  • Debate continues over whether this is the cycle when bitcoin breaks out of its traditional four-year halving pattern. Joshua predicts a prolonged, range-bound market instead.
    • "I do think that we're going to be in a prolonged range bound market." — Joshua Lim [05:34]
• Reduced Leverage and Speculation:
  • Market structure has improved: less unsecured leverage compared to 2022, but an overabundance of open interest in perps and a withdrawal of speculative capital.
  • Speculative fervor has subsided, evidenced by:
    • Low implied volatility in options.
    • Futures trading at levels near spot, showing lack of retail appetite for leveraged crypto exposure.
  • Recent exuberance and inflows into crypto funds now stifled by underperformance; many funds trade below NAV, removing "dry powder" from the market.

3. Crypto as Part of the Broader Asset Management World

• Crypto's Integration with Broader Markets:
  • Crypto is no longer an isolated ecosystem—investors increasingly treat it as one asset class among many, reallocating to stocks, metals, or emerging sectors like AI as trends shift.
    • "Now it feels like ... there are investors that just see it as yet another option among many different asset classes." — Laura Shin [09:16]
  • The metals rally (especially gold and silver) has drawn capital away from crypto.

4. The DAT (Digital Asset Trust) Phenomenon

• Rise and Fall of DATs:
  • Explosion of crypto-oriented equity vehicles created intense attention and inflows, but now most are underwater, including well-known ones like MicroStrategy ("Strategy") and Bitmine.
    • "It's entirely a game of attention." — Joshua Lim [14:40]
  • With hundreds of DATs now, attention and capital are diluted.
    • "Most of those investors are down on the trade ... because a lot of them were buying above NAV." — Joshua Lim [15:09]
  • Some winners may emerge through consolidation or operational efficiencies, but no broad systemic risk is seen from their struggles.

5. Macroeconomic Events: Kevin Warsh as Fed Chair

• Fed Chair Implications:
  • Appointment of Kevin Warsh as Federal Reserve Chair interpreted as hawkish and dollar-bullish—a negative development for risk assets and crypto.
    • "Warsh is generally viewed to be more hawkish ... the general thought was this would be a challenge and a headwind for risk assets and for crypto in particular." — Joshua Lim [19:08]
  • Some price action correlated with evolving betting market odds (e.g., on Polymarket) and subsequent market weakness.

6. The Hyperliquid Bright Spot

• Decentralized Perpetuals Platform's Growth:
  • Hyperliquid has emerged as a rare winner, attracting substantial trading interest, especially in perps based on metals and equities.
    • "HYPE itself ... has been a rare bright spot for crypto over the last couple of months. ... It's actually become one of the most actively traded assets for our client base." — Joshua Lim [22:42]
  • HIP3’s permissionless perp markets have driven $3–4B/day in volume, especially from gold and silver trading, resulting in $4M+ daily revenue—among the highest in crypto after stablecoins.
    • "If you survey the whole crypto landscape ... Hyperliquid is up there. It's like top three in terms of revenue and the other two are stablecoins." — Joshua Lim [24:08]
  • This reflects both the continued usefulness of stablecoins for payments and DeFi’s adaptability to current market demands.

7. Structural Shifts: DeFi vs. Centralized Exchanges

• DeFi Gaining Ground:
  • Comparison of Binance and Hyperliquid volumes highlights that decentralized exchanges (DEXs) are now competing head-to-head with centralized counterparts.
    • "It sort of looks like that we're almost at some kind of inflection point where DEFI is really competing head to head with centralized exchanges or on the cusp of doing so." — Laura Shin [25:26]
  • The upcoming US "market structure bill" could accelerate transparency and accountability, further dispersing volumes across regulatory-compliant venues and DeFi.
    • "We're starting to see like a greater demand for transparency, for accountability and I do think ... the market structure bill will just accelerate that." — Joshua Lim [27:32]

8. Futuristic Trends: AI Agents and Agentic Commerce

• Rise of AI-Driven Crypto Activity:
  • The adoption of new standards (ERC-8004, x402), and the explosion in agentic/A.I.-based transaction tools, may benefit stablecoins and privacy coins most.
    • "It's going to be net beneficial for Internet native, you know, value transfer mechanisms ... it'll probably benefit stablecoins the most." — Joshua Lim [29:06]
  • Privacy-layered L1s (like Zcash, Dash, Monero) could see renewed interest for anonymized microtransactions in automated, agentic environments.
    • "If this becomes like a full fledged agentic AI driven economy where small micropayments in stablecoins that are more anonymized ... will be important." — Joshua Lim [29:38]
  • Regulatory adjustments likely to lag these technological shifts.

Notable Quotes and Memorable Moments

• On the decoupling of crypto from other assets:
  • “Bitcoin is the only chart that's pointing downwards while everything else is up and to the right. So that's very unusual.” — Joshua Lim [01:35]
• On the quantum threat narrative:
  • “That is a question that a lot of asset allocators and investment committees have to answer when they're deciding whether they want to invest in bitcoin versus gold.” — Joshua Lim [03:34]
• On DATs attention economy:
  • “It is entirely a game of attention. ... It's hard for any one name to really break out and stand out and attract fresh inflows in a meaningful way.” — Joshua Lim [14:40]
• On Hyperliquid’s surprising winner status:
  • “HIP3 was set up to permit sort of the permissionless creation of new perp markets ... In particular, in the last couple of weeks, with all the volatility in the precious metals market, we've seen enormous growth in silver and gold perps.” — Joshua Lim [22:52]
• On DeFi's rise compared to CEXs:
  • “We're almost at some kind of inflection point where DEFI is really competing head to head with centralized exchanges or on the cusp of doing so.” — Laura Shin [25:28]

Important Segment Timestamps

• State of the Market & Bitcoin’s Divergence: [00:26–04:37]
• Cycle Discussion & Market Structure: [05:34–09:16]
• Retail Flows, Gold Rally, & Altcoin Lethargy: [11:05–14:04]
• DATs: From Hype to Consolidation: [14:04–18:47]
• Kevin Warsh as Fed Chair and Macro Risks: [18:47–20:43]
• Hyperliquid’s Success & DeFi Structural Changes: [22:42–28:32]
• Future Tech: AI Agents, Privacy Coins, and Stablecoins: [28:32–30:35]

Concluding Notes

The episode captures the complexity and dynamism of today's crypto markets: a time of price malaise, unexpected capital flows, regulatory flux—and innovation in DeFi venues like Hyperliquid. Even amidst a grim macro backdrop and receding retail interest, real technological progress and new forms of trading activity point to a future where crypto continues to reinvent itself. Joshua Lim concludes that stablecoins and privacy-centric blockchains may be the key crypto tools in an increasingly automated, AI-driven commerce landscape.

End of Summary