2025年BTC接下来怎么走、加密货币最大的创新，以及如何挑选赢家

I think we're in a phase where volatility and uncertainty are keeping markets contained below levels where they should ultimately price, given the regulatory and macro backdrop. That's why I'm excited to buy crypto at current prices, because I think the volatility is short-term. It will fade, and the long-term fundamentals will continue to improve.

Welcome back, everyone, to another episode of 1000x. We're here today in kind of a boring week since we last talked. Markets have come off a little bit. They're still trading above that $100,000 level, which Jonah and I mentioned last time is reasonably significant, but things overall are looking like we're in a range.

I start to get nervous about a breakdown if we lose $100,000. I will say that this type of move generally signals the end of a run. So I'm definitely a little bit more nervous about the market now than I was a week ago, 2 weeks ago, or 3 weeks ago.

Basically, we got bullish at around $83,000. That's when we were like, “All right, put all your fucking chips on the table. Let's go up.” Then, at around $95,000 to $97,000, I started getting a little bit cautious. I was like, “Okay, time to take some chips off the table and then just let the rest ride.”

Last week, we were talking about how fucking amazing everything looks. But now, we've basically been down since May 23, and we just keep making these lower highs on a daily time frame, which to me suggests, “Okay, maybe we need a breather. Maybe we need to go back down to $93,000 or something.”

We'll see how we react at $100,000. But I'm definitely not—let's put it like this—I'm not taking any levered longs right now.

1. Can BTC Hold $100k?

Yeah. I think that's what people got wrong. We talked about this on the last episode. Yes, the setup looks amazing, the fundamentals look amazing, and pretty much everything in the backdrop is setting up for a pretty spectacular rally.

I still think it's going to push to $120,000 or $150,000. Maybe we get a really crazy, amazing summer. But we also said on the last episode that there was cause for concern when it comes to leverage. People were deciding to put all their chips on the table with prices at the highs. That's not what you're supposed to do. You're supposed to buy low and sell high, or at least just buy low and hold on for dear life.

It feels like people were adding exposure that maybe they couldn't manage at the highs. I hate looking at other people's P&L, but one very prominent leveraged trader got levered long at the highs and blew up. I'm sure that guy is emblematic of many smaller traders in the space.

You can see it. Before we hit record, you were talking about basis, which is one way of assessing leverage in the market. High basis means high leverage. Low basis means fewer people are invested heavily in risk that they don't necessarily have capital to backstop.

And you know what? We called this shot. We specifically said it's a terrible idea to borrow money to get longer than you've ever been when prices are higher than they've ever been. That just seems dumb.

So I don't think we're going back down through $100,000. I've been wrong before, but I don't think we're going to just break down. I think what basically happened between May 23 and today is that people set auto-liquidations—basically stops for themselves—intolerably close to where spot was trading and got liquidated.

I think what we're looking at in this pullback is that the rally up to $112,000 was noise because it was just people buying on leverage. Maybe the unwind back down to $104,000 was the unwind of that leverage, and this is probably a decent equilibrium level.

I still think the fundamentals will continue to improve. I still think that there will be a steady bid.

Fundamentals are improving? You mean price goes up because the fundamentals of Bitcoin are the price, not just the price?

I mean, yes, obviously momentum is one thing that matters in this market. You could call it a fundamental; I would call it a technical. By fundamentals, what I mean is the general macro backdrop, legislative accommodation for crypto—not just in the US, but globally.

You could talk about the stock-to-flow dynamics of miner selling. I guess that's a function of hash rate, cost of power, and all this other stuff. Bitcoin competes with AI now, so it's much more expensive to mine Bitcoin. Miners will theoretically shut off at higher price levels—higher lows than before.

Other fundamentals you could talk about include whether Bitcoin is considered an appropriate portfolio hedge or portfolio allocation for RIAs and private wealth. Those are fundamentals, and I think all of those are on the march toward steady improvement for Bitcoin. That's kind of what I meant by the fundamental picture. Sorry if I wasn't being clear.

I was making a joke, but then you went on such a good rant about how to actually think about the fundamentals of Bitcoin. I didn't want to interrupt and tell you that that was just a silly little joke. So that was that.

No, that was good, Jonah. I think you outlined it really nicely—what the actual fundamentals are.

I also think one thing to look at is that, as we move forward, Bitcoin adoption outside of the US is going to become more important, because the US is becoming this known quantity in some way. A lot of the talk in the beginning was, “Oh, there's some game theory here. If the US adopts Bitcoin, then that's going to force a lot of other countries to adopt Bitcoin.”

And I think that's at least partially true. My buying was in response to that. It's like, yeah, I think that's actually probably true: if the US leads on Bitcoin, then other countries are going to follow.

What I didn't quite grasp is how much the rest of the world absolutely abhors everything that Trump does and how much he's politicized the issue of crypto to the point where other countries are actually—Europe is like, “No, we're not going to touch this thing because our constituents don't like Trump, and they associate Trump with crypto.”

I think it can come later, maybe after a year, if things calm down with all these tariffs and crazy shit that he's trying to do. If things calm down a bit, then maybe people start to move in other countries. That's another thing I'm looking closely at: Is there movement across the pond? Is there movement in Asia? There's movement south of the Rio Grande, actually.

Panama fast-tracks Bitcoin integration. I haven't really dug into the law yet—it hit basically yesterday—but the Panamanian government is integrating Bitcoin into its payment systems and legitimizing it, making it part of the economy.

I think, basically to sum up my previous rant, that the rally to $112,000 and the pullback to $104,000 are technical, and I think the fundamentals are steadily improving. You could say slowly, but fast enough that I would feel weird selling Bitcoin here to try to buy it back below $100,000.

I would be more worried about us just ranging for a while and then it running away from me if I sold exposure that I want over the long run to try to create a short-term profit opportunity. I'd be afraid of basically missing the train.

2. Ads (Kraken OTC, WalletConnect)

That is my bias, and it has been for the duration of this cycle, so take what I say with a grain of salt. I think altcoins—yeah, I mean, they're not pulling back like we're in a bear market, or like the setup is bad, or like people are panicking. I think the general sentiment is still greed.

3. Will Altcoins Outperform?

Obviously, when Bitcoin sells off a bit, you're going to get a little bit of a pullback. But the top 2 performers today, at least on my watch list, are actually Syrup and Monero. Nice bounces off the lows after their pullback. I think this is still a phenomenal time to get into the coins that you think are going to do well over the next 3 to 6 months.

I think they actually haven't run as much as they could have, especially with Bitcoin's price. Unless Bitcoin completely collapses in on itself—and by that I mean goes back to the 80s—I think that we get a period where you will get outperformance from these coins, especially as they increase traction.

There's something like Hyperliquid, right? Hyperliquid did really well, touched 40—almost, or did; I think maybe it did. But then obviously it comes off a lot, because what ends up happening with these hype cycles is people really crowd into trades. They go up 3 or 4 days in a row, like 10 to 15%, and then obviously you get some profit-taking.

Obviously, it comes back down to earth and, if you haven't positioned, that's a really good time to get in. So kind of like where we are right now, at this moment, is actually, I think, a reasonable time to scale into altcoins. I think taking out some trades here, or trying to buy the stuff that has sold off but you still like, because Bitcoin went from 112 to 104, now is a good time to take a little bit of a punt.

I mean, I think we could get a 10-bagger on that one. I think that could be a nice 10x over the course of the next 7 to 10 months.

4. The Innovation Of Perps

I think it will be. As long as I see that they're still growing in terms of TVL, these guys are raking it in. Same with Hyperliquid. And, yeah, to me, the most bullish possible thing for Hyperliquid—there are 2 things. One, for Syrup, it's TradFi integrations. That's what you're looking for.

Hyperliquid would become legal in the United States. Talk about just general fundamentals improving. If perpetual futures are one of the most interesting innovations, not just in crypto but in modern finance, I personally think, having used them now, that it's probably the most important financial innovation since maybe the Black-Scholes formula for valuing options.

I really mean that. I think it's an incredible idea. I don't know whether Arthur Hayes deserves credit or somebody at that BitMEX team deserves credit, but basically, a perp isn't legal in the United States right now for—I forget what complicated reason, some CFTC rule. There's discussion in Washington of reversing that, and once perps become legal in the United States, which feels at this point inevitable, I think they'll spread like wildfire to the rest of finance.

The platforms that are best situated to capitalize on that kind of proliferation are crypto platforms, because they're already managing perps. They already know how to manage perp risk, perp liquidations, and perp trading. Hyperliquid will suddenly become accessible to US users. That'll onboard a lot of trading fees and volume and activity, and that'll feed into the price flywheel because of the buyback mechanism.

So I wouldn't be surprised if in 6 months we see perpetual WTI futures on Hyperliquid and US users, including oil companies, trading it. Oil is just my litmus test for all things TradFi, because that's where I cut my teeth.

In terms of the other big unlock for Hyperliquid, it would be a Solana integration, because Arbitrum is just a flaming pile of elephant shit. Or even a Base integration, but just more chains, right? I think more chains are better for Hyperliquid, more users are better, and it's all coming. So, yeah, maybe it's a good pullback to get into things like Syrup and HYPE.

I was curious about perpetual futures and how that actually got developed, because my understanding was that BitMEX was the first.

Yeah, they were the first people to produce it. I remember trading their perps. I started trading on BitMEX in 2018. Actually, I would never trade on BitMEX because I'm an American, but if I were to start trading on BitMEX, it would have happened in 2018, when I got into futures trading.

Before that, I was really into Poloniex because they had a good leverage mechanism. I blew up a few times there. That was 2017. I remember getting long ETH/BTC at the exact top, at the literal forever top of ETH/BTC, which I will always be proud of, back in 2017.

But what's interesting is apparently Robert Shiller proposed perpetual swaps in 1992.

Oh wow.

And everyone was like, “No, I don't know. This doesn't really make sense,” because his version of the perpetual swap is a little bit more complicated. I don't think he had the concept of a funding rate. So he tried to use all these other random costs to bake them into the future to just price them correctly.

But I think what happened was, apparently, in 2011, a guy likely named Alexi Bragan developed a solution to simplify leverage trading of cryptocurrencies for unlicensed exchanges. He invented the funding rate. And then—yeah, it was in 2011, believe it or not. How crazy is that?

That is crazy. I had no idea. So I guess we can give Arthur Hayes and company credit for the proliferation.

Yeah, exactly. And they also pioneered it across a variety of different assets. I think that they created their own version of the inverse perpetual swap, the payout-in-Bitcoin version. I think they called it coin-margined, which was the great and horrific thing about them, by the way.

You know what's interesting is that they're not actually illegal, right? There's nothing inherent about them that's illegal. It's just that they're a new product. They're not under the purview of the CFTC, and there's been nobody, I think, except for Coinbase, which is trying right now to work with the CFTC to introduce perpetual swaps to US-based users.

But I feel like that's going to happen in the future at some point. I also wouldn't be shocked to see perpetual swaps come to traditional markets in the next 5 years. I'm honestly really shocked—why has that not happened?

Well, let me tell you, it's that rule, right? Or, rather, the lack of a framework—that's the reason why it hasn't come to traditional markets. The United States is the golden, shining city on the hill for futures commodities markets and financialized futures markets as well, like Eurodollar futures, interest rate futures, blah, blah, blah. So currency futures—it's all CME, NYSE, ICE. It's all this big sort of US-centric ecosystem.

Sure, there are futures in Europe, and sure, there are futures in Asia, but the United States is really the hub of that kind of trading, that kind of leverage trading. If you've ever been a professional futures trader—which, you know, I have, and many people listening probably have as well—you're familiar with the concept of the roll. Every single month, you have to roll your prompt exposure into the next month.

And if you don't intend to take physical delivery, or sometimes futures won't even require physical delivery, it'll just be cash-settled, which makes no sense. I guess if you're a hedger, if you're a corporate hedger, and you have exposure that rolls off your books on some specific date in the future, then you're perfectly happy to, if you're a commodities company, deliver futures into a contract, or if you're a financial company, just have your exposure expire on a certain date.

So in the sense of hedging, it can be very effective to have an expiry date. But for speculators, there are 2 distinct nightmares associated with futures trading. One is the roll, right? It's a pain in the ass. All sorts of weird dynamics start to occur as you get towards expiry and OI drops.

The other is analysis of the data becomes—you know, yes, there are ways around this, but it becomes kind of complicated to go back and try to normalize all these different futures to 1 sort of rolling price history. And so I think that perps are a lot cleaner from the perspective of speculation.

As far as hedging is concerned, you could certainly design instruments on top of perp exposure that sort of automatically decrements or rolls off or minimizes itself on certain dates into the perp future. Funding-contingent stuff—there are lots of structures you could build on top of a perp in order for hedgers to feel comfortable using it. But from the speculators' perspective, the perp is sort of the optimal instrument for all sorts of markets.

So I don't really know why a currency future, for example, has a tiny, tiny fraction of the volume of the underlying spot pair. I would imagine that's the case for assets where spot is a more important thing to speculate on than dated exposure—expiring exposure—which is probably most markets, and where spot isn't readily available.

So FX will be fine because you can easily access spot, but I think perps will really proliferate. I think perps will eat market share very quickly, and I don't expect the CME to be at the bleeding edge of that innovation. They suck at that stuff. It's going to be things like Hyperliquid, like Coinbase if they get their act together. I think it might be one of those crypto-native use cases that onboards users.

Yeah. I mean, from my perspective, everything that doesn't require physical delivery or anything that's outside the realm of commodities, the perpetual future is a better product, right? If you don't have natural users—producers or people who are, "Okay, I'm a farmer. I want to hedge my corn crop in for this year"—as long as you don't have a huge amount of those people in the market, perpetual futures are going to be much better, right?

So if you're thinking about the S&P, like the S&P, like the E-Minis, right? Why not have those? Why have expiring S&P exposure? Why? There's kind of no reason for that, right? Equities—that's market number 1. Market number 2 is interest rates: a rolling 2-year swap, basically 2-year interest-rate exposure or 5-year interest-rate exposure.

It's a nightmare to deal with Treasury bonds, but you could easily design a perp based on a certain interest-rate tenor and then have the funding mechanism keep the perp in line with whatever the prompt cheapest-to-deliver underlying future is, without having to deal with all the mechanics of expiry and annoyance there. So I think that could be a big use case.

What's kind of cool is it would also give us another indicator to look at for positioning in the markets.

Yes. I mean, in theory, all of these products obviously would trade at a negative funding rate to begin with. A negative meaning the buyers get paid because they all have dividends, right?

So, yeah, there can't be any arbitrage there. You short that by the underlying, collect the dividend—that's going to get arbed out. You're going to have to pay to short the thing.

Yeah. In the beginning, but it would give you kind of an interesting dynamic there. It's like, if the funding rate goes very negative versus the dividend, you know that a lot of people are betting that the market's going to go down.

That's interesting. And it would be real time, right? One thing that people really underappreciate—not underestimate, underappreciate—about the crypto market is just how much information and data we get to trade this thing versus the traditional markets.

Basically anybody can log on to Velo Data and see, okay, in the last 15 minutes, how much leverage has been added to the system? What is basis? You need to actually pay a lot of money to get that, and some things you can't even get. The fact that basically every exchange lets you stream its order-book data is crazy.

Yeah. That's very expensive if you want to get that from any other exchange. They're going to charge you an arm and a leg for that, especially if you tell them you're a professional trader, which I always found was funny. If you tell them you're a professional trader, it's just, "Oh, you work at a bank? You're paying a lot more, buddy." You know what I mean?

It makes sense—they make a lot more—but I just thought it was funny. They always ask you. I hate that. I hate feeling like I'm getting scammed. If a service costs X, you shouldn't pay more because you have more money. That's charity, that's not business. Anyway, sorry, side tangent.

Yes, I agree. This is why crypto is the golden asset class for retail, because you can have access to leverage. You can have access to hyperoptimized financial instruments like perps, where you can get long and short something without having to worry about delivery mechanics, with amazing data and high leverage, just by yourself in your pajamas in your bedroom, right?

You can access information about the product on Discord, Telegram, Twitter, and podcasts, and you can find it basically like a virtual online trading floor. It's not just this weird niche gambling market. It's not baseball cards. It's not online poker. It's becoming geopolitically relevant, and it's not completely orthogonal to other financial markets that matter, as we've seen during the tariff pullback.

We should probably touch on macro at some point in that vein later in the podcast, but this is why it's the golden market for retail. One of the biggest mistakes I've ever made in my career was thinking that I needed to work for a company to trade crypto, because that's an obvious conclusion if you trade any other market.

You're not going to be a successful gasoline trader in your pajamas from your bedroom, but you will be much better positioned, and the odds will be much more in your favor, if you work at Vitol to trade gasoline, right? The same doesn't apply to crypto. In fact, the opposite is true. It's a constraint to have all sorts of random risk controls and exposure limits and platforms that you can and can't farm on and whatever.

So, yeah, crypto is the golden asset class for retail. And I think that crypto instruments like perps and many of these other innovations, such as having all this data on-chain for everybody to see, will democratize other markets in time.

Yeah, I think you're right. Equities and maybe interest rates will be first to go. What would Hyperliquid be valued at, Avi, if TradFi starts trading equity and interest-rate perps on Hyperliquid?

5. Ads (Kraken OTC, WalletConnect)

That would be insane. It would be freaking crazy. It's entirely possible. It genuinely is possible, which is why I'm excited about this stuff. And that's why I'm excited it's down. It didn't immediately teleport from 40 to 50, so I can buy a little bit more.

6. Why Is Gold Rallying Again?

Why don't we touch on macro? I mean, the equity markets have kind of stagnated here. One thing that's worrying me is that gold is starting to do very well again. Uh-oh. It's up 2.5% today, and to me, the chart is looking gorgeous. That's on the Russia attack. Same reason oil's up.

I think it's a little concerning to me that we're seeing that on a day when equities basically haven't gone anywhere for 2 weeks. They've just gone completely sideways for 2 weeks. So what do we make of this Russia attack? What do we make of its impact on the markets? What do we make of what's going on, Jonah?

Yeah. I mean, okay, so for those who missed it, the Ukrainian special forces loaded a bunch of AI-enabled drones onto trucks—basically containers on trucks—that were driven deep into Russia, either unbeknownst to the Russians by Russian drivers or Ukrainian agents. We don't know who.

Then all these containers just opened up, and the drones came out and blew up a very concentrated grouping of Russian nuclear-capable bombers, which were all clustered at this airfield. They hadn't been clustered there recently, but they were getting clustered there as some sort of gambit by the Russian army—a planned gambit to drastically escalate the Ukraine war as a pillar of peace negotiations.

Basically, establish the upper hand, then anchor the negotiations more in your favor by doing so. That was sort of what happened, and it got foiled by the Ukrainians. Now the Russians are really pissed off. Who knows if it's real or not, but there are all kinds of menacing Russia-watching, Russian-military-watching accounts on Twitter posting that the Russian military is pointing nukes at Washington, London, and New York, and all sorts of scary, horrible things.

Basically, geopolitical uncertainty is up because this is a massive humiliation for Russia, and they're a strongman culture. They're going to either retaliate or saber-rattle. So that's why gold is up. That's why oil is up, despite the fact that it should be down because Saudi is threatening to increase production to punish Kazakhstan for cheating. Basically, the geopolitical risk factor is up massively.

And what I think that should do in the short term—the first thing that happens when geopolitical risk goes up—is gold spikes. Bitcoin acts more like stocks than gold in that environment. But I think Bitcoin isn't a geopolitical-risk hedge. It's a hedge against what governments do to mitigate the financial impact of geopolitical risk, which is ease financial conditions, and then Bitcoin sends. So I think that's probably what we're going to see again. And if we don't, it's because Russia nuked the world and brought about the end of days. So who cares? Buy Bitcoin.

Yeah. The one important point on this Russia issue is that the Ukrainians actually checked with the United States before they launched this attack. For a long time, it was thought that the United States, with Trump in charge, would be very kind to Russia. They would basically work with the Russians and with the Ukrainians to try to come to a ceasefire and not give the Ukrainians as much leeway as the Biden administration did.

I think what we're seeing right now is Trump's fatigue with Putin. He's starting to realize, “Okay, I'm actually not getting anywhere with this guy.” So if Ukraine calls and says, “We have this plan. It's going to really piss off the Russians and could escalate the war,” for Trump to say, “Yes, go ahead,” instead of, “No, hold on, we're literally about to have a peace talk”—the Russian delegation was in the air, headed toward the summit, while this was happening—it signals escalation, which is why gold, as you said, is up 2.5% today. That 2.5%, by the way, is a big move for gold. That is not a small move in a day. That is a sign that is saying something significant.

What is more shocking to me, genuinely, is that the S&P is flat with gold up 2.5%, because gold is taking this very, very seriously. The markets are not, which really says to me, at least, that there are 2 possibilities here. The first possibility is that the equity markets don't necessarily appreciate what's happening because, in a world where the equity markets are affected, that's a world in which the war expands, and nobody wants to bet on that because it just means equity markets are down tremendously. So either it's minus 30, or it's binary. It's a binary choice: the markets aren't really reacting to it, or the other thing here is that, as the war over there heats up, the divisions between countries are going to get even stronger, sides are going to need to be chosen, and the multipolar world comes even faster. In which case, countries are going to need to really stockpile gold to be relevant in this world.

So I think it's more likely that's what's happening: geopolitical risk, countries are going to stockpile gold. Let's pile into this. I'm not necessarily saying that the war is going to expand massively.

Yeah, I think that's the right take. But I'm still giga-bullish on gold. I mean, I have been for a while. I did sell out of my gold a while ago. I bought back in basically around the same price, so I didn't really make much on that. But I did buy equities with the sale proceeds, so I guess I came out on top. But I just recently sold some equities to buy back some gold here.

Yeah, the megatrend in gold is certainly intact. Just go look at the 3-day chart. It's so sexy.

Yeah. It's just the most beautiful chart ever right now. It's like, when does this thing stop?

7. Is BTC A Safe Haven?

I think the most beautiful chart is the long-term chart. I mean, look at it. It's basically been up only since October 2023. Oh, no, sorry. I guess it flatlined for summer 2023. No, yeah, basically October 2023 onwards, it's just been up only. It's the smoothest, highest-Sharpe thing to hold on to, and I think that's going to continue.

I wonder why, and I want to get your take on this, Avi. Why do you think it is that in any one of these geopolitical-risk scenarios, Bitcoin sells off and then immediately spikes back? Do you think it just feels like the market hands you an opportunity in crypto every time there's a geopolitical scare? Because obviously the next thing that happens is governments talk dovish on financial markets and Bitcoin rallies. A multipolar world is going to be a little bit rough on the ecosystem of traditional financial companies. China and the U.S. will both be pumping stimulus if those economies separate from each other, if they get a divorce, right? So I feel like these V-shaped dips won't keep happening forever. And we're just in this phase where people haven't wised up to the fact that Bitcoin should behave like gold in a geopolitical flare-up. So it's kind of an opportunity for people like us. I don't know. What do you think? Eventually Bitcoin will just go up. It won't give you a dip to buy, is my point.

Yeah, I mean, I agree.

Okay, let me stop you there. I agree with that statement that Bitcoin does go up in that scenario after a bit and that a substantial dip is meant to be bought.

But it dips, I think, because of flow issues. It dips because the equity markets are going to dip, and Bitcoin is traded very heavily by macro PMs. This is especially true if something happens over the weekend. There's nowhere else to go. You sell Bitcoin. If something significant happens and you want to bet against the equity markets, there's some level of correlation there. Russia gets attacked on a Saturday, you sell Bitcoin, and then you even it out when equity futures open, right? Then Bitcoin can get a bounce.

I do think what can happen there is that correlation traders send down the price, and Bitcoin is a very momentum-driven asset. Bitcoin will go down because correlation traders will sell, and then everyone else is like, “Okay, well, I'm sitting on uPnL and Bitcoin can move down 10% in a day. Let me just get the fuck out,” which I kind of like. I'm a little nervous that's what's happening right now.

Generally—and I know this sounds really silly—but if you draw a line on the Bitcoin chart, we've been in a sustained uptrend since the beginning of April, and we just broke it. And people buy momentum and value. That's the framework that I always point to. Right now, you kind of have neither, unless you get some good news out of the Bitcoin world, which is very possible. But yeah, I think we're either going to chop lower or, without news, stay here right now.

I do think that there's probably a floor at $97,000. Maybe we can trade there and pop back up. But yeah, like I said, I'm definitely not like this likely James Wynn guy. I think this likely James Wynn guy is in trouble, let's put it like that, because his liquidation price is like $1,000 lower than here. I don't understand why people do that. I guess I do. It's just a gambling addiction. It's terrible trading to do stuff like that. It just goes to show they want to gamble, you know. Let them have it, Jonah.

Fair enough. Let them gamble. Don't complain about people gambling. That's their whole livelihood—taking the other side.

That's true. Gambling is fun. And speaking of taking the other side, look, if people sell Bitcoin into oblivion because there's bearish news on a weekend, unless that news is so impactful that it's going to send the market lower over the medium term, that's just a phenomenal opportunity for anyone who wants to take the other side of that trade. Stuff like that happens all the time. Airline companies will hedge jet fuel. They'll buy deferred jet fuel futures, meaning they expire far in the future, right? They'll buy those futures to hedge their jet fuel consumption at levels that are way, way, way above the levels at which jet fuel actually realizes in the prompt.

So anybody with enough risk capacity to take the other side of consistent flow that puts short-term hedging needs ahead of long-term mathematical realities is a winner, right? It's a great trade if you can stomach the variance. And I think the same thing probably goes for people who use Bitcoin as a weekend panic button. So unless Russia's actually sending the missiles west of Kyiv on a weekend, in which case, don't buy the dip, maybe these dips are meant to be bought.

And to your point about Bitcoin maybe going down to $97,000, if it does, I kind of hope it does so I can add some exposure to things where I still feel a little bit light. Maybe Syrup, maybe Hyperliquid. These are an opportunity to sell some—either take cash and add more to crypto or sell equities or things that I don't expect to 5 to 10x and roll it into things that I do expect to 5 to 10x, because I'm starting to get greedy here.

I think we are in a phase where volatility and uncertainty are keeping markets contained below levels where they should ultimately price, given the regulatory and macro backdrop. That's why I'm excited to buy crypto at current prices, because I think the volatility is short-term; it will fade, and the long-term fundamentals will continue to improve.

Basically, I think that's a great note. Big crypto looks good here.

8. Ads (Ledger)

Yeah, it looks good here over the medium term. Short term, I agree with you: it could still keep chopping.

9. The State Of Leverage In Crypto

Here's a question for you, Avi. Let's go to Velo.xyz/futures. Let's look at Bitcoin. I was wrong about something, and I want to own up to it: I thought that we were out of the leverage woods when Bitcoin was at the highs, and I was wrong. I think there was a little too much leverage in the market when Bitcoin was trading above $110,000, which obviously unwound. The way that I judged that was by looking at the BTC funding rate, right?

I looked over a 3-to-6-month timeline. So let me put 6 months in here. Actually, let's go a little further back. Let's go to a year. The crazy funding is what you saw around the election—forget Hyperliquid, maybe when Bybit funding was 42%, when people were just seeing green without really thinking.

I was like, “Oh, we're trading at $112,000 and the funding rates are only okay. Bybit is 8.4%, OKX is 3.5%, Binance is 3.5%. These funding rates aren't crazy. I guess the market's not too levered. What was I missing?” Because obviously leverage has come off.

This is actually quite simple. Notice how—okay, we'll go to the bottom right of the Bitcoin chart, where it bottomed out. I'm on the 12-hour chart here, so it bottoms out at $74,000. We have 173,000—let's call it 170,000—in aggregated open interest. This is counting Bitcoin in Bitcoin terms across all exchanges.

From there all the way to May, we added about 15,000 coins. At the peak, we added 36,000, but then you see how this comes off really quickly. So even at the peak, we only added 36,000 coins. Remember, prices are lower, so you see how open interest doesn't really go up a ton here. Yes, obviously it goes up, and there are some spikes that immediately get sold back down into, but open interest doesn't go crazy.

Now go to May 18. Bitcoin's price goes up from $102,000 to $111,000. That's only $9,000; it's a 9% move. The move before was a 40% move. So, for a 40% move, you get 15,000 coins added in OI. For a 9% move, you get 40,000 coins added in leverage. It's all about the ratio. You basically take the number of coins and divide it by the price movement.

If that ratio is 2 or 3, then you're in a danger zone. You're like, “Okay, I don't know how sustainable this move is going to be.” Now, immediately, Bitcoin loses it, and this is key, by the way. Bitcoin goes sideways, loses its momentum, and open interest stays flat. That means nobody is now willing to add to their positions. There are no more buyers. Funding is just eating their money.

The guys that add all of this leverage are generally the last buyers of a rally, right? They're the guys who are like, “I didn't make enough money from here to here. I'm going to make all my money in this tiny little section over here.”

Then, once it starts going sideways, they're like, “All right, I've got to get the fuck out, because these guys are going to have to come off at some point.” And look, that's what it does. To be fair, this isn't a huge move. It's a 7% move, but I'm not saying you have to short every time this happens. I'm just saying maybe lighten up. Maybe don't buy. You see this, maybe you're not buying.

Yeah, no, you don't want to buy a ton in that area where that happened.

You want to wait a little bit for it to come off. You can short. I think there are ways to tactically short. Generally, my rule of thumb is I don't buy until all of this goes away. So I'm not buying until we get back down to here, basically 190,000. And we need another 10,000 to 13,000 coins to come off. Maybe that takes us down here to $97,000. Then, if we're at $97,000 and all of that is down, I'm buying a fuck ton of alts, right? So this is a little bit of how I think about it.

That is a very clear and very helpful representation of how you look at this. That's awesome. Thank you. Basically, I guess my mistake was that I was too focused on funding rates and not looking at open interest enough. Actually, we can go back and look at the funding rates. The issue with funding rates is that you often look at them over time, but what matters are the spikes.

Let's see if I can—I'm going to go back and share. Can you share your Velo screener, just the way that this is? I think maybe our community in the Niger Delta Avengers chat would appreciate having it.

It's very easy. You go to Indicators, and you just click Open Interest and Aggregated Funding, and just look at aggregated. There are all sorts of other amazing things here. Basically, anything with Velo in front of it is specifically Velo.

Oh, you're doing this in TradingView. So Velo has TradingView integrated.

Yeah, I use their web app, but yeah, fair enough. You see how you get these funding spikes here? That's not great either.

Yeah, I just thought that funding spike was so minimal compared to what we saw during the election that I kind of dismissed it. But I shouldn't have.

It's minimal, but it's also because there's a lot of money in the markets arbing out these funding rates. So the funding rates don't get elevated for a very long time.

So what is the point of a funding rate spike, then? Why do I care about a funding rate spike?

The funding rate spike tells me that I'm not just imagining that this open interest is long. Right? Because open interest, obviously, can go both ways. For every long, there is a short. But generally what's happening is that market makers are offsetting one of the sides, right? So it's the takers that really matter.

When you see open interest go up a lot and then the funding rate has spiked, that means open interest is going up, in all likelihood, because there are aggressive takers buying, getting long positions, and then there are market makers taking the short side and hedging out the risk. So, net-net, you still end up reasonably long, right? That's why the funding rate spikes are important.

I don't actually use funding at all anymore except to confirm the direction of open interest. Otherwise, it just doesn't really make sense to use because of all the people that are arbing it. There are so many people that are just taking it back to neutral for free money.

No, that's a great point, because really all it requires is a balance sheet. You can do it all day. It just requires a balance sheet, and there are enough people here who have a balance sheet. The reason a guy with $2 million isn't doing it yet is because if they take a $1 million position, they can get liquidated.

Yeah. But you take a $500 million position, arbing out funding rates across a bunch of different instruments, and you have $1.5 billion on your balance sheet and a relationship with the exchange, and they're not going to liquidate you without allowing you to top up more capital—which happens a lot more than you think. Then you can do this all day.

One interesting phenomenon is that those funding rates are where they are because of interest rates in general, right? Let's say the Fed reduced the short-term borrowing rate from wherever it is now—4-ish percent—to 0. Those funding rates would come in a lot. They'd go down because TradFi institutions, like my former employer as well as its competitors, borrow capital to do this trade.

Or even if they don't borrow capital and are just sitting on a bunch of partner capital, they have to evaluate the opportunity cost of deploying capital into crypto basis versus the other opportunities they have on the table, which are plentiful. So there's sort of an internal funding threshold below which you don't go for opportunities and above which opportunities start to look interesting.

If you can earn 4% on T-bills or 4.1% on T-bills, you're not going to try to earn 3.5% doing a Bitcoin basis trade on Binance, because that's inherently much riskier than doing a T-bill. But you would go for a 20% arbitrage on Binance after the election.

So basically, that speaks to your point about the funding spikes being short-lived, and it also gives you a sense of where the general, deep-pocketed crypto basis-arbitrage crowd has its break-even. It was part of our spreadsheet at Cumberland. We would literally be like, “Oh, okay, it costs us 10%, so we’re not going to go for opportunities that are less than 10%.”

And that 10% cost—I’m just making up a number here; it was obviously different than that—included the risk-free rate, the opportunity cost of other opportunities, as well as capital constraints within the firm, et cetera, et cetera. It was a moving target, but it was there. So maybe that’s why funding doesn’t spike for very long, because all those people have powder in the gun, ready to do their basis arbs when funding spikes too much.

I take your point about funding being a good bleeding-edge indicator, with open interest really telling you when people are over their skis or not.

100%.

Okay. I think that was fun. That was the first time I did a screen share and taught you guys something about how to trade, so I hope you guys enjoyed it. I did. We’ll do more of that in the future. Maybe we’ll give a few lessons in the future about how I think about trading.

Master class.

Yeah, Jonah, this was awesome. This was great—an unexpectedly busy episode.

Great talking to you, Avi, as always.

Yeah, this was a pleasure, Jonah.

All right, see you next week. Talk soon. Take care.