Key Takeaways

• The current downturn in crypto prices is influenced by the broader performance of risk assets.
• Bitcoin’s divergence from gold is causing instability in the market.
• Bitcoin is experiencing a unique market condition, trending downwards while other risk assets rise.
• Market flows, rather than fundamental catalysts, are driving Bitcoin’s current market behavior.
• The quantum computing narrative poses a significant challenge for Bitcoin’s attractiveness to institutional investors.
• The crypto market is expected to remain range-bound this year due to recent credit contraction cycles.
• The market structure is healthier now, with less leverage and unsecured credit compared to previous cycles.
• The current market consolidation is due to over-leverage and speculative fervor.
• Capital is expected to return to crypto from other speculative assets, but timing is uncertain.
• Crypto is increasingly viewed as just another asset class option by investors.
• Recent movements in gold and silver suggest a potential blow-off top.
• Retail investors are driving the trading of gold, influencing its price independently.
• Retail interest in Bitcoin is expected to return, leading to significant price movements.
• The current crypto market is characterized by recycled capital rather than fresh retail investment.
• There is a lack of buying sponsorship in Bitcoin due to broader market concerns.

Guest intro

Joshua Lim is Global Co-Head of Markets at FalconX, a digital asset prime brokerage. 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 built the treasury and OTC trading desk at Circle.

The influence of risk assets on crypto prices

• The current downward price action in crypto is largely influenced by the performance of risk assets.

  — Joshua Lim

• The disconnect between crypto and traditional risk assets highlights market volatility.

• I think it’s entirely gonna be a function of how well risk assets can hold up.

  — Joshua Lim

• Understanding the relationship between crypto markets and broader risk assets is crucial.

• Everything is still near all-time highs… that has not translated to bitcoin and to crypto generally.

  — Joshua Lim

• The divergence between Bitcoin and gold is significant and destabilizing.

• I think the most stark divergence is between bitcoin and gold that divergence is wreaking havoc.

  — Joshua Lim

• Knowledge of how Bitcoin and gold typically correlate is essential for market analysis.

Bitcoin’s unique market condition

• Bitcoin is trending downwards while other risk assets are rising, indicating a unique market condition.

• Bitcoin is the only chart that’s pointing downwards while everything else is up into the right.

  — Joshua Lim

• This divergence could indicate underlying issues or shifts in investor sentiment.
• The market for Bitcoin is driven by flows rather than fundamental catalysts.

• It’s really very much a flows-driven market.

  — Joshua Lim

• Significant capital is moving towards established asset classes like gold.

• Flows are dominated by a lot of central bank activity… flowing into more established asset classes.

  — Joshua Lim

• Understanding market flows and central bank roles is crucial for analyzing Bitcoin’s market behavior.

The quantum question and its impact on Bitcoin

• The quantum computing narrative is a significant overhang for Bitcoin.

• It’s the quantum question and that narrative… is an overhang.

  — Joshua Lim

• This challenge affects Bitcoin’s attractiveness to institutional investors compared to gold.
• Investment committees must consider quantum computing implications when choosing between Bitcoin and gold.
• Understanding quantum computing’s impact on cryptography is crucial for Bitcoin’s future.
• This narrative highlights the need for technological adaptation in the crypto space.
• The quantum question could influence future investment decisions and market dynamics.
• The potential impact of quantum computing on Bitcoin’s security is a critical consideration.

Range-bound market expectations

• The crypto market is expected to remain range-bound this year.

• I do think that we’re gonna be on a prolonged range-bound market.

  — Joshua Lim

• Recent industry events, including liquidations and trading firm failures, contribute to this forecast.
• The market structure is healthier now, with less leverage and unsecured credit.

• Market structure is a lot healthier this time around.

  — Joshua Lim

• This healthier market structure could impact future trading behaviors.
• Understanding previous market cycles characterized by excessive leverage is important.
• The absence of gross overextensions of leverage or unsecured credit is a positive market change.

Market consolidation and speculative fervor

• The current market is experiencing a consolidation phase due to over-leverage and speculative fervor.

• I think this is relatively healthy like we’re just sort of consolidating down here.

  — Joshua Lim

• Understanding the dynamics of market cycles is crucial for analyzing current conditions.
• Capital is expected to return to crypto from other speculative assets, but timing is uncertain.

• I think at some point all of that money will come back to crypto.

  — Joshua Lim

• This insight highlights potential future market dynamics.
• Crypto is increasingly viewed as just another option among various asset classes.

• There are investors that just see it as yet another option among many different asset classes.

  — Joshua Lim

Precious metals and retail investor influence

• Recent movements in gold and silver suggest a potential blow-off top.

• We had pretty drastic moves 30% plus move in silver 15% and plus in gold.

  — Joshua Lim

• Understanding the historical context of gold and silver as stores of value is important.
• Retail investors are driving the trading of gold, influencing its price independently.

• The retail impulse is driving asset classes these days.

  — Joshua Lim

• The influence of retail investors on market dynamics is a critical factor.
• Retail interest in Bitcoin is expected to return, leading to significant price movements.

• Once the retail mindset comes back and focuses on bitcoin you’ll see stuff like that again.

  — Joshua Lim

Recycled capital and lack of fresh retail investment

• The current crypto market is characterized by recycled capital rather than fresh 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

• This lack of new retail participation highlights current investment flow dynamics.
• There is a lack of buying sponsorship in Bitcoin due to broader market concerns.

• There’s sort of still this overhang from the worst nomination.

  — Joshua Lim

• Understanding current market conditions and investor sentiment is crucial.
• Concerns in the broader market are affecting crypto investments.

• Even other risk assets are starting to move lower.

  — Joshua Lim

Traditional investors and crypto vehicles

• The influx of traditional investors into crypto vehicles has led to many being down on their investments.

• Most of those investors are down on the trade right because a lot of them were buying above nav.

  — Joshua Lim

• Understanding the dynamics of crypto investment vehicles is important.
• Not all crypto vehicles will trade below NAV indefinitely; strong winners will emerge.

• There’s gonna be strong winners.

  — Joshua Lim

• This forecast suggests potential market shifts and standout performers.
• Knowledge of the competitive landscape in the crypto investment space is crucial.
• Factors contributing to the success of certain vehicles are important for market analysis.

Wall Street engagement with crypto

• Wall Street investors are expected to engage more actively with crypto-related companies.

• I expect… there probably will be at some point.

  — Joshua Lim

• This potential shift in investor behavior could impact crypto market dynamics.
• The appointment of Kevin Warsh as Fed chair is likely to create headwinds for risk assets, including crypto.

• This would be a challenge and a headwind for risk assets and for crypto in particular.

  — Joshua Lim

• Understanding the implications of Federal Reserve leadership changes is important.
• Macroeconomic leadership can influence the crypto market significantly.
• This opinion provides a critical perspective on market sentiment and asset prices.

Hype as a safe haven and trading volumes

• Hype has become a safe haven for liquid crypto funds, acting as a refuge amidst market volatility.

• Hype itself, the token and the volumes on its platform have been a rare bright spot for crypto.

  — Joshua Lim

• Understanding the role of Hype in providing liquidity and stability is crucial.
• The growth in Hype’s trading volumes is likely to continue, driven by new perpetual markets.

• We’ve seen enormous growth in silver and gold perps.

  — Joshua Lim

• This forecast suggests a shift in trading behavior within crypto.
• Hyperliquid is generating significant revenue, ranking among the top three in the crypto landscape.

• Hyperliquid’s up there, it’s like a top three in terms of revenue.

  — Joshua Lim

DeFi’s competition with centralized exchanges

• DeFi is on the cusp of competing head-to-head with centralized exchanges.

• We’re almost at some kind of inflection point where defi is really competing.

  — Joshua Lim

• This insight highlights a significant shift in the market landscape.
• The rise of platforms like hyperliquid may lead to a dispersion of trading volumes.

• Maybe a lot of those volumes that were concentrated there will get dispersed.

  — Joshua Lim

• Understanding the implications of regulatory changes on trading venues is important.
• The evolving market structure could impact trading behavior and market dynamics.
• This explanation provides insight into potential regulatory developments.

Demand for transparency and AI-driven commerce

• There is a growing demand for transparency and accountability in crypto markets.

• We’re starting to see like more a greater demand for transparency.

  — Joshua Lim

• This trend highlights the importance of transparency in building trust with users.
• The rise of AI-driven commerce will likely benefit internet-native value transfer mechanisms.

• It will probably benefit to double coins the most.

  — Joshua Lim

• This insight suggests potential market dynamics due to technological advancements.
• Understanding the intersection between AI technology and crypto is crucial.
• Future opportunities for specific types of crypto are indicated.

Privacy-enabled chains and regulatory challenges

• The development of privacy-enabled chains that comply with regulations is crucial.

• The most interesting area to build in is how to build these types of privacy enabled chains.

  — Joshua Lim

• This trend emphasizes the balance between privacy and regulatory compliance.
• Regulation is lagging behind the development of new technologies in the crypto space.

• Regulation is always a little bit behind on this type of stuff.

  — Joshua Lim

• This statement reflects a common concern regarding regulatory adaptation.
• Understanding ongoing regulatory developments and challenges is important.
• The pace of regulatory adaptation to technological advancements is a critical consideration.