This episode moves beyond broad market sentiment to dissect high-conviction investment theses in Ethena, Galaxy Digital, and Hyperliquid, revealing how specific catalysts could drive significant outperformance.
Short-Term Market Caution and Key Indicators
- Jason, Delphi's Head of Markets, opens with a tactically cautious short-term view, despite remaining bullish on a new Bitcoin all-time high in late Q3 or Q4. He outlines a mix of positive and negative signals that informed his decision to take off leverage, highlighting a disconnect between strong fundamental news and sideways price action.
- Positive Signs (as of late July):
- Digital Asset Treasuries (DATs): A wave of these companies, which are publicly traded vehicles designed to hold crypto assets, signaled present and future buying pressure, though Jason notes this could also be a sign of market froth.
- ETF Developments: The anticipated Solana (SOL) ETF and the potential for staking-enabled ETFs for both SOL and ETH.
- Regulatory Progress: Positive momentum for bills like the FIT21 Act (incorrectly transcribed as Genius Bill, Clarity Act) in the U.S. Congress.
- Macro Environment: Decent tech earnings and the prospect of impending rate cuts.
- "Not Great" Signs:
- Price/News Divergence: Bitcoin’s price trended sideways-to-lower despite a stream of positive headlines, a classic warning sign.
- Coinbase Premium: The premium, a key indicator of U.S. institutional demand, turned negative for the first time since mid-April.
- Froth Indicators: Jason points to a key metric where altcoin Open Interest (OI) and volume dominance matched or exceeded Bitcoin's, a pattern often seen at local tops. Open Interest (OI) refers to the total number of outstanding derivative contracts that have not been settled.
- Token Unlocks: A persistent headwind of token supply entering the market.
Jason's take: "I still think we make new all-time highs... But, um over the last two weeks, I've just been I've taken off like all leverage trades. I still have all my spots... just short-term like tactically like very cautious."
Market Absorption and The Shifting Source of Bids
- Yan provides a counter-narrative, arguing the market is showing impressive resilience. He points to the market's ability to absorb a massive $9 billion sale from a Satoshi-era wallet with minimal, temporary impact. This suggests the market is maturing beyond reliance on single, large players.
- MicroStrategy's MNAV Challenge: A key concern is MicroStrategy's inability to issue new equity to buy Bitcoin if its MNAV (Market Cap to Net Asset Value) ratio falls below 2.5. This removes a consistent, passive buyer from the market. Yan notes this makes the market less reliant on a single entity, which he views as a long-term bullish sign of maturity.
- The New Bitcoin Bidder: The panel speculates on the source of current demand. With institutional ETF flows slowing, the bid appears more distributed and global. Yan suggests nation-states are unlikely to disclose purchases until their accumulation is complete, making the current buyer profile opaque but broad-based.
The Bull Case for Ethena (ENA)
- The conversation shifts to Ethena, which Jason identifies as a top coin on his watchlist. The panel highlights its unique position at the intersection of the Digital Asset Treasury (DAT) and stablecoin narratives. Despite the ENA token price being down from its peak, the market cap is at an all-time high due to token unlocks, and the supply of its stablecoin, USDe, is also at a record high.
- Supply Growth: USDe supply is expanding rapidly even with its yield at a relatively modest 10-11%, a stark contrast to the 50%+ yields seen last year. This indicates growing trust and deeper integrations are making the protocol far more capital-efficient.
- Revenue and Fee Switch: Ethena is one of the highest-revenue protocols in crypto. While a fee switch for token holders is not yet active, founder Guy Young has outlined a clear, milestone-based plan for its implementation, prioritizing market share growth first.
- Strategic Positioning: Yan notes that Ethena's yield is inversely correlated to Fed rates, making ENA a compelling asset in a rate-cutting environment, unlike other stablecoin issuers. The upcoming DAT focused on Ethena is expected to add significant, sustained buying pressure.
Galaxy Digital (GLXY): A Crypto and AI Data Center Power Play
- Duncan presents his high-conviction bull case for Galaxy Digital, a position he states is around 50% of his net worth. He argues the market misunderstands Galaxy, viewing it as a three-part thesis: a robust balance sheet, a thriving crypto services arm, and a massively undervalued AI data center business.
- Part 1: The Balance Sheet: Galaxy holds approximately $3.3 billion in crypto and cash, providing a solid foundation for its operations and differentiating it from capital-light competitors.
- Part 2: The Crypto Business: CEO Mike Novogratz described July as the company's best month ever. Galaxy is a key service provider for the new DATs, has a top-tier trading and lending desk (executing the $9B Satoshi-era sale), and a strong investment banking pipeline.
- Part 3: The Helios Data Center Business: This is the core of Duncan's thesis.
- Galaxy's subsidiary, Helio, has a deal with CoreWeave to lease its full 800 megawatts (MW) of power capacity. Based on Goldman Sachs' valuation multiples, this facility alone could be worth $14-18 billion in equity value by 2028—significantly more than Galaxy's entire current market cap.
- Galaxy has another 1.7 gigawatts (GW) of power under study, with 800 MW expected to be approved by year-end. This pipeline could bring total equity value from the data center business to over $40 billion.
- Strategic Implication: Duncan advises investors to evaluate Galaxy's progress “earnings call to earnings call,” focusing on management's execution of this data center build-out.
Duncan's summary: "You have exposure to, you know, the two mega trends that are going on right now... which is AI and crypto. Um, so I quite like the stock from that perspective."
The Solana Meme Coin Shake-Up: Pump.fun vs. Bonk
- The discussion turns to the Solana ecosystem, focusing on the recent market share battle between Pump.fun (PUMP) and Bonk (BONK). Yan explains that Bonk initiated ecosystem incentives that, combined with a quiet launch from Pump.fun, led to a shift in activity and a sell-off in the PUMP token.
- Pump.fun's Response: The Pump.fun team broke its silence with two key announcements:
- 100% Revenue to Buybacks: All protocol revenue is now being used to buy back the PUMP token, creating a consistent bid in the market.
- Forthcoming Incentives: A major announcement regarding new user and activity incentives is expected soon, which has already stimulated a rebound in platform activity.
- Investor Takeaway: With the token price below its ICO level and significant sell-offs from early investors now complete, the combination of buybacks and upcoming catalysts presents a potentially favorable entry point.
Hyperliquid (HYPE): A Flows Issue, Not a Fundamentals Issue
- The panel analyzes Hyperliquid, another top revenue-generating protocol. Despite strong fundamental performance, the HYPE token has seen weakness. The consensus is that this is a temporary flows-driven issue rather than a sign of fundamental decay.
- Reasons for Underperformance:
- Profit Taking: Early investors and airdrop recipients are taking profits after a massive run.
- Collateral Selling: As a liquid, high-performing asset, some traders sell HYPE to cover margin calls elsewhere during market downturns.
- Tax-Loss Harvesting: The run-up in late 2023 may have prompted some to sell in the new tax year.
- Future Catalysts:
- HIP-3: This upcoming proposal will allow anyone to create a permissionless market for any asset on Hyperliquid by staking 1 million HYPE. This could unlock trading for equities, commodities, and FX on-chain.
- Coin-Margined Collateral: The ability to use assets like BTC, ETH, and SOL as collateral is in development and would significantly expand the user base.
- Regulatory Risk: The primary headwind is regulation. HIP-3 could enable the trading of tokenized securities, placing the protocol in the crosshairs of regulators. The panel notes the recent pro-crypto shift in the U.S. offers some hope, but this remains a major uncertainty.
The Crypto IPO Wave and Regulatory Tailwinds
- The episode concludes by discussing the increasingly positive regulatory environment in the U.S. and the trend of major crypto companies pursuing IPOs.
- Regulatory Shift: Jose highlights a recent, "insanely bullish" speech from SEC Commissioner Hester Peirce, who advocated for self-custody, privacy, and protections for open-source developers. This signals a dramatic turnaround from the hostile environment of a year ago.
- IPO Trend: Companies like Circle, Kraken, and Gemini are opting for public listings. Yan explains this is the path of least resistance, as equity markets currently offer far more liquidity than token markets for these established, regulated businesses. This trend is expected to accelerate as long as the IPO window remains open.
- Will Base Launch a Token? The panel agrees it's unlikely in the near term. With L2 tokens not being highly valued relative to Coinbase's market cap, and sequencer revenue already accruing to the stock, there is little incentive for them to launch a token right now.
Conclusion
This episode argues that the most compelling opportunities now lie in specific, catalyst-driven theses rather than broad market beta. Investors should focus on projects like Ethena, Galaxy, and Hyperliquid, where clear developments in revenue, infrastructure, and market access could unlock significant value independent of overall market direction.
