Key takeaways

• Bitcoin has been performing as a safe haven asset amid geopolitical tensions and rising oil prices.
• Market volatility can be assessed using the VIX, which reflects the demand for downside protection.
• The crypto market has established a stable trading range, showing cautious behavior.
• Despite market fluctuations, the integration of digital assets and blockchain is accelerating.
• AI development is expected to yield benefits as major companies continue their investments.
• The crypto market is experiencing a record high in stablecoin activity, indicating significant interest.
• The dollar retains its safe haven status, even as bond yields are expected to fall.
• There is a growing demand for event-driven trading in the crypto space.
• The VIX index is a useful tool for understanding expected equity market volatility.
• Banks and insurance companies are significant buyers of downside protection, influencing the VIX.
• The crypto market’s cautious behavior reflects a deleveraged state and stable trading ranges.
• Stablecoin usage is reaching unprecedented levels, showcasing market interest.
• AI investments by large companies will gradually reveal their benefits.
• The dollar’s resilience contradicts expectations of yield-driven market behavior.
• Event-driven trading is gaining traction in the crypto market, highlighting a new trend.

Guest intro

Andy Baehr serves as managing director of asset management at GSR. Previously, he was head of product and research at CoinDesk Indices, where he discussed bitcoin’s performance as a hedge and the launch of crypto ETFs like the Grayscale CoinDesk Crypto 5 ETF. He held leadership roles on derivatives desks at Credit Suisse, BNP Paribas, Morgan Stanley, and Deutsche Bank.

Bitcoin as a safe haven

• Bitcoin is acting like a safe haven asset amidst rising oil prices and geopolitical tensions.

• Bitcoin is actually acting like a safe haven it’s up about 4% since the conflict started on February 28 and over the last few days or so.

  — Andy Baehr

• The geopolitical context and the relationship between oil prices and crypto markets are crucial for understanding this trend.
• Bitcoin’s performance in this economic context indicates its potential role as a safe haven.
• Bitcoin’s behavior contrasts with traditional assets during economic uncertainty.
• The rise in Bitcoin’s value demonstrates its appeal as a hedge against geopolitical risks.
• Bitcoin’s safe haven status is becoming more apparent in times of global tension.
• The market’s perception of Bitcoin as a safe haven could influence future investment strategies.

Understanding market volatility with the VIX

• The VIX can be used to gauge market volatility and potential contagion effects.

• I always look at the VIX first… it’s not a 32 VIX which of course implies like a 2% daily move in equities… to measure the scope of crisis or the scope of contagion of an oil situation into markets looking at things that way.

  — Andy Baehr

• The VIX reflects the demand for downside protection in the equity market, particularly from banks and insurance companies.

• The VIX is heavily pricing in how in demand downside S&P 500 put options are costing right and who is buying those banks and insurance companies are buying them every day which keeps the volatility market you know shapes the way it is.

  — Andy Baehr

• Understanding the VIX and its implications is crucial for market risk assessment.
• The VIX provides insights into market participants’ behavior regarding equity protection.
• The VIX index indicates expected volatility in equity markets, with specific values correlating to daily price movements.

• One way for people who aren’t very familiar with the VIX to think about it is what it implies the VIX isn’t that 26 because of this but think you know a 16% VIX implies a 1% move in equities every day and a 32 VIX implies 2%.

  — Andy Baehr

Crypto market’s cautious behavior

• The crypto market has been acting cautiously and has established a stable trading range.

• It’s clear that by early Feb you know the market the crypto market had taken had the wind taken out of it was deleveraged and was being acting very cautious…we’ve traded this very very tight range Bitcoin Ether Solana have all you know 65 to 71 on Bitcoin you know around 2,000 on Ether around whatever $85 once once Solana had gotten his legs under it.

  — Andy Baehr

• The market’s cautious behavior reflects a deleveraged state and stable trading ranges.
• The current state of the crypto market shows a shift towards stability.
• The cautious approach in the crypto market is a response to previous volatility.
• This stable trading range suggests a period of consolidation in the crypto market.
• The cautious behavior may indicate a strategic pause before potential market movements.
• The crypto market’s stability could attract more conservative investors.

Resilience of digital asset integration

• The progress of integration of digital assets and blockchain has continued at an accelerating pace despite market fluctuations.

• Nothing really changed right in fact the progress of integration of digital assets and blockchain continued almost at an accelerating pace.

  — Andy Baehr

• The ongoing development in the crypto space indicates resilience amidst economic shifts.
• Despite market volatility, foundational work in digital asset integration persists.
• The accelerated integration of blockchain reflects its growing importance in various sectors.
• This resilience showcases the long-term potential of digital assets beyond market cycles.
• The continued progress suggests confidence in the future of blockchain technology.
• The integration of digital assets is becoming more embedded in traditional financial systems.

AI investment trends

• The benefits of AI development will gradually become apparent as major companies continue to invest in it.

• These giant companies that are going to have the power to create support store and energize artificial intelligence they’re continuing to build and over time that those benefits will start to realize themselves.

  — Andy Baehr

• Current investment trends in AI are poised to impact the broader market.
• AI investments by large companies will gradually reveal their benefits.
• The ongoing investment in AI reflects its perceived value and future potential.
• As AI development progresses, its influence on various industries will become more evident.
• The strategic investments in AI highlight its role in future technological advancements.
• AI’s integration into business models is expected to drive innovation and efficiency.

Record high stablecoin activity

• The crypto market is seeing a record high in stablecoins, indicating significant activity and interest.

• We’re at a record high on the crypto side for stablecoins 317,000,000,000 I think we hit or close to 320,000,000,000.

  — Andy Baehr

• Stablecoin usage reflects the growing interest in the crypto market.
• The record high in stablecoins suggests increased market participation.
• Stablecoins are becoming a key component of the crypto ecosystem.
• This surge in stablecoin activity highlights their role in facilitating transactions.
• The high level of stablecoin activity may indicate a shift towards more stable crypto investments.
• The significant interest in stablecoins could drive further innovations in the space.

Dollar’s safe haven status

• The dollar is maintaining its safe haven status despite expectations of falling yields.

• The dollar just still has that Teflon quality… you would expect yields to to go down as people rush into bonds and that wasn’t the case last year.

  — Andy Baehr

• The dollar’s resilience contradicts typical expectations of yield-driven market behavior.
• The dollar’s safe haven status remains strong amidst economic uncertainty.
• The unexpected behavior of bond yields highlights the dollar’s unique position.
• The dollar’s stability provides a reliable option for risk-averse investors.
• This observation indicates a deeper insight into current economic conditions.
• The dollar’s continued strength may influence global financial strategies.

Event-driven trading in crypto

• The demand for trading on events is increasing significantly in the crypto space.

• We’re seeing tons of activity happening there some of it I guess morally ambiguous related to like the Ayatollah and and his fate but but nonetheless it just shows the demand for people being able to trade on on these events.

  — Andy Baehr

• Event-driven trading is gaining traction in the crypto market, highlighting a new trend.
• The rise in event-driven trading reflects a shift in market dynamics.
• This trend indicates a growing interest in speculative trading based on real-world events.
• The demand for event-based trading platforms is increasing among crypto investors.
• The moral ambiguity of some events underscores the complexity of this trading trend.
• Event-driven trading could lead to new opportunities and challenges in the crypto market.