Six weeks ago, we threw everything away and we started from scratch. And is that better for the company or is it worse? It's been tremendously better for us. I have this term that I use: strong beliefs loosely held, which is what do we believe in the long term and then what are we willing to change our mind on to still hit that goal?
Welcome to Galaxy Brains.
An infinite amount of cash flow.
I'm your host Alex Thorn.
The US banking system is sound and resilient.
Bitcoin hitting new all-time high.
If you're not long, you're short.
Satoshi's going to come on here, blast us directly, go quiet, and all Bitcoin's going to be erased.
Bitcoin's the best crypto asset.
Bitcoin is going to zero.
Welcome back to Galaxy Brains. As always, I'm your host Alex Thorn, head of firm-wide research at Galaxy. Bitcoin not zero. We have a great episode for you this week. Arjun Sethi, co-CEO of Kraken and Payward is our guest. Arjun's been on the show once before, but he was remote. We're recording today live from Consensus in Miami at the Miami Beach Convention Center. It was a great interview with Arjun. The guy is really dialed in. What I was most impressed with actually is the way Kraken balances this institutional-grade company now with the decentralization ethos. They do it and talk about it in a way that's better than most by far in this industry. I think that colors everything that Kraken does. Even though they're like a big company in crypto, still really carry forward Jesse Powell's ethos of decentralization. One of the oldest crypto firms in the world, Kraken. Great interview with Arjun. We'll also check with our friend Bimnet Abebe at BB about markets. Before we get to that, I need to remind you to please refer to the link to the disclaimer in the podcast notes. Note that none of the information in this podcast constitutes investment advice or an offer, recommendation, or solicitation by Galaxy or any of its affiliates to buy or sell any securities.
Well, here we are, Phineas, in Miami.
Yet again. Technically, we have been to Miami several times.
Usually to interview Michael Saylor. It's a little bit different being on Saylor's property versus here at the Miami Beach Convention Center.
Yeah, this is a very exciting conference. Walking around with you, I will admit, is a little overwhelming. There's a lot of people that are trying to talk to you and it seems like very positive vibes. I know you were at Bitcoin
How is it, really quick before we jump in, how is it different than Bitcoin? I know it's a somewhat different community, but there's a lot of overlap.
It is a different community. I think there are community-specific conferences, the Bitcoin conference, there's ETH Denver, there's Solana Breakpoint, and then there's sort of like crypto broad big-tent conferences, Consensus and Token, I think are probably the two biggest at this point. And they're different because of that. I think this is much more institutional crypto-industry focused. It's a lot of the big companies like Galaxy are here because they serve everyone in the industry. The Bitcoin conference, frankly, has a ton of institutional Bitcoin stuff, but that's really a global community bazaar. Bitcoin has a genuine global cult following, the asset and the network, and the Bitcoin conference is sort of like an expression of that. Whereas this has got everything. This is more of a financial services crypto conference at this time, and they're both quite exciting to me. I mean, I love both.
Well, it's cool. I mean, this is obviously very appropriate for Galaxy to have a presence because Galaxy touches so many
Yeah, exactly. But it's cool. I mean, we're doing, we've already done three episode mini episodes today. We're going to be dropping them periodically over the coming weeks. Some really cool great guests. Some are repeat guests from the past, but today we start with Arjun, and it's a huge, I was saying before, it's a huge job. I mean, it's sort of like really
Kraken's a massive company in this space, and they've been around, I don't know, for more than 12 years. I forget. I think they were founded in 2013 or something like that. I mean, that was a long time ago. Think about how much has changed.
Yeah, it's got real staying power. I mean, it's really influential as a business.
Well, thank you, Phineas and our friend Chris and the whole team at Studio Friends for coming to Miami to make this possible. This is I think going to go down as our best on-site rapid recording session. We did some in Hong Kong and Singapore once before and we did it in Nashville 2024.
We're getting better at it. Absolutely.
Let's hop right into it. Bimnet Abebe of BB. Let's go now to our friend Bimnet Abebe from Galaxy Trading. As always, Bimnet, welcome to Galaxy Brains.
We're here on set in Miami at the Miami Beach Convention Center for Consensus 2026. What's your first thought of this conference? You're not a big conference guy the way I am.
I am very impressed. I think there's a lot of institutional attendance. And in terms of the quality of the participants, the protocols, the companies here, it's top tier.
And I think it's indicative of a market that's matured. And when the big boys show up in size and strength, it's probably a good thing for things to come.
Yeah. They are here, aren't they? We keep saying the suits aren't coming. They are
You're not really a crypto guy, you know? You're a rates trader from Citi. What's your impression of the banks now where you came up getting involved in crypto? Is it real this time?
I think it's very real. 100%. I think they are committing real dollars, time, energy. Actions speak louder than words. I've probably talked to at least six different banks in the last 24 hours.
And this isn't like Regional Bank of East Dogpatch, right? These are the big boys.
Asset managers as well. I think this is crypto's moment to shine and there's a lot of good stuff happening. Now, because institutions are here doesn't necessarily mean the price of XYZ token needs to go up.
It just means that there is adoption of the financial rails that have been innovated by crypto.
Let's talk about markets a little bit. Obviously that's our favorite topic. Bitcoin trading almost at 82K. I think it got to like 81.6 or so.
It's the highest it's been since the end of January, which by the way was right before we went into a non-stop free fall into February. February 5th was that 58K bottom. Is this just a local move or is the bear market ending? How do you think about it?
I think the structural downtrend that's been in place in Bitcoin since October of last year is still in play. And this is a healthy correction in the trend because markets don't move in one direction. I'm still cautiously bullish in the next week or two on BTC simply because it's broken through some resistance, with stress trading back at close to par, I think there'll be some additional issuance and more debt buying. And to be honest, I'm still constructive on a potential resolution of the Iran situation.
Constructive. It's still holding even though we've had a little tit-for-tat. And I think the market's willing to look through any kind of turbulence with respect to the Iran conflict in the next week or two. Earnings were really good. S&P's trading at all-time highs. Risk sentiment is very good and so I think there's a little pocket here where the market can continue to do well. But if you ask me where my outlook is for the next 3 months, I'm a lot more cautious. My playbook is still the Bitcoin cycle playbook where you've historically had a 70 to 75% drawdown from the highs and so I think there's still a reasonable percentage
To like 52% or so, something like that, yeah.
And now that spot's rallied so much, in theory it should be harder to move higher simply because of math. It's a lot harder to move something
Required to move a big object.
Correct. More force, physics, however you want to think about it.
And then at the same time, it's getting a lot cheaper to play for downside because vol has been coming lower. It's been a spot-up vol-down tape in terms of implied vol. And so I think you can get some real convexity if you're looking to get some protection on.
In terms of macro, I'm growing ever more concerned with the commodity market and the feedback loop into the fixed income market. One of the things I've been paying close attention to with respect to this conflict has been longer-dated energy contracts. So the end of this year or the start of next year. And essentially what happened yesterday was they started trading at local highs. People are pricing in higher energy prices for longer. And you have a direct feedback loop into inflation. Look no further than gas prices. The AAA national gas average was around $4.48. A week ago it was $4.08. You're talking about a 10% move higher in gas prices in a week. Diesel prices a year ago were on a three handle and now you're looking at them at around six.
Right? How do you transport food across the country?
More inflation is coming. Downstream inflation is going to happen.
And what you've seen happen particularly in Europe is you're starting to price in an aggressive amount of hikes.
