Key takeaways

• Current crypto price levels are significantly lower compared to previous highs.
• The resilience of risk assets will dictate future crypto market performance.
• Bitcoin’s divergence from gold is causing market instability.
• Bitcoin is experiencing downward trends while other risk assets rise.
• The market is currently driven by capital flows rather than fundamental catalysts.
• Quantum computing concerns are impacting Bitcoin’s appeal to institutional investors.
• The crypto market is expected to remain range-bound this year.
• Market structure is healthier now due to less leverage and unsecured credit.
• The market is consolidating due to over-leverage and speculative fervor.
• Capital is expected to return to crypto when other speculative assets lose appeal.
• Crypto is increasingly seen as one of many asset classes.
• Retail investors are significantly influencing asset prices across classes.
• Retail interest in Bitcoin is expected to return, driving price movements.
• The current market is characterized by recycled capital rather than new retail investment.
• Increased investor activism in crypto companies is likely as they explore real-world assets.

Guest intro

Joshua Lim serves as Global Co-Head of Markets at FalconX. He co-founded crypto derivatives trading firm Arbelos Markets, which was acquired by FalconX in 2025. Previously, he led derivatives trading at Genesis Trading and Galaxy Digital after starting in equity derivatives at Goldman Sachs.

Historical price movements and market dynamics

• “The current price levels in crypto markets reflect a significant regression compared to previous highs.” – Joshua Lim
• “These levels are obviously distressing for anyone who’s worked in the industry for quite some time.” – Joshua Lim
• The future performance of crypto markets will depend on the resilience of risk assets.
• “It’s entirely gonna be a function of how well risk assets can hold up.” – Joshua Lim
• The divergence between Bitcoin and gold is causing instability in the crypto market.
• “This very large divergence and in particular, the most stark divergence is between Bitcoin and gold.” – Joshua Lim
• Bitcoin is currently experiencing downward price movement while other risk assets are trending upwards.
• “Bitcoin is the only chart that’s pointing downwards while everything else is up into the right.” – Joshua Lim
• The current market for Bitcoin is driven by flows rather than fundamental catalysts.
• “It’s really very much a flows driven market and what we’re seeing is like the flows… flowing into more established asset classes in particular with gold.” – Joshua Lim

Institutional concerns and market forecasts

• The quantum question poses a significant concern for Bitcoin, affecting its attractiveness to institutional investors compared to gold.
• “It’s the quantum question and that narrative… is an overhang.” – Joshua Lim
• The crypto market is expected to remain in a prolonged range-bound state this year.
• “I do think that we’re gonna be on a prolonged range-bound market.” – Joshua Lim
• The current market structure is healthier due to the absence of gross overextensions of leverage or unsecured credit.
• “Market structure is a lot healthier this time around.” – Joshua Lim
• The current market is experiencing a consolidation phase due to over-leverage and speculative fervor.
• “The market got a little bit over-leveraged and there was a little bit too much speculative fervor.” – Joshua Lim
• Capital will eventually return to crypto as speculative assets like stocks and commodities lose their appeal.
• “I think at some point all of that money will come back to crypto.” – Joshua Lim

Perception of crypto as an asset class

• Crypto is increasingly viewed as just another option among various asset classes rather than a standalone market.
• “It feels like crypto is just part of the wider markets.” – Joshua Lim
• Gold and silver have experienced significant price movements, indicating a potential blow-off top.
• “We had pretty drastic moves 30% plus move in silver 15% and plus in gold.” – Joshua Lim
• The retail investor is significantly influencing asset prices across various classes.
• “What it does show is just how much like the retail impulse is driving asset classes these days.” – Joshua Lim
• Retail interest in Bitcoin will return, leading to significant price movements.
• “I think once the sort of retail mindset comes back and focuses on Bitcoin you’ll see stuff like that again.” – Joshua Lim
• The current crypto market is characterized by recycled capital rather than new retail investment.
• “A lot of that money that’s coming from one token to another in crypto is just recycled crypto native capital.” – Joshua Lim

Investment vehicles and market dynamics

• The proliferation of investment vehicles in crypto has diluted attention and made it difficult for any single asset to attract significant new investment.
• “It’s hard for any one name to really break out and stand out and attract fresh inflows in a meaningful way.” – Joshua Lim
• Some investment vehicles will emerge as strong winners despite current market conditions.
• “It’s not inevitable that a lot of these will trade below nav forever…there’s gonna be strong winners.” – Joshua Lim
• There will likely be increased investor activism in crypto-related companies as they explore real-world assets and share buybacks.
• “I think we’d get a lot of lead time before that would like before that really materializes.” – Joshua Lim
• The appointment of Kevin Warsh as Fed chair is likely to create headwinds for risk assets, including crypto.
• “The initial and you know obviously a bull for the dollar right so I think the general thought was this would be a challenge and a headwind for risk assets.” – Joshua Lim

Market challenges and opportunities

• There is a lack of buying sponsorship in Bitcoin and other crypto assets due to concerns from the broader market.
• “What we’re seeing today it’s just like a lack of buying sponsorship in Bitcoin in other crypto assets.” – Joshua Lim
• Weak earnings reports and concerns in the AI sector are impacting equities, which in turn affects the crypto market.
• “You saw kind of some weaker earnings on some of these names that have come out and reported.” – Joshua Lim
• Hype has become one of the most actively traded assets for crypto clients, acting as a safe haven for liquid crypto funds.
• “Hype itself, the token and the volumes on its platform have been a rare bright spot for crypto.” – Joshua Lim
• The growth in HIP-3 volumes indicates a trend towards the creation of new perpetual markets focused on real-world assets.
• “Most of the new creators have focused on real world assets like equities and commodities.” – Joshua Lim

Trading dynamics and regulatory impacts

• The revenue generated from trading on Hyperliquid is significant, with fees accruing to the protocol and benefiting token holders.
• “It’s on the order of like $4,000,000 of revenue per day.” – Joshua Lim
• DeFi is on the cusp of competing head-to-head with centralized exchanges.
• “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.” – Joshua Lim
• The rise of platforms like Hyperliquid may lead to a dispersion of trading volumes from centralized exchanges to more regulated venues.
• “With the rise of Hyperliquid… you can kinda have some idea that maybe a lot of those volumes that were concentrated there will get dispersed.” – Joshua Lim
• There is a growing demand for transparency and accountability in crypto markets.
• “I think we’re starting to see like more a greater demand for transparency for accountability.” – Joshua Lim

Technological advancements and future trends

• The rise of AI-driven commerce will benefit internet-native value transfer mechanisms, particularly privacy-oriented transactions.
• “I do think it’ll probably benefits to double coins the most.” – Joshua Lim
• The development of privacy-enabled chains that comply with regulations is a crucial area for innovation.
• “I think the most interesting area to build in is how to build these types of privacy enabled chains with compliance to KYC and AML.” – Joshua Lim