Rob Hadick: Crypto markets show resilience amid global downturns, geopolitical tensions raise stagflation risks, and confusion over monetary policy reaches new heights | Unchained

Key takeaways

• Crypto markets have shown resilience despite downturns in global equity markets.
• Geopolitical tensions, such as those in Iran, are impacting market sentiment and could be classified as war.
• Sustained disruptions in oil production are increasing the risk of stagflation.
• Confusion in the market regarding future monetary policy is at an all-time high.
• Rising bond yields, despite expectations of lower rates, indicate market confusion.
• The US approach to regime change in Iran is expected to be complicated and messy.
• Investors are encouraged to adopt a long-term perspective, focusing on macroeconomic trends.
• Bitcoin’s resilience suggests a shift towards long-term holding among investors.
• The long-term outlook for crypto remains positive despite short-term risks.
• A potential 10-15% correction in the S&P could impact Bitcoin’s stability.
• The broader crypto ecosystem’s long-term outlook is as strong as ever.
• The current military situation suggests that the conflict could be prolonged.
• Hyperliquid markets are seeing increased trading volume, particularly in commodities.
• Structural issues in trading markets limit risk-taking over weekends.
• The clarity act’s new language around yield has raised significant concerns within the crypto industry.

Guest intro

Rob Hadick is a General Partner at Dragonfly, a crypto-focused investment firm managing approximately $4 billion in assets. He previously led multi-stage crypto investments at GoldenTree Asset Management, a $50 billion multi-strategy hedge fund, and has invested in fintech and crypto companies across Goldman Sachs, PJT Partners, and Heritage Partners. Hadick holds an MBA from Columbia Business School and a Bachelor’s degree in Economics and Political Science from Washington University in St. Louis.

Crypto resilience amid global market downturns

• “Crypto has held up surprisingly well despite global equity markets being down.” – Rob Hadick
• “We actually saw I think crypto hold up pretty well surprisingly and despite the fact that you know global equity markets were all down overnight.” – Rob Hadick
• The resilience of crypto markets suggests a shift in investor sentiment towards long-term holding.
• “It doesn’t seem like there’s the crypto markets are as fragile as maybe the equity markets are right now.” – Rob Hadick
• The long-term outlook for crypto remains positive despite short-term risks from the equity market.
• “I do expect that… the long term setup for… crypto is still very good with potential for market structure with how many… kind of institutions are adopting.” – Rob Hadick
• Bitcoin’s resilience during market downturns suggests a shift towards long-term holding among investors.
• “I actually think it’s quite positive that crypto and bitcoin held up quite well over the weekend… it looks like… there aren’t necessarily like a lot of sellers left… most of the people are holding now are have much more like long term perspectives.” – Rob Hadick

Geopolitical tensions and economic implications

• The situation in Iran can be classified as a war based on recent escalations.
• “I think we can start calling it a war in Iran you know over the weekend we actually saw.” – Rob Hadick
• The likelihood of sustained economic risk is increasing due to potential prolonged disruptions in oil production.
• “I think even President Trump yesterday said that he expects this to go at least four weeks which if it goes if he’s saying at least four weeks there’s probably likelihood that the time frame is actually longer than that which means that there’s a much higher chance of kind of sustained economic risk.” – Rob Hadick
• The US approach to regime change in Iran is likely to be complicated and messy.
• “I don’t see that happening in four weeks especially if the US wants to rely solely on airpower as a way to sort of eliminate casualties which just I find again I find it very hard to accomplish your mission in a country of 93,000,000 people.” – Rob Hadick
• The current military situation suggests that the conflict could be prolonged.
• “It seems like pricing this like it’s June again is probably pretty wrong… this could be a you know kind of a a quite long conflict.” – Rob Hadick

Market confusion and monetary policy

• There is significant confusion in the market regarding future monetary policy and political pressures.
• “It’s very clear to me that right now that there’s just more confusion in the market than ever and you actually have different people who trade these different markets who are coming to different conclusions in a way that we haven’t seen before.” – Rob Hadick
• Bond yields are rising despite expectations of lower rates, indicating market confusion.
• “Yields are actually going up right now which is sort of what you would not expect like bonds obviously they move inversely with bond prices and you would think bonds would be going up along with the dollar but they’re going in opposite directions.” – Rob Hadick
• The risk of stagflation is increasing due to sustained disruption in oil production.
• “I think the risk of stagflation is even higher right and so from a macroeconomic perspective I think we’re in a very precarious time.” – Rob Hadick
• Investors should adopt a long-term perspective in the market, focusing on macroeconomic trends.
• “We’re a little bit different than you know probably some of your listeners and the fact that like we take very long views on the market right and we invest with the idea that like we won’t be in positions for you know you know at a minimum like you know call it a year.” – Rob Hadick

Structural issues in trading markets

• Structural issues in trading markets limit risk-taking over weekends due to market maker hedging challenges.
• “These markets still do have like some structural issues in terms of allowing people to take risk over the weekend because how are the market makers going to hedge out that risk.” – Rob Hadick
• Hyperliquid markets have seen a significant increase in trading volume, particularly in commodities.
• “We’ve seen significant significant uptake in volume on the commodity side and on the on you know some of the rates and like at like side as well the stock volume hasn’t been quite as high it’s been much more around commodities.” – Rob Hadick
• Traders are trying to protect against near-term downside while maintaining a long-term bullish outlook.
• “It seems very clear that people are trying to protect you know dear like in near term downside or long term structurally you know bullish that all makes sense to me.” – Rob Hadick
• The market is likely pricing risk correctly regarding geopolitical tensions.
• “I think market’s probably pretty correctly pricing and risk to be honest… the equity market’s only being down a little over a point… Bitcoin is actually up 2% over the weekend.” – Rob Hadick

Regulatory challenges and the clarity act

• The clarity act’s new language around yield has caused significant concern within the crypto industry.
• “That yield language was kind of this new thing that got certain people and especially Coinbase kind of really up in arms right that you know and then you know Brian Armstrong tweeted about the the you know that markup and not being you know very happy with it not being able to support it.” – Rob Hadick
• The banking lobby is significantly influencing the conversation around yield in the clarity act.
• “Because the banking lobby is so interested in it they’re the ones that are are driving a lot of this conversation around yield.” – Rob Hadick
• The banking lobby is resistant to allowing revenue from stablecoins to be passed on to consumers.
• “The banking lobby has said okay well like listen we actually don’t really care if clarity happens… no revenue whatsoever from stablecoins should be allowed to ever pass on to a consumer.” – Rob Hadick
• Political pressure from the administration could lead to a compromise between banks and the stablecoin industry.
• “If there can be enough political pressure from the administration… to get the banks to get to somewhere in a middle ground here, I think the industry is there.” – Rob Hadick

Venture capital trends in crypto

• Venture capital should ideally be deployed during bear markets when prices are lower.
• “The way VC should work and it’s it’s very odd that it doesn’t work this way is that you should deploy a bunch of capital when markets are bad and you should probably not deploy as much capital when markets are good because prices are higher.” – Rob Hadick
• Venture capital funding tends to increase during bullish markets due to heightened excitement and more entrepreneurs entering the space.
• “What happens is sort of the opposite lot because you know there’s you know more entrepreneurs enter the space you know when when prices are up there’s excitement.” – Rob Hadick
• The venture capital space is not large enough to justify investing billions while ensuring returns.
• “The reason we’re not allowing ourselves to go bigger than that is our perspective is that this space is still not so big that you can you know invest you you know call it a billion 1 and a half 2 billion dollars and you know protect returns.” – Rob Hadick
• Firms raising large amounts of capital may not achieve the best returns due to the saturation of investment opportunities.
• “You look at the returns of their funds and I can almost certainly tell you that across every vertical that they’re in they’re not the best returning fund.” – Rob Hadick

Long-term optimism in the crypto market

• Rob is optimistic about the long-term future of the market despite short-term uncertainties.
• “I am very bullish from where we’re going over time but short term you know there’s a lot of things that we don’t know right and so I continue to be you know cautiously optimistic and very optimistic over the long term.” – Rob Hadick
• The long-term outlook for the broader crypto ecosystem is probably as good as it’s ever been.
• “It’s important to note just to you know and i because i wanna really re you know make this point which is that the long term outlook for the broader crypto ecosystem right now is probably as good as it’s ever been.” – Rob Hadick
• Now is an excellent time to invest in startups building on blockchain technology.
• “It is in my mind one of the best times to be building in our space especially around any sort of financial product.” – Rob Hadick
• There are significant structural tailwinds supporting the blockchain space.
• “There are so many structural tailwinds behind our space right now when it comes stable growing like adoption when it comes to tokenization.” – Rob Hadick

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.