Roshun Patel on What Really Happened During the Crypto Market Crash

Joe Weisenthal (0:10)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:16)

And I'm Tracy Alloway.

Joe Weisenthal (0:18)

Tracy, do you remember the recent episode that we did with Aaron Lammer about DeFi trading in the crypto space?

Tracy Alloway (0:26)

How could I forget, Joe? We are all DeFi all the time, it feels like.

Joe Weisenthal (0:31)

Well, I made a joke at the beginning of that episode. I was like, oh, by the time we're covering something that's probably the top and we're, you know, there's probably gonna be a crash right afterwards. And then like, I think literally two days or a day after that episode came out, we actually did get one of the biggest true crashes in the crypto space in a long time.

Tracy Alloway (0:53)

I mean, it's that classic magazine cover indicator, isn't it? Like by the time the mainstream media is talking about something, it's probably reaching its zenith in terms of popularity. That kind of makes sense. I gotta say, I was really disappointed.

I missed the crypto crash, so I took a few days off that week, and I was out in the country, and I wasn't really paying attention to either the news or social media trying to take a break. And then I started getting all these messages from people going, look at crypto, look at Bitcoin, it's at $30,000. So it seems like it was a very dramatic week, but I'm still trying to wrap my head around exactly what happened.

Joe Weisenthal (1:37)

Yeah, it was a really dramatic week. There was already a bunch of negative stuff. There was the Elon stuff and other things going on that we already talked about. And then that Sunday, our episode with Aaron Lammer came out on Thursday. That Sunday, which was just, I guess, three days ago. So we're recording this Wednesday, May 26th. So let me, I guess that was Sunday the 23rd. We got this really intense crash and Bitcoin touched like 30,000 and Ether fell below 1600 and so forth. Really big crash. And I think there were a bunch of people that were like ready to say, oh, this cycle is over. See you all in four years when we do the next one. But it's actually like, I mean, it hasn't come back all the way by any stretch, but pretty resilient actually, the last few days post that crash.

Tracy Alloway (2:27)

I do think it highlights something pretty important for the crypto market though, which is this idea that I think there's a tendency to look at it and think that it's just a bunch of people who are buying crypto on their computers, with their own wallets, when in fact the market has changed enormously and there's a whole ecosystem built around it. You have the big exchanges, you have people providing financial services that are tied to Bitcoin. You have derivatives contracts in the form of a futures market, which seems to be playing a huge role.

And I don't think people have appreciated enough the change that has overcome crypto and how it actually impacts the underlying price.

Joe Weisenthal (3:12)

Absolutely. So I think there's the sort of crypto conversation, and then there's the crypto market structure conversation, and we're both super interested in that. So today we're gonna talk a little bit more about market structure.

I'm very excited about our guest. We're gonna be speaking to Roshun Patel. He is the VP of Institutional Lending at Genesis, which can be described as basically a crypto prime brokerage. And so I think if we wanna think about the role institutions are playing in the volatility, the role of hedge funds, how they're trading this, what caused the liquidations, where the money is coming in to buy the dip is a great perspective on all this. So Roshun, thank you so much for joining us.

Roshun Patel (3:53)

Hey Joe and Tracy, thank you guys so much for having me. It's great to be here.

Joe Weisenthal (3:58)

So why don't you actually just start off, before we even get to the crash or get to anything like that, why don't you sort of talk to us about where Genesis sits within the crypto ecosystem and sort of what your role is there and how you got to occupy that seat, so to speak.

Roshun Patel (4:16)

You know, Genesis, broadly speaking, is kind of basically a sell side desk in the crypto ecosystem, similar to kind of a bank prime brokerage desk. We facilitate the ability for clients of ours to trade, as well as lend to us, borrow from us, get yield on their holdings. And then recently, as of last year, trade derivatives with us bilaterally over the counter. So we kind of offer the whole gamut of financial services in crypto markets. Genesis has its roots kind of, they go back to really the kind of mid 2000s to a company called Second Market, without getting too much into the details there. That company basically facilitated buying and selling illiquid company stock, really like Facebook, Twitter, LinkedIn, like those kinds of things in the mid 2000s between buyers and sellers when those companies weren't really public. Eventually that was sold to Nasdaq and one of the desks there started trading Bitcoin in like 2011, 2012 And effectively that desk became Genesis and kept the broker dealer license still based out of New York here.