The State of Bitcoin with Alex Thorn

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. And we have a great episode for you this week. You're stuck with me. This is Alex Thorne's 2026 July state of crypto. No gas, BIMNet is off this week. And we will be off next week during the 4th of July week. But this week, I'm going to talk to you about some questions here. Has Bitcoin bottomed? Let's talk about MicroStrategy and their big shift on Monday. Talk about agents and trading. Is that a real thing? Tokenized securities, the Clarity Act, and much more. Before we get to that, I need to remind you to please refer to the link to the disclaimer in the show notes and note that none of the information in this show constitutes investment advice or an offer recommendation or solicitation by Galaxy or any of its affiliates to buy or sell any securities.

1:16Alex Thorn:We're here. We're in the summer doldrums. That's what I called it with BIMNet last week. And it's true in all markets. You're still ping-ponging on Iran headlines. Some of the economic data came in this week. Consumer confidence lower than expected. Employment looking okay. Markets now pricing Fed rate hikes, which is probably a headwind for Bitcoin. But in general, this is the hot, and also the U.S. East Coast facing apparently a historic heat wave. It is quite hot here in New York, but our office is nice and cool with air conditioning. That's why I've got the hoodie on. And, you know, like markets feel that way too, right?

1:59Alex Thorn:It feels squishy and soft and rudderless, I would say. And that's definitely true in Bitcoin markets. You know, Bitcoin today green back up over 60. But I think earlier today wicked as low as like the high 57s. 58K gang. people don't remember was effectively the peak in 21. We ranged there a long time in 24 after the ETFs launched in between all-time highs, the pre-having all-time high, and then the later all-time high following the November 2024 presidential election. But 58K was like this big joke in Bitcoin, and they call themselves the 58K gang. Right now, they're defending 58, basically, and we look pretty anemic here on Bitcoin price.

2:48Alex Thorn:And everyone has been asking two big things in the Bitcoin world. One, have we bottomed? And if not, where is the bottom? And two, what to do with strategy? I'm going to talk about strategy in a few minutes, but I put out a report a couple of weeks ago called Bitcoin May Not Yet Have Bottomed. Here's where the data says it could. And the point of the report was primarily that, you know, whether you understand it or not, and frankly, I don't, the four-year cycle is real almost to the day from cycle low to having to all-time high, 17, 21, 24, I don't know if we call it 24, five or six, this cycle, almost to the day exact timing.

3:30Alex Thorn:Now, I don't know what that means, and it's confounding in some ways, but the timing has been uncanny and almost identical, but the amplitude has not. The amplitude of this cycle has been compressed from both ends. The top 125-ish K was not really a blow-off top at all. We kind of grinded higher up to it, and it was substantially lower in relative terms than prior all-time highs. Other metrics like MBRV didn't get close to their all-time highs. It was in the low twos and, you know, really need to be like 2.9 to 5 on that metric to be comparable to prior cycles. And again, the low, you know, we're, you know, 60K is about minus 51, minus 52 percent down from all-time high, nowhere close to the prior minus 75 to 85 percent bottoms.

4:23Alex Thorn:You know, and if we did have that, a minus 75 to minus 85, that would put us in 20K territory. And I frankly am calling it now. We will not see that. I'm retiring that as a possibility. That report, though, if we use comparable MVRV and other metrics to prior cycles, suggests a base case bottom of the mid-40s. A shallower one would put us in the low to mid-50s. And some kind of extreme washout event could be in the high 30s. This is, again, what the data suggests if we compare bottom signals from prior cycles and apply them to the price today and in this drawdown. I find it hard to believe that we would go below 50 personally.

5:10Alex Thorn:And for all we know, look, I mean, it looks a bit tenuous. We got 60 ,200 over my shoulder here in Bitcoin on the block clock. 58K gang is out here defending 58. I don't know that they can, but we've now tapped it a bunch of times. And frankly, over the last week, we've basically been at it, but with no substantial capability to send Bitcoin below it at the moment. Doesn't mean it can't happen. And, you know, by the way, on that timing, right, the data is pretty clear. I mean, again, I don't know why. I don't know why they line up so well in timing, and they do. That would suggest a Q4, 2026 of this year bottom date, if it just all else equal, you know, if played out the same way.

5:55Alex Thorn:There is a hiccup, right? I mean, we did get an all-time high before the halving, which is a regular in, I think, in February 2024, you know, following the launch of the Bitcoin ETFs. Nonetheless, then we sort of fizzled out in some of the euphoria metrics, but yet, of course, grinded higher into and after the president's re-election. And then following the inauguration, all of 25, you know, sort of culminating with October. Well, the all-time high was October 6th, 2025, but sort of then the October 10th, like liquidity crisis meltdown, maybe as the straw that broke the camel's back. Interestingly, though, a lot of the topping euphoria metrics had already topped long before that October 6th, 2025 all-time high.

6:38Alex Thorn:So one of the consequences of a compressed top is that realized price, the network sort of average cost basis was a lot higher and closer to the top. And that kind of sets a higher floor for the bottom. And I will say that that's reflexive. You know, if price goes lower, realized price will also drift lower. But again, like this is the compressing amplitude, magnitude of the cycle high and cycle low seems to be a feature of this current cycle. And that also plays into why I think you're going to see a higher bottom in relative terms than prior Bitcoin cycles. Anyway, go check out that report. There's a lot in there.

7:21Alex Thorn:A lot of charts, like 25 charts, and we've shown some of them on the screen if you're watching on YouTube. But yes, it feels anemic. I mean, we're on, I think we're like almost minus 6 billion in net outflows from the ETF complex this year. something like the longest 30-day average net outflow from IBIT, the largest very deep outflows. It feels like out here, from my experience, I've been in Bitcoin for more than 10 years and watching it, and it feels like we're at or near a bottom to me, the sentiment. If we look at the bottom indicators, which we'll put here on the screen too, only four of the 13 that typically would mark a bottom have been hit.

8:05Alex Thorn:That's part of the reason why I have some conviction that we haven't quite seen the bottom yet. And we'll talk about some catalysts that could create the bottom or send us higher as we go forward. But that's my view of the price action here. You know, the data suggests for mid 40s, from my report, my gut tells me low to mid 50s would be the bottom. But, you know, if that cycle timing is correct, like we're still looking at a few more months and it's the summer months. That wholesale in May and go away adage may have proved true for Bitcoin. And yet again, by the way, stocks also kind of flattering.

8:44Alex Thorn:Everything's sort of feeling a bit rudderless right now. I don't know if it's the heat. They say it's a historic heat wave. My recollection, guys, is that summer typically is hot. And growing up, I never thought, oh my God, it's historic. But I don't want to, I'm not trying to be a climate change deny or anything like that. But, you know, it's hot. People are tired. Markets are rudderless. And that's the state we find ourselves in. I hope you don't feel rudderless listening to this at home, my friends. Let's talk about one of the biggest stories in markets and certainly in the Bitcoin market, MicroStrategy or Strategy Inc, as of course they are now called.

9:19Alex Thorn:So, you know, everyone's really up in arms about what Michael Saylor and his team at Strategy would do about their preferred securities trading at this discount to their target$100 par. And I think Stretch, STRC, the biggest one, at one point traded as low as the low 70s. It's now recovered a bit since Monday of this week when Strategy announced a new, pretty comprehensive plan to become what the CEO, Fong Li, called now an actively managed. He said they're moving, the company is moving from one-way capital issuance to active capital management. I got to say, I am very supportive of what they did on Monday.

10:03Alex Thorn:And here's what they did. The board approved a new USD reserve policy. The reserve stood at$2.55 billion on June 28th, which I believe was, what was that, Monday? And no, that would have been prior to Monday. and they raised the strc dividend from 11.5 to 12 which again has been the method that they've used to try to bump it back towards par they authorized a one billion dollar buyback of their digital credit securities so those are the preferred stretch strike stride and stream i believe is the european one and they authorized a buyback of up to one billion of class a common stock, that's MSTR, and they announced a BTC monetization program authorizing up to 1.25 billion of Bitcoin sales to fund the reserve dividends and interest or buybacks.

10:52Alex Thorn:It doesn't obligate that they sell. Anything outside of those purposes would need a fresh board vote. So I think they kind of did everything. People were calling for stretch buybacks. They were calling for selling a bunch of Bitcoin to raise cash. They didn't sell a bunch of Bitcoin on Monday or announced that they had, but they did create a pathway for them to do it should they need to. And I think they did hit the MSTR ATM and increase their runway to what one analyst said, if you include the potential Bitcoin sales, 25.9 months of runway, more than two years. I think just with the cash they have now, it's about 17 months, The runway being the cash to pay the dividends for the preferred security holders.

11:37Alex Thorn:So I think this was a very prudent move. Very prudent. I think they kind of authorized all the options for themselves. And this is what Fong is now saying is an active strategy. But I have to say, a lot of people doomsaying on MSTR, like it's – I've heard the word solvency and bankruptcy thrown around. Totally unintelligent and inappropriate to use those terms. They have$50 billion of Bitcoin, okay? This is, you know, and by the way, hearing some armchair quarterbacks talk shit about Michael Saylor and the team at Strategy when, I'm sorry, do you have$50 billion of Bitcoin? Like, let's get serious here, all right?

12:14Alex Thorn:Their liabilities are nowhere close to their assets. It's embarrassing to hear people calling for that. And I have to say, there are real issues, right? And they got themselves into a bit of a pickle. There's no doubt about that, right? Unable basically the digital credit engine currently not running and not funding Bitcoin purchases the way Michael Saylor designed it. There's no doubt about that. And I am opposed generally to sell. Some people were saying you should sell$4 billion of Bitcoin right now. That would create such negative sentiment. It would be reflexive and cause Bitcoin to go down further.

12:48Alex Thorn:And it's not necessary. OK. So but this idea that somehow it's structurally broken, that he doesn't have enough capital to cover his liabilities, words like I said, insolvency, totally insane and incorrect, hubristic as well from people that have never built something of the power of strategy. And it is powerful. And, you know, I've heard people say that he's stupid. Oh, I'm sorry. How much Bitcoin do you have? Because they have 50 billion dollars of Bitcoin. And it's just, I find it frankly embarrassing hearing some of the doomsayers coming out, of course, at the bottom. And by the way, a lot of doomsayers in TradFi coming out declaring that Bitcoin's dead.

13:30Alex Thorn:I've seen a lot more of that lately. I've been around. Bitcoin's been a lot deader than this. You're telling me 60K BTC and Bitcoin is dead? Listen to yourselves. You sound stupid when you say that. And I will also say people said, oh, what happened to the digital gold thesis? Where's the digital gold thesis? I thought it was supposed to be like gold. You know where it is? It's right there. at 60K. Last time, Bitcoin bottomed at 15.7. That's the digital gold thesis. The people buying Bitcoin here are the ones who believe in Bitcoin's long-term promise as a store of value. That's the digital gold thesis.

14:03Alex Thorn:Those are the digital gold buyers, the ones buying at these levels. I've been a buyer, a structural buyer, and that's it. That rising floor, even if we go lower, that floor will be so much bigger than prior lows. Like that's, that buyer of last resort, the number of them are growing every cycle and they are buyers of Bitcoin like I am at these levels. And well, I'm buying at every level. So, you know, I just, it's just, God, every time, you know? This happens every time. Bitcoin goes down a bunch and people say, oh, is Bitcoin dead? It's not dead, all right? TikTok next block, they keep printing.

14:43Alex Thorn:And by the way, to hear people, you know, I get it. You know, it's sort of the price above that rising floor is the speculators. They're the ones that drive it to$125. But meanwhile, the long-term believers keep stacking. One of the things that we know could probably send Bitcoin and crypto higher is Clarity Act passage. And if you follow my content, you know I've written extensively about this. I think I'm the only analyst in a crypto firm that's been consistently and deeply covering this. Most of the rest of the crypto industry is merely advocating. We're also obviously advocating, and I am too.

15:20Alex Thorn:But our clients and counterparties like to trade volatility, and they want to know point-in-time odds. Of course, they and everyone can rely on things like Polymarket and Calci. But also, I've written about this. And the high watermark for my likelihood was after the May Senate banking markup of the Clarity Act where I pegged, because of the bipartisan outcome there, the odds at 75 percent. It's been bleeding lower since then. I think I've put out two adjustments downwards for 60-40 and just last week 50-50. And I'm sorry to say it looks like it's going to bleed lower, the odds. Right now, Senate is going into July 4th recess.

16:03Alex Thorn:And then, you know, I'd previously said this. I think if we don't get a vote scheduled announced in the next week or so, a week and a half, the odds get pretty low. Now, just the scheduling the vote doesn't mean it's going to pass. And I think the reason why even a vote scheduling, a floor vote scheduling, would not materially raise my odds that much is it's also not quite clear the vote can get to 60 votes. So while I do think that a positive outcome on clarity this summer before the August recess, which is basically at the end of July, though they could extend the congressional time, a little bit.

16:43Alex Thorn:While I think it needs to happen before the August recess, it's just not clear that it can. And I think if it does, it's a positive, clearly. If it doesn't, I do think the market is going to take it as a negative if we see a floor vote that doesn't succeed. But it shouldn't take it as negative, I think, as some have said, because the reality is with these agency directors at the SEC and CFTC and elsewhere in Treasury, et cetera, and the banking regulators, the OCC, all the charters that have been applied for and conditionally approved or approved, we're likely to get the crypto industry most of what it wants from agency guidance, interpretive guidance, and relief for at least the next two and a half years.

17:24Alex Thorn:The real reason we want clarity, recall, is to codify it in federal statute. And that is a good reason to get it, no doubt. But again, I think the downside should be somewhat limited. Whether the market agrees with me or not, at least on a fundamental basis, I can tell you the downside is somewhat limited. We get a lot of what we need and want and should have to make this market better, safer, more transparent, more accessible, and promote innovation from the agencies themselves. So, you know, still need to wait and see what's going to happen. You know, we still have outstanding issues like ethics and the illicit finance, as they say, illicit activity, what we would call dev protections.

18:06Alex Thorn:You know, it seems like there's still some shoes to drop there. And without, you know, certainly on ethics, without some compromise resolution here, I don't think you do get to 60. And we haven't heard news of those compromises being successful yet either. I've got to say that while everyone knew that the president and his family are involved in crypto, I think, you know, he just last night released his Office of Government Ethics financial disclosure that which showed substantial, at least 100 million. That's a low, that's a floor because some of it reported as up to at least 100 million in assets, crypto assets owned directly by the president or through his ownership interest in World Liberty Financial.

18:44Alex Thorn:Again, everyone knows this already, but I think the numbers probably give some, you know, numerical talking points to cryptos, the anti-crypto army. Let's move on. Let's talk about stable coins. Everyone loves stable coins. There was just a new consortium announced, Open Standard USD, I believe it's called, OUSD. You know, Galaxy is a member of this coalition, but we're talking dozens of banks and fintech companies and crypto companies all involved in this. Made a lot of news. I haven't seen any information. It seemed like today it's just a press release. You know, a lot of discussion about whether, you know, Coinbase is part of that coalition or consortium or whatever we call it.

19:21Alex Thorn:A lot of people speculating like, well, I thought that they were, you know, deep in it with Circle. They have USDC on their platform. They still do, I think. And I've got to say, a lot of markets in the world end up looking like 60, 30, 10. So one big player dominates with 60%. A secondary player has 30%. And then the long tail of competitors fills out that other 10%. For example, the transfer agent market, computer share, equinity, and a bunch of others. Stablecoin market, about$180 billion by tether. $75 billion circle, so less than half. And then the next biggest one, I believe, is SkyUSD, which is like MakerDAO's decentralized stablecoin, at seven.

20:04Alex Thorn:Literally an order of magnitude lower than, three is an order of magnitude lower than circle. And then a long tail. And frankly, the only other consortium-based stablecoin that I'm aware of that is in the top ten is number ten, it's USDG, which I believe, I'm not certain, don't hold me on this, but I want to disclose. I think Galaxy is also involved in. So again, the history, and Jeremy Allaire made this point about consortium stablecoins. Simply haven't seen one work. Doesn't mean this one, or, you know, get huge adoption, I should say. Not that they don't work, but the reality is we haven't seen any stablecoin really beyond Circle even challenge Tether.

20:40Alex Thorn:Now, will the market always look 60, 30, 10 in stables? Not necessarily. It's not a rule, although it does appear to be one of those things like the Fibonacci pattern that may appear in nature, all else equal. But something to watch. Nonetheless, stablecoin interest surging, right? Genius Act rulemaking is coming soon, I think by the fall. And you're going to see a lot more stablecoin adoption. I guess the big question for crypto is like, you know, Satoshi said the root problem with traditional currency is all the trust that's required to make it work. And the history of central banking is filled with betrayals of that trust.

21:19Alex Thorn:I'm paraphrasing something. It's a famous quote from Satoshi. He didn't say the root problem with fiat currency is that we can't settle fast enough between banks. All right. In some ways, stablecoins stealing the limelight from Bitcoin and crypto. It's a bit deflating if you've been in this space. Whether you're a Bitcoiner or a Web3 maximalist or whatever it is, using our tech to move dollars didn't seem necessarily like the vision of utopian victory that we've had as Bitcoiners. And there's a big question about whether growth, Tom Lee has argued this, whether the growth in stablecoins will accrue value to, say, Ethereum, to ETH.

21:58Alex Thorn:I would say today, so far it hasn't. And a lot of these stablecoins, whether it's USDC, a circle announcing their ARK blockchain or Stripe saying they're going to use Tempo or the emergence of these other either stablecoin focused or even sort of semi-public blockchains. And frankly, I think I'm being charitable. Do those accrue value to the crypto assets that the world loves so much? It's not clear that they do. That's a big outstanding question as stablecoin growth grows. Another big topic that's similar to stablecoins, tokenized securities. And our audience will know that I'm very interested in this.

22:35Alex Thorn:You know, I spent time as a senior compliance official at Fidelity deep in securities regulation. I'm very active in Washington on our portfolio of issues, including tokenized securities. And of course, Galaxy, GLXY, is one of the only issuer-sponsored tokenized securities in the world with help from our friends at SuperState. So will those, by the way, if they rise, accrue value back to the crypto assets? I'll throw that in there as another question. I think so, maybe. Yes. I would say yes. Soft yes. Not sure how to calculate that. But tokenized security is a big, big area here that everyone knows is so hot right now.

23:18Alex Thorn:Obviously, the real heat, most of the real heat is actually on perps. But there are, you know, Backpack has some. Trade XYZ, I believe. let alone, I would say, the big players, Ondo and Kraken, which have, I think, the most outstanding supply, Ondo at number one of tokenized securities. And those are third-party issued securities, right? Other people call them wrappers. The format of these differs, but generally, at a high level, they're not coming from the issuers of the securities themselves. Some version of a swap or an SPV, right? You know, the SPV buys the stock, puts it in the special purpose vehicle, effectively a fund, and then they tokenize the shares of the fund.

24:00Alex Thorn:And those tokens are what are out on the market ex-US today. And the holders of those tokens, to the extent they have recourse, rights, ownership, it's between them and the SPV. So, like, for example, if they have rights to dividends, it's because the SPV is passing on the dividends. Obviously, then you have SuperState, Securitize, and others who are pursuing an issuer-sponsored model where the tokens are coming, the tokenized securities, the tokenized format of the traditional security is emanating from the issuer. I believe in, I know in SuperState's case, and I think in Securitize as well, also facilitated by a registered transfer agent.

24:42Alex Thorn:um metal x and those gabe shapiro and his team have it even yet an even different uh native version as well um look i think obviously we favor the issuer sponsored model i think that's the cleanest it's the most it's the way in which the token holder has a direct relationship with the issuer and as the issuer we also prefer it we like to know who our shareholders are so that we can reach them contact them interact with them etc i i think this is this is a big question. The biggest question right now in this topic is when will the Securities and Exchange Commission release, announce, publish their so-called innovation exemption?

25:22Alex Thorn:And this is, as Chairman Atkins has said, this will focus on the secondary trading on chain of tokenized securities. So the Exchange Act. And I say that as a distinction between the Securities Act, right, and primary issuance of securities, which we also understand something will come from the SEC on this, and they refer to that as reg crypto or project crypto. That's interesting too, but not my focus at the moment. I'm very interested in the question. Is the market interested in trading securities on-chain or lending and borrowing them? And will the regulators allow it and in what format under what circumstances?

26:03Alex Thorn:So we – there was some reporting I think it was in May by Bloomberg that the commission was close to issuing this and that it would include third-party wrappers, meaning the third-party issuer tokenized securities. Now we don't – then the commission came out and said they were delaying or working more on it. So they effectively delayed that release. By the end of that week, I think the Bloomberg store was on a Monday and by the Friday they had delayed. So they're still working on it. And we understand they're doing good work and deliberative work to make sure this thing is both consumer and investor protecting, but also provides some of the relief that entities like Galaxy and SuperState need to test this in the market.

26:45Alex Thorn:And I'm a big proponent of an exemption, time-limited, of course, overseen, careful whether you call it a sandbox, whatever you call it, before we go to formal rulemaking around tokenized securities. And this is sort of where the dispute between my side and the crypto industry is having with the securities industry and the big banks. Because they're calling, Citadel in particular, but also big banks and CIFMA, which is the Securities Industry Financial Markets Association, so their big trade group, they're calling for more caution, taking it slow. They want more formal rulemaking. I want to be very clear.