Questions & Alpha with Andy Baehr

Questions & Alpha: Andy Baehr on Momentum, Macro, and the Next Phase of Crypto

Crypto's summer swoon didn't need a headline event. No exchange collapse, no blow-up, no single villain. Just nine months of steadily falling temperature. In the first edition of Questions & Alpha, GSR's new interview series spotlighting the people building our business, Head of Strategic Communications Frank Chaparro sits down with Andy Baehr, Managing Director of Asset Management, to talk through what's actually happening beneath the surface: why sentiment cratered, why the fundamentals haven't, and what it will take for the market to find its footing again.

In this conversation:

• Crypto's Q2 slump has no single cause. It's a slow fade, not a crash.
• Institutional demand hasn't disappeared. It's rotating toward yield, absolute return, and tokenized traditional assets.
• Crypto interest rate markets are the next frontier. Two regimes (Fed-driven vs. DeFi supply/demand) create an opportunity no traditional asset manager can touch.
• The market's missing ingredient is momentum. Rallies keep resetting to zero before they can build layers of demand.
• Bitcoin moves on macro. Ethereum and Solana are starting to trade on their own fundamentals.

Frank Chaparro: How would you describe today's crypto market?

Andy Baehr: Everyone working in digital assets wants to find reasons for optimism. What's different about this cycle is that, unlike previous crypto winters, there isn't one event you can point to and say, "That's what caused it." 10/10 was a catalyst, but that incident was finite in scope and reach. The last nine months have simply felt like someone gradually turning the temperature down.

By now, I think everyone is comfortable admitting that the second quarter was difficult. Prices are one thing, but what stands out to me is the lack of energy. The market feels distracted. New projects face a much harder launch environment, it's increasingly difficult to attract trader capital—let alone long-term investor capital—and overall participation has slowed.

That creates a deeper concern that I think most honest people in crypto have wrestled with at some point. What if blockchain adoption succeeds, but the assets we've historically viewed as the centerpieces—Bitcoin, Ethereum, Solana—aren't necessarily the primary beneficiaries? I don't believe that's how this plays out, but it's an underlying fear that's become more common as tokenization and other blockchain applications have attracted attention.

You can already see capital rotating toward tokenized equities and other traditional assets being brought on-chain. Compared to a year ago, when optimism around crypto-native assets was near its peak, today's market feels much more selective.

Fortunately, our business is built differently.

Asset management is ultimately about delivering outcomes. People need yield. We can deliver yield. People need absolute return. We can deliver absolute return. Others simply want actively managed exposure to digital assets. Those objectives don't disappear because sentiment weakens.

We're still a relatively young business, but because we spent time focusing on product-market fit and building our platform the way a traditional asset manager would, demand has held up well relative to the broader market. As institutional capital, foundation treasuries, family offices and crypto-native investors become more active, we think we're well positioned to gain and maintain their trust.

Frank Chaparro: How is crypto asset management different from traditional asset management?

Andy Baehr: In my view, it should look far more similar than different.

The disciplines of portfolio construction, risk management and delivering client outcomes don't change because the underlying assets are digital. Where crypto differs is the opportunity set.

We have access to information and markets that simply don't exist in traditional finance. That includes DeFi-based yield, perpetual futures, and a growing universe of tokenized credit and money market products.

What excites me most right now is the evolution of crypto interest rate markets.

Traditional finance is built around central bank policy–interest rates are largely driven by Fed monetary policy. Crypto operates very differently. Rates are driven by supply and demand within decentralized markets, and should–should–offer a risk premium because they’re not, well, risk free.

Those are two entirely different interest-rate regimes.

We're building products that allocate between them. That's something traditional U.S. asset managers generally can't access today.

At the same time, I think the industry is still early in building institutional-quality fixed-income products.

There are plenty of yield vaults and individual DeFi protocols, but there aren't many professionally managed fixed income funds. There's no shortage of tokenized Treasury funds, credit products or money market vehicles—but someone still needs to build diversified portfolios around them.

That's where we see the opportunity.

I sometimes joke that we're not trying to build the biggest casino in the desert. We're trying to build the place where people can reliably find water and food.

That's a much more durable business.

Frank Chaparro: What's the missing ingredient today? What does this market need?

Andy Baehr: Momentum.

Roughly three-quarters of crypto trading takes place in derivatives, primarily perpetual futures. Over the last several months, the pattern has been remarkably consistent: the market rallies, traders increase leverage, prices reverse, positions get liquidated, and confidence resets to zero.

That's been the experience for much of this year.

The market needs enough sustained upside that participants feel they're joining a trend rather than trading another feeble rally.

What does the successful trend look like? We’ve seen it before, and not that long ago.

Take Ethereum last year. Hedge funds had built a large long-Bitcoin, short-Ether position that pushed Ether toward $1,500. When Ether finally began moving higher, the first buyers were short-covering. Then came spot buyers. After that came ETF flows.

Markets often build in layers.

The participants closest to the market move first. Then broader investors follow. Then institutions join. Like peeling an onion, each layer adds another source of demand.

That's how sustainable rallies develop.

If perpetual traders begin generating profits again, leverage returns. Funding rates improve. DeFi borrowing activity increases. ETF inflows accelerate. Momentum builds on itself.

People sometimes dismiss that by saying, "Crypto is just momentum trading."

I'm not convinced that's unique to crypto.

When investors talk about multiple expansion in equities, they're describing the same behavioral dynamic. Rising prices attract more buyers because confidence improves. Crypto simply expresses that process more visibly because it's a younger, narrower market.

Frank Chaparro: So what changes the narrative from here?

Andy Baehr: For Bitcoin, it's primarily macro.

Interest rates, liquidity conditions, monetary policy—those are still the dominant variables. I don't think Bitcoin's long-term trajectory depends on crypto legislation. Regulatory clarity matters for the industry, but Bitcoin doesn't need the CLARITY Act to justify its existence.

Ethereum and Solana are different.

As blockchain adoption expands through stablecoins, tokenization and on-chain financial infrastructure, I'd expect those assets to become increasingly differentiated from Bitcoin. Over time they should trade less as a single "crypto basket" and more on the fundamentals of their individual ecosystems.

Ethereum, in particular, has probably done a better job operationally than it has communicating its progress. There have been meaningful improvements to the network, and leadership has become more proactive about articulating the long-term vision.

I'd expect that narrative to continue evolving.

Ultimately, though, markets need both a story and a catalyst.

If we move beyond peak hawkish monetary policy, geopolitical uncertainty begins to ease, and liquidity improves, that's a constructive backdrop for Bitcoin. If, at the same time, investors continue gaining confidence in blockchain adoption, tokenization and stablecoins, then Ethereum, Solana and the broader smart contract ecosystem should increasingly benefit from those trends.

I think those two forces—macro normalization and continued blockchain adoption—are what ultimately drive the next phase of this market.

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