Rob Hadick: Crypto markets show resilience amid global recession, global tensions raise inflation risks, and confusion over monetary policy peaks

Important takeaways

• Crypto markets have shown resilience despite the downturn in global markets.
• National conflicts, such as those in Iran, have an impact on the market and can be classified as war.
• Continued disruptions in oil production increase the risk of stagflation.
• Confusion in the market about future monetary policy is very high.
• Rising bond yields, despite expectations of lower rates, reflect market confusion.
• The US approach to regime change in Iran is expected to be complex and ugly.
• Investors are encouraged to take a long-term view, focusing on macroeconomic trends.
• Bitcoin’s strength suggests a shift to long-term holdings among investors.
• The long-term view of crypto remains positive despite short-term risks.
• A correction of about 10-15% in the S&P can affect the stability of Bitcoin.
• The broader crypto ecosystem long-term outlook is as strong as ever.
• The current military situation suggests that the conflict may be extended.
• Hyperliquid markets are seeing an increase in trading volume, especially in commodities.
• Structural problems in the trading markets limit risk taking on weekends.
• The new language of the clarification act regarding yields has raised serious concerns in the crypto industry.

Guest introduction

Rob Hadick is a General Partner at Dragonfly, a crypto-focused investment firm with approximately $4 billion in assets under management. 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 downturn

• “Crypto has held up incredibly well despite global markets falling.” – Rob Hadick
• “In fact we’ve seen I think crypto has held up surprisingly well and despite the fact that you know the global markets are down overnight.” – Rob Hadick
• The strength of the crypto markets suggests the volatility of investors’ sentiments in long-term holdings.
• “It doesn’t seem like the crypto markets are as fragile as the equity markets right now.” – Rob Hadick
• The long-term view of crypto remains positive despite short-term risks from the equity market.
• “I expect that … the long-term setup of crypto is still very positive and it is likely to have a market structure and how many … types of institutions take it.” – Rob Hadick
• Bitcoin’s resilience during market downturns suggests a shift to long-term holdings among investors.
• “Actually I think it’s true that crypto and bitcoin held up well over the weekend… it looks like… there aren’t many sellers left… – Rob Hadick

Political tensions and economic implications

• The situation in Iran can be classified as a war based on the recent escalation.
• “I think we can start calling it a war on Iran you know over the weekend we saw it.” – Rob Hadick
• The potential for sustainable economic risks is increasing due to possible long-term disruptions in oil production.
• “I think that even President Trump said yesterday that he expects this to continue for at least four weeks, and if he says at least four weeks, the time frame may actually be longer than that, which means that there are more chances of continued economic risk.” – Rob Hadick
• The US approach to regime change in Iran is likely to be complicated and ugly.
• “I don’t see that happening in four weeks, especially if the US wants to rely on air power only as a means of eliminating casualties, which I also find is very difficult to accomplish your mission in a country with 93,000,000 people.” – Rob Hadick
• The current military situation suggests that the conflict may be extended.
• “It seems like pricing this as June and it might be wrong … this could be kind of the longest argument you know.” – Rob Hadick

Market volatility and monetary policy

• There is a lot of confusion in the market about future monetary policy and political pressures.
• “It’s clear to me that right now there’s more confusion in the market than ever before and you actually have different people trading these different markets coming to different conclusions in a way we’ve never seen before.” – Rob Hadick
• Bond yields are rising despite expectations of lower rates, reflecting market confusion.
• “Yields are actually going up right now which is kind of what you wouldn’t expect as bonds are obviously moving in the opposite direction to bond prices and you would think that bonds would go up along with the dollar but they’re going in the opposite direction.” – Rob Hadick
• The risk of stagflation increases due to continued disruptions in oil production.
• “I think the risk of inflation is very high so from a macroeconomic point of view I think we are in a very critical period.” – Rob Hadick
• Investors should have a long-term view of the market, focusing on macroeconomic trends.
• “We said it’s a little different than you probably know some of your listeners and the fact that as we take very long views on the market and invest with the idea that we won’t be in positions because you know that at least you know that you’re worth a year.” – Rob Hadick

Structural problems in trading markets

• Structural problems in the trading markets limit risk taking on weekends due to the challenges of hedging market makers.
• “These markets still have structural issues in terms of allowing people to take risks over the weekend because how are the market makers going to cover that risk.” – Rob Hadick
• Hyperliquid markets have seen a significant increase in trading volume, especially in commodities.
• “We’ve seen a huge increase in volume on the commodity side and you know some prices and like on the same side and the volume of the stock has never been as high as it has been on the commodity side.” – Rob Hadick
• Traders try to protect against down-term downside while maintaining a long-term bullish view.
• “It seems very clear that people are trying to protect you, you know dear, whether in the near term or the long term, you know it all makes sense to me.” – Rob Hadick
• The market is likely to be at risk of correctly pricing in the country’s tensions.
• “I think the market is probably right on pricing and credibility risk… the stock market is down just a little bit by one point… Bitcoin is actually up 2% over the weekend.” – Rob Hadick

Regulatory challenges and clear action

• The new express action language regarding yields has caused a lot of concern in the crypto industry.
• “That productive language was kind of this new thing that got some people and especially Coinbase kind of strong arms you know and you know Brian Armstrong tweeted about he knows he’s tagging and you don’t know he’s very happy to be able to support.” – Rob Hadick
• The banking lobby is very influential in the debate about the benefits of deregulation.
• “Because the banking team is interested in it, they’re driving a lot of the discussion around profitability.” – Rob Hadick
• The banking lobby resists allowing income from stablecoins to be passed on to consumers.
• “The bank lobby said it’s fine as a listen we don’t really care if it’s clear what’s going on… no income from stablecoins should be allowed to flow to the consumer.” – Rob Hadick
• Political pressure from management can lead to compromise between banks and the stablecoin industry.
• “If there can be enough political pressure from the administration … for the banks to get somewhere in the middle here, I think the industry is there.” – Rob Hadick

Venture capital trends in crypto

• Business capital should be used during bear markets when prices are low.
• “The way VC should work and it’s strange that it doesn’t work this way is that you should take out a lot of money when the markets are bad and you shouldn’t take out a lot of money when the markets are good because the prices are high.” – Rob Hadick
• Venture capital funding tends to increase during bullish markets due to increased excitement and more entrepreneurs entering the space.
• “What is happening is the opposite because you know that there are many businessmen entering the area and you know when prices go up there is excitement.” – Rob Hadick
• The venture capital space is not large enough to justify investing billions while guaranteeing returns.
• “The reason why we don’t allow ourselves to be bigger than our vision is that this space is not yet so big that you don’t know that you have invested, you know you are calling it one and a half billion two billion dollars and you know that it is to protect the profit.” – Rob Hadick
• Firms that raise capital may not get the best returns because of the glut of investment opportunities.
• “You look at their investment returns and I can tell you for sure that in all the specific areas they are in they are not the best return fund.” – Rob Hadick

Long-term prospects in the crypto market

• Rob is optimistic about the market’s long-term future despite the short-term uncertainty.
• “I’m very happy with where we’re going in the long term but in the short term you know there’s a lot of things we don’t know very well so I continue to be you know he’s very optimistic and he’s very optimistic in 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 pay attention to what you know and me because I want you to really know the point is that the long-term outlook for the broader crypto ecosystem right now is as good as it’s ever been.” – Rob Hadick
• Now is the best time to invest in the first development in blockchain technology.
• “It’s in my mind one of the best times to build in our area especially for any type of financial product.” – Rob Hadick
• There are significant structural tailwinds supporting the blockchain space.
• “There’s a lot of structural fundamentals behind our space right now if it’s going to grow as stable as adoption when it comes to tokens.” – Rob Hadick