Assessing Bitcoin Market Conditions with Beimnet Abebe

0:00Alex Thorn:Welcome to Galaxy Brains.

0:25Alex Thorn:Welcome back to Galaxy Brains. As always, I'm your host, Alex Thorne, head of firm-wide research at Galaxy. Bitcoin, not zero. We have a great episode for you this week. My friend, Bimnet Abibi from Galaxy Trading, he and I are going to sit, we're going to review the last month. We haven't talked to Bimnet since, I think, early December. We had the Michael Saylor episode, the Michael Novogratz episode. We took a week off for the holidays. And by the way, welcome back. Hope everyone had a great and happy holiday break. We're going to talk with Bimnet about the markets, the economic data, update on his bear thesis is near term bear thesis i should say um and and it's going to be a very interesting conversation i know you'll enjoy before we get to that i need to remind you to please refer to the link to disclaimer in the podcast notes and note that none of the information in this podcast constitutes investment advice or an offer recommendation or solicitation by galaxy or any of its affiliates to buy any securities phineas my friend we are back we're back it's a new year new year is it cold it's cold it's i always complain about it being cold but it is winter It's every year, it's the same.

1:25Alex Thorn:Why do we live here? We went down to Miami to shoot with Michael Saylor for the second year in a row, which was just lovely. We should have spent more time. We were there for approximately 18 hours. Same as last time. Quit flying, shot down, and shot back. Do you have any New Year's resolutions, Phineas, that you're thinking about? I'm trying to move slower in my day-to-day and just be more present. I'm trying to get my heart rate up as frequently each week. we talked about this. It's all about heart rate. You got to get your heart rate. As I'm aging, it's about heart rate. Yeah.

1:58Beimnet Abebe:And, you know, be present, keep my heart rate up. I used to be like, oh, I'm going to go to the gym

2:05Alex Thorn:all the time. I'm going to change my diet. It's like, just get my heart rate up. Even a brisk walk would do it. A brisk walk, you know, once a day. That's a good one. I have that one as well. And I also say, you know what, I'm going to, for the audience too, more rap. Oh. Let's bring some raps back. Bring back the raps? Yeah, Like, conceptually. Bring back the rap. I like it. Let's bring back some raps. I've got some ideas for that. I've been talking with my friends at the Bitcoin Bugle. This is the satirical news magazine about Bitcoin. Yep. One of them, Rod Palmer, has got some banger beats.

2:39Alex Thorn:That was one of the reasons we stopped, is I've made hip-hop beats since, like, 2005. And we used a lot of them. In fact, every single one that we rapped on when I was doing the rap intros to the show, which was basically like the first 85 episodes in a row.

2:54Beimnet Abebe:Unbelievable.

2:55Alex Thorn:Those were on my beats as well. And I haven't really been actively making hip-hop or any real music, honestly, really since I got sort of working professionally in Bitcoin and crypto. I just don't have enough time. So it kind of just exhausted my library, and I didn't want to keep reusing the same beats. That was one of the reasons we stopped. But now that I've got the Bugle Boys maybe ready to make me some new beats, maybe we can get back into it. We can do it. Well, this is a fun one with BimNet. We really haven't talked to him in a month, so it's good to get his update. Because, I mean, even as we write this, this is what, as we record this, January 7th, S &P 500 hit an intraday all-time high today.

3:29Alex Thorn:Yet Bitcoin, you know, trudging along at 91 over my shoulder. Interesting to hear BIMNet's take. I mean, it does still feel like we're in a similar-ish, everyone's sort of waiting for treading water a little bit. Yeah, it doesn't feel like crazy bearish. Nobody's like, oh my god, Bitcoin has failed or anything like that.

3:48Beimnet Abebe:super bullish, doesn't feel super bearish, but the nuances of that are interesting.

3:52Alex Thorn:Kind of in this range. It doesn't feel like it has decided to go lower or resume its uptrend. So what do you do in a spot like that? You just kind of hold it or something? That's what I do. But, you know, well, he's got some interesting takes. So let's hop. And we did no guest this week. I should make, you know, explicitly clear. But we've got a good guest for you next week. And let's hop right into it with Bimnet Abibi. Let's go now to our friend Bimnet Abibi from Galaxy Trading BIMNet. As always, welcome to Galaxy Brands. Thank you for having me. 2026, it's a new year. We haven't talked to you in a month, I think, because we did the Sailor episode, which you weren't on.

4:30Alex Thorn:You weren't in Miami with us this time. Thanks for the invite. Yeah, and then we did Novo, and I think you were busy, and then we took a week off. And so, gosh, lots to catch up on. I want to talk to you about markets generally and what has happened over the last month. We want to check in on your current views on Bitcoin.

4:48Beimnet Abebe:Yeah.

4:48Alex Thorn:I think the last episode with you, I don't know if it was the last one you were on, but we did one with just you about a month ago that was called Navigating the Bitcoin bear market. And we enunciated some of your near and medium term bear thesis. So I want to check up on that. But before anything, maybe just give us a little bit of an overview of where the macro indicators are and whatever data we've seen in the last month or so. Is inflation up or down? What do the employment numbers look like? What can you say about the general state?

5:22Beimnet Abebe:Yeah, it's a very hard set of circumstances to analyze because there's just a lot of weird dynamics. Thanks. Generally speaking, the econ data suggests that we're doing just fine. GDP printed a four handle, although it's likely to get revised lower. The employment picture seems fine. Just looking at the outright level of initial jobless claims, you had job openings actually tick up today and the employment portion of the ISM services index also went up. Now the question is, you know, how much of that is stemming from like employment supply that has gone down as a function of immigration versus like increased demand for workers.

6:13Beimnet Abebe:So it's like a bit tricky to analyze. And then on the price stuff, you know, prices are elevated depending on like what you're looking at. So take ISM manufacturing that came out yesterday. It printed in contractionary territory, but prices paid were super elevated. Same thing with prices paid for, you know, ISM services. And then you have this very large start of year effect to inflation figures that's been present since COVID, basically, where you get a lot of prices that increase at the start of the year that show up in the data even when it's seasonally adjusted. So like, you know, healthcare premiums going up day one, like, you know.

6:57Alex Thorn:Everybody raises prices every year, basically. Correct, correct.

7:01Beimnet Abebe:And so there's like a seasonal effect to that. But there's also some other dynamics that are, you know, a little bit concerning. You know, one, you know, there's a lot of people that are going to have to start paying a lot more money for insurance as a function of, you know, the legislative kind of situation with Obamacare. And I think 23 million people are being moved off of Obamacare that now need to enroll in private insurance or not have insurance. So that's a big deal. There's also wage garnishment that is starting for folks that are behind on student loan payments. And so like there's a weird set of conditions to start the year.

7:47Beimnet Abebe:And then like there's really like a big dispersion within like certain industries. Like obviously the AI data center build out stuff is going really well. But if you look at like, you know, homebuilders, right, homebuilders, like the average price that they're selling at is coming down. You know, Trump just announced today that he's going to try to make corporations not be able to buy residential properties. and you have pockets of formerly hot real estate markets like Austin, Texas and Miami that have some troubling signals where I think I was looking at something in Austin where 80 % of homes that have been on the market have had price reductions.

8:36Beimnet Abebe:That's a really high one. That's a regional thing with Austin. That's a regional thing, yeah. But there are lots of pockets and you have this dynamic where the people that are in low mortgages want to sell their homes, or the ones that do want to sell their homes at least, they're expecting far higher prices than what people that are going to have to buy the house paying a 6%, 7 % mortgage are willing to pay for. So you have like the market still kind of like a little stalled out. So but, you know, I think the biggest thing to pay attention to in terms of data on a go forward basis is really kind of like the employment picture.

9:19Beimnet Abebe:So if you look at like underemployment, it's pretty elevated at like right around like 8.3 percent. And the thing that would actually crack the housing market is like a slowdown in the labor market. now you know time will tell if if that will happen because you know like ai like it takes a long time for those efficiencies and for people to like cut all the way i am concerned about the ai because

9:48Alex Thorn:this is one of the things that i saw over the holiday break was a lot of top engineers in the world including i think the principal engineer at google uh tweeting just shock and awe at the unbelievable power of things like Claude and Cursor. The Google engineer said, don't quote me exactly on, I can't recall the exact text, but it was something to the effect of they had spent the weekend coding with Claude and that they accomplished more in a weekend than their whole team had in a year or two years ago.

10:17Beimnet Abebe:Yeah, it had to do with agent coordination and she's apparently one of the top programmers in the world and they had a whole team working on one solution for a whole year that Claude effectively solved over a weekend.

10:29Alex Thorn:Yeah, and many other top developers at big companies basically came out and echoed the same thing. You saw testimonials on social media of some of them expressing amazement and others bewilderment, confusion at the fact that it was all of them saying the same thing. Some even remorse that Elon tweeted that he thinks this is a singularity. and so I would say that the AI like labor job loss or impact that it may have has not reared its head yet it doesn't feel but it seems like every day we get closer to that that's going to be a very interesting

11:06Beimnet Abebe:you have to pay attention to that but the stuff that's been on the headlines like first and foremost has been the geopolitical stuff we just took out the leader of a nation. Well, well, we captured him. Captured him. And, you know, depending on how you think about it, that is a little bit unprecedented.

11:29Alex Thorn:I would say it's rare. It's certainly unprecedented in recent history. But it's also, I think, to cut to your main point, it's destabilizing, right? Correct. And it hints at sort of a breakdown of the international order to the extent that it exists. Absolutely.

11:44Beimnet Abebe:You know, and there's some more tensions around Greenland. There is tension around Japan, Taiwan, and China. Obviously, China just did massive exercises. There's some back and forth with Japan directly in terms of some export curve starting now. I saw that. And then the U.S. just took over a Russian flagged oil tanker. And so the geopolitical tensions are a touch elevated. You wouldn't know that by looking at the VIX, which is kind of still on a 15 handle. And that, you know, I think is it feels mispriced to me. I feel like people are not expecting as much variance as there likely is going to be.

12:35Beimnet Abebe:But, yeah, you know, if you talk to most people in terms of what they're thinking about, you know, risk markets, most forecasts are for the S &P to finish higher at the start of next year or by the end of this year. Call it on the order of like 10%, plus or minus, a little bit.

12:53Alex Thorn:I always think about this. You love the West Wing like I do. You remember the episode where President Bartlett, he's like, nobody knows what the economy is going to do. He's like, here, look, I got two of the smartest guys. He's like, Bob, you're my national economic advisor. Where's the Dow end at the end of the year? He's like, terrible, down 1 ,000. He's like, John, you're the head of the Treasury. Where's the end? He's like, great, up 1 ,000. Yeah. Right. Like, I don't know when I hear people say like 10 percent, it's like it's pretty safe, moderately bullish call. Right. Like, no one really knows.

13:18Alex Thorn:No, no. It's tough.

13:19Beimnet Abebe:And it's also like if it ends up up 10, but down 30 percent correction before it went up 10. Like, did you. Which is kind of we had that this year. Yeah. Last year, I guess. Yeah.

13:29Alex Thorn:Yeah.

13:29Beimnet Abebe:And so, yeah, the path is going to be very interesting.

13:32Alex Thorn:Let's talk a little bit more about stocks. And I want to talk about gold and silver, which is silver. And by the way, other lesser metals have also ripped. Nickel and copper. It's all platinum. And I want to ask you about that. But first, I was just looking at the chart. Did we hit an intraday all-time S &P 500 high like today?

13:51Beimnet Abebe:Yeah, basically. It looked like it. I think futures got to 7 ,007, which is effectively an all-time high before they dipped lower.

13:59Alex Thorn:Yeah, and then I was looking back because it felt like we kind of limped into the end of the year. But actually, we did okay, though. The real dip was around Thanksgiving. Got all the way down to like 6 ,500 on the S &P. But otherwise, finished pretty strong. And that was with a major correction in April last year that obviously affected around the tariff announcement and then the walkback. And then gold continues to trade well. Silver mooned. Well, since we last spoke. And yet, and I would say Bitcoin had a nice little, but we'll get to Bitcoin in a second, had a nice little bump, basically over the last couple of days, some of which is retracing over my shoulder, as you can see, to 91.

14:40Alex Thorn:But what did you make of that price action? And what is going on with the rotation into the lesser? We know gold performed great. It was up 30 plus percent last year. But is it just sort of like, is it like in crypto where it's like Bitcoin runs, then Ether runs, then the altcoins run? Is that what's happening in the lesser metals? Or is there something more? Like, why are people buying nickel?

14:57Beimnet Abebe:much more are they buying copper uh well cop there's going to be copper shortages um and like especially if you have like a bunch of rebuilding efforts let's say there's like peace between ukraine and russia you got to rebuild all of ukraine you got to rebuild gaza right and if we're yeah so there's commodities there's practical use cases and there's like physical storage because um physical shortages because people didn't anticipate a lot of the activity like For example, like silver is very practical for electronics in the semiconductor industry. So there's actual like real demand for physical silver.

15:36Beimnet Abebe:And there hasn't been any additional capacity added to like silver mining like over the past couple of years because, you know, this AI trend was like fairly kind of recent. So there's actual physical demand. And then you've just had a shit ton of central bank buying of both assets. Yeah. Right. because folks are - A lot of speculation too though, right? Some speculation, but really it's like, guys, this is the trade.

16:02Alex Thorn:Is this part of your, we talked about this on a prior episode, but you pointed out that I think 12 of the last 13, 10 % or more S &P corrections with the 13th being last April, the dollar appreciated during those corrections, but in April it depreciated. And meaning that people theoretically were selling risk assets and looking for something other than the dollar to park their money in. And perhaps gold was one of those answers. Is that also part of this trade, that these non-sovereign metals look like a good?