Podcast: Bits and Bips
Broadcast time: February 11
Host/Guest:
Ram Ahluwalia: CEO & Founder of Lumida, CFA
Austin Campbell : NYU Stern Professor, Founder of Zero Knowledge Consulting
Christopher Perkins: President and Managing Partner of CoinFund
Nic Carter : Founding Partner of Castle Island Ventures
Podcast compilation: BitpushNews
Foreword: In early February, Bitcoin plummeted, falling in tandem with gold, silver, and high-beta assets in the US stock market. This podcast episode starts from this cross-asset pullback, exploring the governance challenges brought about by market structure, institutionalization , and quantum risk, and directly confronting the overdraft of industry credibility after the "2025 junk token wave": crypto may be shifting from a narrative-driven speculative arena to a more realistic financial infrastructure.
In the program, Nic Carter pointed out that many of Bitcoin's fundamental narratives have weakened over time, and institutional concerns, even if premature, have already slowed Bitcoin's adoption. Beyond Bitcoin, he also believes the era of venture-driven, flashy tokens is largely over, predicting that the future of cryptocurrencies lies in more sustainable, cash-generating businesses rather than speculative token issuances.
The following is a summary of the podcast content:
Market crash: Is it a global risk aversion, or pressure specific to the crypto market?
In the sell-off on February 5th, Bitcoin briefly fell to nearly $60,000, one of the worst cross-asset drawdowns in recent years. Gold, silver, and some stocks also fell. Was it a global risk aversion, or was there an internal problem within the crypto space? Rumors circulate that the issue might stem from IBIT (Bitcoin ETF) – for example, a large holding of IBIT experiencing a margin call in the options market. Some say Hong Kong funds collapsed; others counter that they haven't seen any abnormal IBIT redemptions or signs of leveraged "black box unsecured lending" as seen in past cycles. What's your opinion?
Rahm: This is more like a unified deleveraging of "high-beta assets," and margin calls will gradually surface.
Ram Ahluwalia: I tend to think it's just over-leveraged funds being forced to liquidate during the downturn. There are also tweets mentioning Trend Research's Ethereum fund being liquidated. We talked about this a few months ago: bottoms are often accompanied by "corpses surfacing." Now you're starting to see that, and there are likely to be more names coming out later.
Furthermore, this wasn't an isolated crypto crash; rather, high-beta assets fell across the board. It also coincided with a "Mag 7" pullback in US stocks that day, including a sharp drop after Microsoft's earnings report—this appears to be a cross-market risk release.
Chris: There may not be "a perfect culprit"; derivatives and margin mechanisms amplify volatility.
Christopher Perkins: We may not fully understand the "10/11" crash yet, let alone the "2/5" crash. Many things will take time to unfold. But what I do know is that the market is very tense right now, and some market makers will liquidate their positions more quickly and decisively when they are short of margin. This atmosphere of "rapid liquidation" will drive a downward spiral.
In addition, institutional funds will keep an eye on basis trading (when futures prices are higher than spot prices, institutions can engage in arbitrage without direction risk). The entry and exit of basis trading will also cause price fluctuations, especially when everyone unwinds their arbitrage positions at the same time, which will put downward pressure on prices.
Overall, I think the market will continue to experience some "violent fluctuations," but it also seems to be gradually "bottoming out" and slowly rebuilding.
Nic: This time it wasn't a single catalyst.
Nic Carter: I'm not sure there will be a "single, satisfactory catalyst" to explain this sell-off. We were "spoiled" in 2022—there were plenty of clear triggers to point to that: it was what caused it.
However, market structures can become inherently unstable at certain times, and a small trigger can ignite a chain reaction, so it is not necessarily necessary for "a large fund to collapse" to explain the decline.
Will BlackRock step in to "save" Bitcoin from the quantum threat?
What are your thoughts on the "quantum skeptics" in the Bitcoin community? How does this affect whether or not funds are willing to enter the market?
Nic: The key disagreement lies in the "timeline," and the most feared outcome is "centralization."
I believe the controversy isn't about whether quantum mechanics 'exists,' but about the timeline. I worry that many people mistakenly believe that when quantum mechanics becomes truly dangerous, we'll have a long warning period. I don't see it that way.
The key point is: it could take close to a decade for Bitcoin to complete a quantum-resistant transfer. This isn't a question of whether the threat will come tomorrow, but rather that if you don't start preparing now, it might be too late by the time you're sure it's 'close enough'.
I understand the developers' caution: they don't want to drastically change Bitcoin for a risk they're not entirely sure about, because changes themselves introduce new risks. But I don't think this issue has been taken seriously enough. And I don't think it's reasonable to bet on 'technological progress slowing down'. AI is accelerating engineering and discovery; quantum computing is a physics and engineering problem, and AI will drive it. Capital is also pouring into the quantum field—this is not something to be taken lightly.
Even if you personally think quantum mechanics is still far off, institutions will treat it as a real problem. It will enter every investment committee: 'What about quantum mechanics?' This will directly slow down institutional adoption.
There are two paths to address this: either truly solve the problem—for example, by introducing post-quantum signatures (which can be gradual and optional); or at least solve the 'perception problem'—provide a clear roadmap, milestones, and triggering conditions to let the outside world know that you are in charge.
But what we see too often now is that those who raise risks are labeled as FUD (Frequency, Inflation, and Demand). This doesn't reassure institutions.
If developers continue to do virtually nothing, I fear the final outcome will be this: institutions like BlackRock, which manage massive client assets through ETFs, will be forced to intervene. You are the trustee; if the problem remains unresolved for too long, you have no choice.
Therefore, I believe that if the issue isn't resolved spontaneously, it could ultimately lead to a corporate takeover: institutions would "lay off" existing developers and replace them with new developers to drive upgrades. Then Bitcoin would become more like a centralized chain—this is the governance outcome I fear most.
Chris: Institutional investment committees do indeed ask about quantum risks; it affects adoption speed like a "throttle/brake."
I'm more optimistic: because the fact that this issue has been brought to the forefront by someone like Nic means that "the risks have been identified."
It won't immediately stop adoption, but it will slow it down. For example, you'll see conversations like, "We're going to vote for Bitcoin—wait, what about Quantum?" at every institutional investment committee meeting. This will slow down the process.
I also believe that quantum mechanics cannot be viewed in isolation: three major technologies are currently accelerating together—encryption, AI, and quantum mechanics. AI will accelerate quantum mechanics research and development, and it will also accelerate our defense mechanisms. Therefore, our ability to respond is also improving.
Nic: It's a mistake to pin our hopes on a slowdown in technological development; a quantum breakthrough might only be 2-3 orders of magnitude away.
I agree that AI will accelerate quantum mechanics because quantum mechanics is essentially physics and engineering, and AI excels at those.
I oppose the idea of "betting the future on the fact that technology won't advance that quickly." Look at AI; it has leaped across multiple orders of magnitude in less than a decade. The gap between quantum mechanics—from "state-of-the-art" to "enough to threaten the Bitcoin elliptic curve"—may only require two to three orders of magnitude, not six or seven.
Moreover, capital is pouring into Quantum. 2025 appears to be Quantum's biggest year for funding, with private equity injecting around 10 billion yuan, along with investments from national levels like China. I'm concerned if the Crypto continues to deny it.
Rahm: Direction is not the same as timing. Many hard technologies were "right a long time ago, but wrong a long time ago."
I'm more of a skeptic from a "time" perspective: being on the right track doesn't guarantee short-term results. Human genome sequencing and nuclear fusion both demonstrate that breakthroughs can take a long time. The "real impact" of quantum mechanics on the market may not happen so quickly.
However, I also agree with a transactional reality: your opinion doesn't matter; the investment committee's opinion matters more. If institutions slow down due to quantum concerns, then Bitcoin must address those concerns for it to expand adoption.
Institutionalized narratives and reflections on the "junk issuance boom"
Regarding the "institutionalized" narrative, I noticed that many of the largest IBIT holdings on the 13F board come from hedge funds (such as Millennium and Jane Street), and many are underwater. Traditional institutions typically don't like to "cover losses." This suggests that so-called "institutional demand" is actually limited. It's more like wealth management channels (RIAs) selling products to end clients, rather than institutions managing large-scale allocations themselves. This also makes prices more fragile—this cycle is different from the past.
Chris: This also raises a point: currently, many people treat "the entire crypto asset market" as a single entity: Bitcoin = crypto. Quantum risk will also be understood holistically, thus dragging down other projects as well. In the future, we hope the market will mature further, differentiating different chains and applications based on "fundamentals/cash flow/governance capabilities".
Nic: That’s why if Bitcoin upgrade coordination is difficult, a more “corporate” approach may be forced: large institutions with custodial responsibilities and governance preferences, if they believe the problem cannot be left unresolved, may ultimately push for a “de facto governance takeover”.
Q: You all mentioned feeling "gloomy." What's the reason? Is it because the quality of token issuance in 2025 is too poor?
Nic: Yes. Many token offerings in 2025 "fell terribly and were terrible." People should be angry about the lack of alignment among crypto VCs and entrepreneurs, who just want to issue tokens quickly and cash out.
True civilization-level innovation is:
Decentralized Exchanges (DEXs)
DeFi lending: Conducting "banking" transactions without banks or counterparties.
However, many policy discussions (some of the bills he mentioned) do not focus on these core achievements, but market attention is instead held hostage by "coin arbitrage".
Austin: This resembles a "commission-securitization-commission" cycle in many industries: when incentive structures encourage short-term withdrawals, market sentiment deteriorates. In contrast, stablecoins/payments/on-chain financial infrastructure are more excited because real business is taking place.
Chris: There are indeed "high-achieving students who make money" and "low-achieving students who are just wasting time." If you can look at projects using "fundamentals," you can still see very strong innovations such as stablecoins, RWA, and on-chain equity.
Why are derivatives of HYPE/Hyperliquid so important?
There's a debate in the community: Kyle Samani criticizes Hyperliquid (and HYPE) as "the problem with everything in crypto," yet his former organization bought a large amount of HYPE. What's your take on this?
Chris: If Solana wants to create a "decentralized Nasdaq," it must solve the problem of derivatives.
I have great respect for Kyle. The Solana ecosystem is also excellent; its vision is like a "decentralized Nasdaq," designed for high-frequency trading and low latency. But if you want to create a "Nasdaq," you must address derivatives. In traditional markets, "derivatives devour spot," offering both higher profits and greater liquidity.
Hyperliquid's sudden rise and dominance in derivatives presents a strategic dilemma for Solana. While Solana can make progress in areas such as DePIN and on-chain capital markets, it must fill the gap in derivatives, otherwise its ecosystem narrative will be challenged.
Regarding Hyperliquid: It is not perfect. For example, the ADL (automatic liquidation) mechanism is controversial and needs improvement, but it is indeed fast in innovation and execution.
Nic: The old-fashioned token VC approach is coming to an end.
Kyle is my friend, and I don't want to be too harsh. But his public actions (redeeming/leaving/publicly shorting related positions again) are very "outdated." From an industry history perspective, this is quite landmark. Kyle is important because he is typical: highly focused on liquidity, strong conviction, largely indifferent to criticism, and deeply involved in the "token game." But now, this "way of working" may no longer exist.
I believe the VC-driven, glamorous, L1 token-issuing model is essentially over in its current form. There will be tokens in the future, but "that era" is over. What remains is a more mundane, more traditional financial infrastructure-like component, which is precisely what generates cash flow and long-term value.
Austin: I agree that a lot of tokens will die. Those that survive will either have real cash flow or be professionally traded and valued like in mature markets—this will make "crypto" more and more like "the market itself" rather than a unique narrative bubble.
Japanese Election and Global Risky Assets, AI Bubble
One last macroeconomic topic: the Japanese election, which boosted the Japanese market and pushed the 10-year Japanese government bond yield to near record highs. What spillover effects will this have on global risk assets?
Rahm: I'm generally bullish on Japan. The Japanese market has performed strongly over the past year, and Japanese financial stocks have also been strong. The bigger theme is that the crowded US tech/high-beta assets are being "knocked down," and capital is spilling over into international markets and value assets. You should pay attention to regions that are "relatively outperforming," such as Japan, South Korea, South Africa, and South America.
Rahm: I want to steer the conversation towards AI: Do you trust Sam Altman? Is OpenAI's valuation realistic? What about CoreWeave?
Nic: AI is a super trend, but model companies are "capital incinerators," and private equity valuations are out of sync with the public market.
I have limited trust in Sam, but I am very optimistic about the trend of AI.
The key point is that AI's capabilities are growing at a "super-exponential" rate. A crucial indicator is how long a top-tier model can reliably perform human-equivalent labor (with a 50% success rate). This number is rapidly increasing, sufficiently explaining the rationale for massive Capex investments. However, I still find model companies like OpenAI quite alarming. Competition between models is like a "hot potato"—one day you're strong, the next you're strong, easily destroying value. Private equity valuations look like "somewhat ridiculous money."
Austin: Could accounts receivable of data center companies pose a risk of bad debts?
The model company has signed a large number of computing power contracts (RPO/performance obligations), but can its revenue and cash flow cover them? These contracts may be reflected as assets/receivables on the data center company's books. If the model company encounters problems, will they become bad debts? What are your thoughts on CoreWeave?
Nic: I prefer to hold shares in companies at the "AI infrastructure layer": above hardware (NVIDIA) is data center/computing power supply. Model companies are too easily replaced and defeated by changing user preferences. Data center companies are relatively more "hedging": even if OpenAI runs into problems, there may be companies like Anthropic, Google, and Grok to take over the capacity. They are closer to the position of "exponentially betting on AI" than model companies.
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