My most convicted bet is that credit in crypto is the single most important variable for asset stability and growth of the asset class. Until we get a real credit market going, this space will not be prime time.

How does this happen? Rates. Rates. Rates. When cost of capital drops (interest rates at the federal level come off), lenders can move to the riskier part of the asset universe (crypto) in order to generate yield.

What does this do? Credit does 2 things 1) Efficiency 2) Expansion

Efficiency - when a large firm that needs a lot of capital to operate needs financing to move across the asset of crypto can more easily scale in and out of positions because they can borrow cheaply, the space as a whole becomes more stable and efficient. Less illiquid moves in

Expansion - when large firms with big balance sheets can change their positions from needing to sell to being able to synthetically borrow cheaply, supply ends up not hitting the tape so aggressively. This is somewhat more solved for larger assets but for anything outside of BTC

I’ve been screaming from the roof about credit expansion for years since FTX blew up and I still believe it is the most vital step towards the longevity of this space and the future of stable makets. When markets are stable, all assets can be more productive. Split Capitalio.

P.S. - if you think this is fine today OR your only version of understanding credit markets is the clown fest from 2021, please don’t opine. Study credit markets in the USA.