Looking for Gains Right Now? Crypto Isn’t the Trade — This Is: Bits + Bips

It's really challenging to be in crypto and see this massive equity rally, massive gold rally. I don't know, we do have an adventure arm, and three, four years ago, every venture deck would be like, this is the market cap of crypto, this is market cap of gold, this is the market cap of equity. Now it's like this is the market cap of crypto, this is the market cap of gold, this is the market cap of equities.

So crypto didn't change at all, and everything is going up, and it's kind of sad. It just doesn't look like a volatile asset anymore, which is very bizarre.

Hi everyone, welcome to another episode of Bits and Bips the Interview. I'm your host Steve Erlic, and I'm here today with Aenni Gyo, CEO and founder of the crypto market maker Winter. Welcome.

Thanks for having me.

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Before we do, just a quick disclaimer. As always, nothing you hear on the show today is investment advice or financial advice. For more disclaimers, please see unchained.com/bitsandbbits for more information. And with that, let's dive right in.

I want to make sure that everyone listening today understands your business and what you do because it's critical, but it's also a little bit in the shadows. So, can you just briefly explain market making and in particular how it relates to crypto?

Sounds good. It's a question I get a lot generally because as a prop train firm in crypto, we really do a lot compared to a lot of our competitors. Now we roughly have three core businesses.

So the first one is basically prop train on and market making on centralized exchanges like Coinbase, Binance, Kraken, Bit, basically all the big ones, all the second tier, some third tier ones, and that's basically our bread and butter. They run hundreds of algos doing millions of trades daily, basically providing bits and offers algorithmically.

So basically, if you trade on those exchanges, any of hundreds of tokens that we cover, you are quite likely trading with us.

The second bit, and that's something we've been doing since 2020, is basically providing liquidity on DeFi. So we basically provide liquidity on all the key RFQ protocols on DeFi like 1inch or Jupiter for example, and Solana.

We run propm strategies for those who know what it is, but basically it's another way to provide liquidity. We arbitrage liquidity pools. We do liquidations. Basically do pretty much everything that can be done on DeFi side of things in terms of making or taking liquidity.

And finally, we have a pretty big OTC business where we trade again, hundreds of assets across derivative sport, and basically beyond. Those three core parts of the business is what really differentiates us from competition and that's what really makes the business very successful because we are basically the only prop trader firm in crypto that actually does everything and it's pretty much our motto to be connected to every liquidity pool and matters.

And one question that comes up a lot that I'd like to just kind of ask right away, how do you sort of segment the prop trading, the trading you do on your own book versus the market making? Just ensure there's no conflicts of interest or no shadiness going on.

I think it's less about separating market making from other strategies. But honestly, in the modern world, even if you look at TradFi, nobody does pure market making anymore. In order to run successful market making strategies, you need to run a bunch of strategies all on side it, need to run a bunch of signals that basically enhance those market strategies.

So basically let you be out of the market when it's too volatile for example, or jump right back in if you are more sure about the prices that happens. So it's less about segregating different strategies but more about having a more comprehensive black box if you may.

Okay. Gotcha. And I want to get into some of these functions in more detail, but I think we'll be able to do that through our discussion today and questions.

So I guess first I want to discuss some of the key findings from your recent 2025 OTC report where you sort of give a layout of everything that happened last year in crypto and in particular one key focus or one key point was the fact that alts did not have a good year and most trading activity most liquidity concentrated in the mega cap tokens primarily Bitcoin and ETH. Could you please expand on that?

I think a big challenge currently is basically last year and year before that there was a pretty big surge in Bitcoin trading especially on Solana but also beyond that and there were a bunch of factors that led to that.

First and foremost, I think there was a growing dissatisfaction on the retail side of things that they getting into tokens at the much later stage. So basically venture capital firms get into those tokens with early and when tokens are released for traders basically too late for retail to make money and that basically kind of proliferated platforms like pumpf fun where people had a at least maybe potential, well most what I'm really illusion of getting into things early and basically being able to make this 10x 100x on basically trading something very early before anyone else.

But in reality, what happened is instead of focusing on a bunch of back tokens, people started trying to guess which of those millions of meme coins will work out on any given day and it just became very much unsustainable. The capital became very diluted because it's just the same amount of retail money competing for millions and millions of those meme coins and it basically inevitably resulted in market crash of 1010 and beyond where basically both retail for both retail and bunch of liquid funds as well just lost a lot of money because the system was too leveraged but the liquidity was too seen and the system just couldn't handle.

Post 1010 basically people just, yes, there was a very clear flight to quality at least on crypto side of things where people just decided to park their money either in stable coin or bitcoin or serial or maybe Solana.

Okay, yeah that is I want to get into the retail psychology a little bit more because that is particularly interesting but let's first focus just on the mega caps again because again there was the fight to quality but then there was also a big surge in DATs and ETFs especially in the beginning part of the year had some additional inflows. Can you maybe explain a little more what you you saw there and and in particular what you saw through the end of the year in particular sort of I guess how sustainable or what what you expect to happen price-wise as we move into this year given the fact that I would say after liberation day or so crypto but bitcoin every asset including the big ones struggled.

I think that digital asset treasuries definitely also contributed to this the whole space being too diluted like there just again there are too many things to basically invest into. So you have bunch of ETFs, you have bunch of dots, you have bunch of tokens and perpetuals and everything else listed.

So those dots I think people didn't expect them to basically fail and crash and burn so quickly but again post 1010 that's basically what inevitably happened and a lot of them are trading basically way below net asset value which is only natural and I think it will take quite some time for the market to get back to people being excited about those dots especially for dots that focused on not Bitcoin not Ethereum but in some very very long tail part of part of the curve.

Okay. So I'm going to how does that change your business then? I'm I'm curious like when when investor interest thins out it gets concentrated in these large tokens that are already pretty liquid. How does that change what you guys do?

Honestly, not much. Our operating principle we are trading where we are busy trading where volume is. So if volume is primarily concentrate on bitcoin will trade bitcoin more but there had been other developments in crypto as well like there had been search and tokenized gold gold perpetuals as well on bunch bunch of platforms as well.

So they're actually shifting focus towards trading commodities. They're shifting to focus to towards for example equity perpetuals as well. So that that looks quite promising. So it's basically our operating model is just focus where the market interest is at at current moment. So we are not struggling in that regard.

I do am going to talk about all that or ask you about all of that a little bit later but okay so we we kind of handled spot but we also saw a big explosion in derivatives in particular options and it's a good thing in many ways because it creates more mature markets it makes things safer for institutions to to come in because they could hedge but it also dampens volatility and that works way beyond Bitcoin as well.

We've seen a lot of this covered call like yield strategies like across the whole curve all all the way to longtail assets even on the interest side. So I think we will most likely see the continuation of this this year. So I think we will see a lot more interest and people continuing expressing interest in train options and enhancing the yield parameters or what or what's not by using those more complex complex instruments.

But when it I think when it comes to retail, retail will probably still stick to use perpetuals unlike in traditional finance where people are quite frequently using options to get leverage. I think it's still perpetual will be the product of choice for retail and in crypto.

Okay. And and you operate worldwide including in the US correct?

Yeah, we have basically we have three core offices with London, Singapore and New York. I'm I'm curious how you see engagement in derivatives and options in particular, how that differs geographically like in Asia versus perhaps the the US levels of maturity and and in particular how those instruments are used.

I think in Asia it's primarily focused on your generation while in the west it's a lot more complex basically. So I think it's basically the sophistication sophistication is a lot more on the western side of things.

All right. So and I'm curious how do you decide which tokens to to participate in? I mean I mean I assume you sometimes you work with the exchanges, sometimes you work with token issuers themselves. Like what is your thought process when you're evaluating a potential client?

It's primarily volume. I mean there are there are like a bunch of there is quite some due diligence process going through this. We are really trying hard not to work with somebody scammy like to put it very very directly. But ultimately it's all about I wish everyone in crypto would pursue the same principle but that's definitely what how we operate but generally it's all about volume like we do try to work with tokens that we expect to have significant interest just basically either on D5 and CFI OTC like if a token is not expected to trade much we probably are not going to engage.

And and where do you think retail attention is going to go Next, if alts like like traditional alts are struggling, meme coins have flamed out, NFTTS are, they're struggling as well, for lack of a better term. Where do you think this altcoin attention is going to go? Is it AI? Is it like like exotic derivatives based on tech stocks that are tokenized? Like what what do you think?

I think that we already seeing well, first of all, commodities. Well, gold and silver and specifically equity per basically like Nvidia, Tesla of this world. I'm pretty sure there is there's going to be a lot more interest on those primarily because it can just get leveraged that way.

And prediction markets. So that's going to be a even bigger theme for this year because we see culture and poly market competition will just continue. I do think we'll see a lot of other sort of like smaller competitors popping up more and more. So I do expect a lot of interesting things happening in prediction markets as well.

Do do you work with prediction markets?

We're better looking at it. It's not necessarily the like it's like on the how do you call it on a on a volume side. It's not necessarily like the most interesting market. But we do see certain events. Obviously sports betting is very interesting from that perspective. But yeah, like we we we are looking to insert ourselves just like in crypto. Where volume.

I'm curious your sense of like how honest production markets are because I'm sure you've I mean you've studied this extensively it sounds like and I'm sure you've read stories about and you've seen it. I mean concerns about insider information and in the US like sometimes trading on that on poly market is not even insider trading because of basically how certain laws are defined or the fact that markets that are somewhat thin they can be moved by by big traders that are are not trading on their honest expectation of events but because they feel that there's a way to manipulate the outcome in a way that will be materally beneficial to them.

I I'm interested your thoughts on like how like like what are some of the red flags that you see or or like how what are the safest ways to engage with prediction markets for people watching and listening who I'm sure already are.

I think it's a major problem for market makers primarily because as a retail participant okay like if there is inside trading or any kind of like manipulation in certain market okay it's more or less 50/50 for you like it can be like it can go either way you might actually be on the same side as insider and then you're lucky but as a market maker it's basically very challenging because if you want to actually provide liquidity like in a big size.

It obviously works really well for the insider because then suddenly he can trade even more and make even more money because he has access to information that we are not that we don't and so it's definitely a consideration. So we are we definitely would be a lot more careful providing liquidity on markets where we do things there is high chance to have inside information surfacing one way or another and I think it's also a difference between culture and poly market to a degree because because culture is K by seed and poly market is not there is definitely more challen it's definitely more challenging to provide liquidity on poly market because of that because it's even harder to basically catch somebody if somebody has inside information.

That's really interesting. I didn't think of it that way that essentially you could be the sucker at the table in a way if you're providing deep liquid markets that are that that that are fundamentally unfair where whereas the someone like like me you could accidentally be on the right side of the person manipulating it would would benefit. That's that's pretty interesting.

And in a way we also sort of incentivize like we incent like if we provide a lot of liquidity we even incentivize even more for people to actually use inside information because if it's really same book and you cannot really make a lot of money by using inside information you're probably not going to do it but if there is a lot of liquidity you actually okay I can make like 10x more 100x more compared to what I could have made before it just it creates this really weird incentive loop.

Yeah it is. Yes. You have to be very careful.

So, so I I guess just to be clear, have you have you engaged in prediction markets yet or or you're still trying to find the right strategy?

I would say safe to say the experiment. I think that's that's that's the best I can indicate at this moment.

Okay. Um and I want to talk a little bit also maybe go a little more detail into tokenized equities like per related to traditional securities. We'll get to commodities a little bit too, but how are you thinking about that from your from your business? Like how is that similar to the business lines who already operate? How are there any important differences? And and in particular to I know there's been some controversy. I don't know if controversy is the right word, but it's difficult to stand up liquid markets for for even like ostensibly liquid assets if they're new like on on Robin Hood's arbitum offering for instance like like how do you help bootstrap that so that when people trade these these new versions of assets you they're making sure that they're getting the best possible price they're get they're not enduring too much slip edge.

I think like the biggest challenge with basically with anything like equity related onchain or like with equity per is basically train when it's when the like the key market is not open. So basically train during the weekends for example and that's ultimately like the biggest challenge like from last basically last year like a lot of news typically are now happening over the weekend like Trump loves announcing stuff on Saturday and those things tend to move the markets and like you could sort of like build a model which will make things like move in a fairly correlated way. That's not necessarily like the biggest challenge, but a really big challenge if he does something that changes a specific sector or like one company like I he announces something like I don't know Ben's chips export to China or something like basically something that can affect video only like that's then it becomes really challenging to make markets in Nvidia on Saturday for a market maker like if it's because everybody rushes in because traditional markets are closed so it puts a lot of strain on on you artist.

Well, it's basically you can get arped by people who are basically doing homework better than you. So like if you are just quoting Nvidia by trade on Friday evening and you just like ignore all the news and somebody is actually watching the news really carefully or even like automates the arbitrage strate just based on Twitter news or something like this. Yeah, you basically yeah, you again like you have a symmetry of information and you can get exploited. So it's yeah like I wouldn't expect there to be a lot of liquidity during the weekend in those in those tickers like for quite some time.

Okay. And and so what's the disclaimer that nothing on this show is financial advice? Um, like what is your what is your sense like do you have any tips for people listening watching here that are perhaps trying to be opportunistic during times like that when when there is news to to make sure that they're doing it safely or or that they're not getting too far ahead of their skis?

Good question. I would be very careful positioning myself over the weekend, not basically ultimately not to be too leveraged. And also be really careful with equity per platforms because those tokens or those like equity perpetuals like it's relatively easy to manipulate them during the weekends and so you basically can get liquidated if somebody pushes the price too much down or too much up.

So that's I guess like the main thing you need to be careful if you especially if you deal with equity perks because liquidation risk is very real and very not theoretical.

Okay. All right. So let's switch gears for for a minute. One of the reasons I like bringing on people like you is that you really kind of sit at the the nexus or intersection of what all the smart money is doing in the space. So, it's a really great opportunity for me to ask you what is happening and and perhaps get some inside information in a I guess between us and just a few thousand friends.

But it's hard to have any conversation on crypto and not discuss gold, silver, even now copper. I mean, you read the broad sheets and it seems like some of these assets are completely detached from reality and because this is a crypto show, it it's it's deflating for people watching or listening to not see Bitcoin joining in the fund. So, what are you seeing and and in particular, I know you you mentioned how you're getting involved in tokenized gold and that's a real growth area in crypto. So, maybe you could talk about both sides of the trade.

I mean it's really challenging to be in crypto and see this massive equity rally, massive gold rally. I don't know, we do have an adventure arm, and I don't know three four years ago every venture deck would be like I don't know this is the market cap of crypto this is market cap of gold this is the market cap of equity and now it's like this is market cap of crypto this is market cap of gold this is market cap of equities so it's like crypto didn't change at all and everything is going up and it's kind of sad.

But it's also I guess in hindsight it's more clear like why this is the case like crypto like first reason crypto has been very range bound well not crypto but like bitcoin specifically has been very rangebound like last months or so. So it just doesn't look like a volatile asset anymore which is very bizarre but it is basically the the perception that a lot of people have.

Gold on the other hand it just keeps going up. So it's basically somehow has a lot more cryptolike characteristics characteristics if you may and that's being driven by strong demand from retail it's being driven by strong demand from self-s sovereign sovereign governments as well that are basically selling treasuries and buying gold.

So it's and you want to as a market participants you want to participate in a fun asset not not in something that is being rangebound. So it's kind of sad but I also kind of understand like why it's happening.

I have a few more questions about gold but before we do we have to take a very quick break so we can hear from some of the sponsors who make the show possible. If you're looking for help with crypto taxes, CryptoTax Grill is offering $100 off for Unchained listeners. They provide personalized cryptotax reports and returns and spots before April 15th are limited. Go to cryptotaxgirl.com/chained to save $100. Once again, the link is cryptotaxgirl.com/unchained.

So, we're back. We're talking about gold and I do have one question. We're seeing a big surge in tokenized gold, but one of the oldest investing adages is that people should be fearful fearless when others are fearful and vice versa. What do you make of I'm just curious market timing. So many people rushing into gold now and I know it's not enough to size to have a meaningful impact on the size of the gold market cap, but everyone rushing into gold now to get exposure. Do you think that they're going to end up being the the suckers? Is this now still a good time to buy or are you seeing any traders in particular on your platform doing anything unconventional that perhaps is sort of like counter to that prevailing narrative that it's worth pointing out?

I don't necessarily feel like I'm equipped to give advice on that particular thing because it's a pretty it's a pretty weird move. like we haven't seen move like this in gold like well ever pretty much and I I would typically say okay you can I was just going to say maybe I can then because I I can possibly game wildly and with little fear of consequent no I'm just kidding but it is interesting I mean you see gold going up 5400 $5600 an ounce and that just seems to be completely detached from any sort of fundamentals and I understand the whole all the narratives out there the the the basement trade lack of confidence in in the US. The fact that interest rates are are still sort of interest rates are still somewhat elevated. So so bonds aren't necessarily going to rally quite yet. That is a perfect storm of things to really kind of help gold soar at this point. Even the when central banks actually pulled back on their buying a little bit last year because they only get too overweight. So, it is it's one of those I do wonder what's going through the mind of people buying tokenized gold at this point because you're buying in at the very very very top of the market and there's plenty of people that have said that months ago and it it's still going up. So may maybe maybe it's not the top of the market but it seems very choppy. So but at the end of the day maybe that's necessary to kind of get tokenized gold into the marketplace now so that the next time this happens there's already this existing supply. It it's just something that I've been sort of thinking about. So I I I didn't want to put you on the spot again. So that that's those are sort of my thoughts. I'm curious if you had any reaction to that or if not again I'd love to know kind of what you're seeing on your platform like how some of the protraders like are do you see people buying tokenized gold or are they rolling back into Bitcoin or other assets or maybe we're going to get tokenized silver one day I I don't know.

We do see activity both sides very interestingly we are seeing a lot more activity on the option side with people basically looking for, for example, to sell covered calls on gold. So, yeah, basically looking to get some extra yield. Which is a pretty decent strategy if you have a target in mind. If you're saying, okay, like if gold goes up another, I don't know, $500, I will definitely sell. So, why not just sell some covered calls there anyway? So, like worst case scenario, I'll just get some yield on top.

It kind of depends like back to your original question, it also kind of depends like where you are. Like if you have a portfolio in mind and you're just saying okay gold should be I don't know 1% of this portfolio 2% of this portfolio you can just like keep it and see what happens like if you're like me and like I don't know for me gold like I became sort of like reluctant holder of gold like couple of years ago because I thought okay like I just need to diversify now I'm like quite happy with it obviously but I did start selling today for example because it does feel like a bit overheated but I'll see.

Like I'm definitely not sell on everything because I do think it's a pretty important part of one's portfolio. Basically, it's a pretty good like under diversification engine.

Yeah. Yeah. Locking some of those profits.

Now, what did you buy with the gold or did you just sell it for dollars if I may ask?

I bought some defense stocks.

Okay, fair enough. Um Okay. And which also which are also going up.

Yeah. Well, it's earning season.

So, um, what what's your reaction to to what happened in the Fed with the Fed yesterday holding rates steady for the first time since last summer? I it seems from, I guess, Chairman Pal's press conference after the announcement that they're very much in wait and see mode because they get the sense that the current rates are are not sort of um propelling the economy forward, but they're not too restrictive. inflation is is somewhat steady even if it is elevated and the job market notwithstanding recent announce announcements from the likes of I think it was Amazon this morning seems to be healthier as well like like what what is your sense and and and do you do anything or are you seeing any interesting ways that clients or or traders that you participate market places that you participate in how they're sort of aligning around the Fed?

I mean first So like now we have a lot more instruments on prediction markets to basically either bet on those outcomes or like hedge those outcomes. That's pretty interesting development now. Like obviously in Treadfire like more sophisticated traders always had this possibility but now pretty much everyone on the street has access to this which is which I think is a pretty positive development.

In terms of like why Fed does what it does, like the explanation makes sense. Look, I mean, all the assets are still going up. It doesn't sound like it's a Doesn't sound like there is a massive urgency to cut the rate at the moment. So, if anything, it's feels a bit overheated.

Okay. All right. Well, we're getting close to the end. I have a few more questions and then we'll wrap up. Do you do anything in tokenized credit or is that a marketplace that you're looking at?

Not really. Basically what we are looking at basically at inter RWA space as a whole into basically more like on tokenized money markets like that's that part is quite interesting for us to apply ourselves both as a liquidity provider like during normal times but also as a liquidity provider last resort during the weekends when like the liquidity is pretty thin in those tokenized credit like is something that we have sort of like indirect exposure push it towards like some D5 protocols for example like we incubated one of them called wildcat so they they actually do tokenized credit for market makers including ourselves but generally I haven't seen that much experimentation from sort of like web two space trickling down into crypto yet on that side but yes it's definitely I think it I wouldn't be surprised if we see more more of that.

All right so so what are some of your big expectations for for this year like what what are a couple of the core themes I know we've already touched on a few, but but but what are you expecting this year? And and in particular, u do you have any sort of counterfactual or contradictory thoughts that are sort of against the prevailing narratives that you'd like to share?

Well, I guess like the the one one of the key things that people looking at is obviously like the market structure bill whether it will pass. like it doesn't look very promising unfortunately. So yeah, our expectation is it's actually more likely it won't pass unfortunately this year. And if it doesn't pass this year, it's quite unlikely it will actually pass until the end of this administration in particular because of midterms.

And yeah, midterms is something that everyone is basically sort of looking forward to in terms of well basically getting the volatility back and basically seeing like yeah how they can participate in the outcome of that whether it's prediction markets or crypto prices. I think like my less conventional like opinion would be I don't think that the crypto bare market will last too long actually like fairly optimally like cautiously optimistic like despite the market structure bill not passing like I'm still cautiously optimistic that it will start recapturing the mind mind share closer to the midyear but honestly we'll see like there are just so many components in play like from AI to geopolitics to fat to pretty much everything else.

A couple of followups. So what do you think would be the main catalyst for sort of ending the bare market?

I think it's all about it's honestly it's honestly all about mind share. So basically like once like once mind share is gone from commodities and AI for whatever reason like people basically always want something new in China that might potentially go up and crypto is traditionally like it cannot be like not interesting for too long like at some point people will switch back and think okay like this thing if bitcoin is rangebound for another six months at some point people will be like okay that's actually enough is enough And yeah, at some point it should go up. I might as well buy now.

Okay. And and I'm curious to what do you think would be the impact on on crypto and your business if market structure doesn't pass?

I would say for the next like two three years not necessarily a lot. because generally like one positive thing with this administration is that we have very very I would say friendly regulators in in basically on SEC and CFTC side. So from that perspective it's not like scary to be encrypted at the moment. It's more like if this admin changes like if Democrats are in power like after the next presidential elections not having this framework to back you up can be potentially devastating because yeah new SEC and new CFTC yeah can just do whatever they want because they won't even be constrained by any legislation like if you get if you can get this legislation done it can actually be a pretty big constraining factor for like unfriendly regulators and if you don't have it then unfriendly regulators can be potentially pretty bad.

I wanted to ask I think one more quick one. I I'm curious if you've given any thought to X42 that the new protocol built by by Coinbase to sort of help Agents talk to each other and engage in commerce and how they may that may impact your business moving forward.

I don't think there's going to be like a massive impact on our business necessarily. I think it's more of a like on the stable coin side is definitely like a pretty interesting development because it just like further propagates like importance of stable coins in the digital economy. It's interesting like I think it's like I I do think we'll see a lot more experimentation on the Agent side and I think it's one of the more interesting sort of like AI crypto interactions in general.

Great. Anything else you'd like to to share before we wrap up?

No, not really. Just I guess looking forward to how the year develops because yeah, like it's last year was quite fun in terms of all kinds of events that we've seen especially outside of crypto. And so yeah, it's yeah, do expect to see similarly fun year this year. Which is great for market makers and it's great for traders who are not afraid to take positions. But it might be quite stressful for people who just like like to buy and hold.

Yeah. No, absolutely. Volatility is your bread and butter, I guess, right?

Yep.

Okay. All right. Well, again, thanks for for joining. We'll have to have you back on. Thank you to everybody for for watching and listening. And tune back in next week for another episode of Bits and Bips the Interview.