Bitcoin and ETH Are Up. But This Crypto Rally Still Lacks Conviction.

**Andy Baehr** (0:00)
I don't think it's priced in right now. And so, surprise is one of the most powerful, I guess, emotions that can help fuel either up or down moves in prices. So, a passage would be a surprise, and I think it would be hard to imagine a market that doesn't experience some lift.

**Steven Ehrlich** (0:16)
All right, hi, everyone. Welcome to another episode of Bits and Bips, The Interview. My name is Steve Ehrlich. I'm the head of research at SharpLink, and as always, your host. And here today to talk about what's so far been a really great week. In fact, it's been crypto's best week in months. And my guest today spends his days looking past the price to the flows underneath it, and really understand.
We're going to try to answer one central question.
Should we buy in or is this going to be another kind of sort of relief bump? So, but before we get into it, as always, just a little bit of housekeeping. Nothing that you see or hear on this program should be considered investment or financial advice for full disclosures. Please see unchainedcrypto.com/bits and Bips.
And also, just one other quick piece of housekeeping. Heads up, Bits and Bips has its own channels now separate from Unchained. So if you're not subscribed on the new dedicated channels, you're going to stop seeing these episodes. Don't lose your regular dose of the sharpest takes in crypto. Subscribe to the Bits and Bips channels on X, YouTube, and your favorite podcast platforms right now. So every episode keeps showing up in your feed. Now, let's hear from one of our sponsors before I bring in our guest.

**SPEAKER_3** (1:37)
This episode is brought to you by CAPE, America's privacy-first mobile carrier. Same premium service you'd expect from any other carrier, but designed so your number, your location, and your data actually stay yours. Get 33% off 6 months at cape.co.
Heads up, everyone, we've now fully transitioned Bits and Bips to its new, dedicated channels. So if you're not yet subscribed to the new Bits and Bips channels on X, YouTube, Spotify, Apple Podcasts, or wherever you get your podcasts, go there and subscribe now. For the next few weeks, we'll play segments of the full interviews on Unchained as a reminder. But for now, you'll only hear those short segments of Bits and Bips on Unchained. No more full episodes. You can get links to all of the dedicated channels with the full episodes at unchainedcrypto.com/bits and bips, spelled B-I-P-S. Thanks again.

**Steven Ehrlich** (2:36)
All right, welcome back. So I am very pleased to bring in my guest today. Repeat guest, Andy Baehr. He is the Managing Director of Asset Management at GSR. So welcome, Andy.

**Andy Baehr** (2:48)
Great to see you again, Steve.

**Steven Ehrlich** (2:49)
Yeah, good to have you here. And you're the perfect guest to have this week because, as I said in my intro, in my opening, crypto has had its best week in months. People are feeling bullish. Bitcoin's been pushing up against 65,000. ETH is starting to set its sights on 2,000 again. And it all really, I think, comes down to one number, 3.5, 3.5% specifically the June CPI. And it's down from the year-on-year rate of 4.2%.
And Core has been flat month over month for the first time in five-plus years as well. So this is 3.5%. It's not any number to write home about. But at the same point, and it's far off the target of 2%, but it's gone down.
And there's been a bit of a relief rally. That said, I think the question that I want to post to you first, and I'm sure everyone has been kind of weighing themselves, is what to make of this. Because again, it seems like there's a lot of reasons why CPI went down seemed to be one-offs. I don't necessarily expect that to happen again when we get another reading next month. And although it appears that sort of the proclivity for a rate hike during the next FOMC meeting next week could be off the table, because of this, Kevin Warsh also said in congressional testimony that I think his exact phrasing was inflation was a choice, meaning that he's still committed to being hawkish if he needs to be. So what do you make of this?
Is it just as simple as a relief rally or are there bigger trends underlying that are worth pointing out here?

**Andy Baehr** (4:33)
Yeah, that's a great question. There's a lot to unpack there. I think it feels especially given all of the ambivalence, and that's the word that we've been using to tag the market conditions through most of the second quarter, even at the end of the first quarter. Ambivalence not meaning the market doesn't care what it's doing, but that it will have these pulses of what appear to be well-fueled rallies. You even start to see a little bit of energy returning into the perpetuals market, and then suddenly that rally dissipates very quickly, and then there's a liquidation, and we're back to where we started. That happened with Bitcoin in the high 70s, getting through into the low 80s around the time of consensus and the springtime. Then we had that shunt down to the low 60s, down to the production level of Bitcoin, which actually did bring some energy back to the market.