Why Bitcoin Is Down, Plus the Rare Bright Spot in Crypto: Hyperliquid - Unchained Recap

Podcast: Unchained

Published: 2026-02-06

Duration: 31 minutes

Guests: Joshua Lim

Summary

Bitcoin's recent downturn is attributed to reduced speculative interest and increased investment in traditional assets like gold. Meanwhile, Hyperliquid emerges as a bright spot with rising trading volumes and innovative market approaches.

What Happened

Joshua Lim, Head of Markets at FalconX, discusses the troubling decline in Bitcoin's price, noting that it has returned to levels not seen since before the Trump administration. He attributes the downturn to a flows-driven market with little fundamental catalyst, where investments are being directed towards established asset classes like gold, rather than Bitcoin.

A significant factor in Bitcoin's struggle is the divergence between it and other risk assets, especially gold, which has seen increased purchases by central banks like China. This trend is seen as an overhang for Bitcoin, as traditional investors and central banks prefer gold due to its historical stability.

Lim predicts a prolonged range-bound market for cryptocurrencies, influenced by last year's market liquidations and a healthier market structure with less leverage. He notes a broad shrinkage in volumes on centralized exchanges due to less demand for speculative trading.

The conversation highlights that retail investors are shifting their focus from crypto to other sectors like precious metals and stocks, such as quantum and rare earths. This shift is evident in the decreased retail interest in crypto trading as seen in low futures trade above spot prices.

Hyperliquid has emerged as a bright spot amid crypto market weakness, with a notable increase in trading volumes around metals and real-world assets. This decentralized trading platform is generating significant revenue and offering a safe haven for liquid crypto funds.

The episode also touches on the potential for DeFi to compete with centralized exchanges as structural changes in the crypto market unfold. Hyperliquid's rise, alongside regulatory developments, suggests a shift in volumes from centralized to decentralized platforms.

Lim discusses the implications of Kevin Warsh's potential nomination to a key financial position, which could pose challenges for risk assets like crypto due to his hawkish views. This has added to the existing concerns in the market, contributing to Bitcoin's recent price action.

Key Insights