Institutional traders are increasingly favoring Ethereum and Hyperliquid as higher-conviction opportunities while Bitcoin faces pressure from concerns surrounding Strategy's credit structure, according to FalconX Head of Trading Strategy Hassan Baseri. Speaking on June 18 on the Milk Road Show, Baseri highlighted that the dominant trade among clients has been "short crypto, long AI," as capital flows toward artificial intelligence stocks. However, within the cryptocurrency sector, traders are closely monitoring Ethereum and Hyperliquid, whereas Bitcoin remains overshadowed by risks associated with Strategy and its preferred instruments.

Baseri noted that market participants fear a potential test of Michael Saylor's willingness to sell Bitcoin to support Strategy's credit framework, particularly its preferred stock, Stretch. "People are not buying because they're looking at what's going to happen with Saylor," Baseri said. He suggested that Bitcoin might need to retest the $55,000 area before confidence returns, especially if Strategy sells Bitcoin to bolster reserves and address dividend obligation fears. Additionally, Baseri warned that U.S. midterm elections pose a risk if Democrats gain strength and slow crypto-friendly regulatory momentum.

Ethereum and Hyperliquid Strategies

Baseri indicated that several FalconX clients are expressing bullish views on Ethereum through derivatives, employing risk-reversal trades that involve selling downside puts and buying upside calls. He acknowledged that Ethereum has historically endured prolonged periods of weak price action but emphasized that "when it does rally, it will be very violent."

Hyperliquid is also attracting strong institutional interest. Baseri stated that the market trusts the project's team to protect token value through fee buybacks and disciplined ecosystem development. He further noted that Hyperliquid's capability to facilitate trading in pre-IPO assets, such as SpaceX, Anthropic, and OpenAI, could sustain strong demand.

Bitcoin and Ethereum have eroded more than 16% over the past month amid geopolitical uncertainty and capital rotation into AI-focused companies, marking one of the industry's deepest downturns. StarkWare co-founder and Zcash creator Eli Ben-Sasson described the current market conditions as the worst crypto winter he has witnessed since entering the industry in 2013. Despite improving prices and growing institutional interest, he argued that crypto remains in the middle of an identity crisis regarding its future role in the financial sector.

Ben-Sasson attributed the recent market recovery primarily to macroeconomic developments rather than industry-specific catalysts. He stated that the dominant narrative since President Trump’s return to office has centered on institutional adoption and Wall Street integration. However, he believes that this focus contributed to the sector’s recent struggles, suggesting that the industry has lost sight of its founding purpose of creating systems that enable financial freedom, innovation, and permissionless access.

Future of Crypto and TradFi

Ben-Sasson outlined two potential paths for the cryptocurrency sector's evolution. He argued that crypto will either become the new rails for traditional finance and financial institutions, or it will disrupt them and offer new financial entrepreneurship models. The StarkWare co-founder emphasized that the next major crypto cycle will be driven by applications that deliver capabilities unavailable in traditional finance.

Privacy and Utility Focus

While Bitcoin and Ethereum have benefited from ETF adoption and institutional participation, Ben-Sasson argued that the world is waiting for new things focused on financial freedom. He believes blockchain's long-term value lies not in creating a new asset class but in changing how people transact, store value, and control their digital identities. This view aligns with his comments during the Privacy Podcast, where he stressed the importance of capabilities that traditional finance, with its regulatory moats and massive barriers, will never allow.

Ben-Sasson also highlighted rising interest in privacy-focused technologies and cryptocurrencies, including Zcash, which he co-founded. He argued that privacy remains one of blockchain’s most underappreciated features and will become increasingly important as businesses move financial activity on chain. "If businesses and companies and people all over the world are going to transact on-chain, privacy is a must," he said.