The Breakdown - A Crypto Czar in the White House?

Episode Date: November 22, 2024

A leak suggests that the Trump team is considering appointing a "crypto czar" to run White House crypto policy. Speculation is rampant about who might be chosen. Plus, Michael Saylor is going to speak to Microsoft. Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/nathanielwhittemorecrypto Subscribe to the newsletter: https://breakdown.beehiiv.com/ Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the Big Picture Power Shifts remaking our world. What's going on, guys? It is Thursday, November 21st, and today we are talking about the new potential crypto czar. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link at the show notes or go to bit.ly slash breakdown pod. Well, friends, the Trump White House could be including a new role dedicated to crypto policy. According to Bloomberg reporting, the Trump transition team is considering the creation of a new role being dubbed the CryptoZar.

This would be the first ever crypto-specific position in the White House, sending a message of how central crypto policy is to the incoming administration. According to Bloomberg sources, crypto-industry advocates are pushing for the CryptoZar to have a direct line to the president. As for what the role would entail, the current theory is to assign a small staff to serve as liaison between financial regulators, Congress, and the White House. The article suggests discussions are happening within the transition team, so this seems to be a real idea that has some chance of moving forward rather than just a thought bubble. One minor crypto campaign promised from Trump

was the creation of an advisory council assembled from private industry figures. We haven't heard much about this council so far, but Bloomberg reports that, quote, crypto advocates are currently jockeying for spots in that group. One thing worth noting is that the cabinet selection process has been playing out in the media and seems very online. We've seen polymarket odds fluctuate based on headlines and the Twitter discussion seemed to be influencing the outcomes. As one example, Howard Lutnik's campaign for the role of Treasury Secretary appeared to die off based on reporting an online backlash. Jeff Stein of the Washington Post recently noted his sources are often leaking their own preferences for the cabinet to the media to boost their profiles. Meanwhile,

crypto Twitter whipped themselves into a frenzy around the idea of a crypto czar and began spamming recommendations. Names including Brian Armstrong, Nick Carter, and Brian Brooks were floated along with dozens of others. One of the issues will be that this sounds like an official position within the administration rather than an advisory role, under current rules set by the Office of Government Ethics, that would mean needing to be clear of conflicts of interest with the industry. It would also make sense to appoint someone with an understanding of how Washington works rather than an outsider. Given that, are we more likely to see someone from the crypto lobby elevated than the appointment of an industry executive? Perhaps. Aside from speculation about who would be a good

fit, there's a sense that this could be a position of great importance. David Nage, venture manager at ARCA wrote, to whoever is selected for this new Crypto's R role being floated, have an immense responsibility to foster and shepherd arguably one of the most important technological innovation society has seen in decades. It is far bigger than you, bigger than all of us. Blockchain Association's CEO, Kristen Smith, urged the industry to keep their head in the game, tweeting, we'll have lots of time to debate who would be the best for positions like a Cryptozar. It's a great idea, but the ones before us are Treasury Secretary and the SEC chair. A Cryptozar won't be able to get much done unless the people in those posts are strong.

Let's stay focused. Pretty interesting stuff. I'm excited to see if that material. materializes into anything real. Next up, an update from the Cryptozar of our hearts, Michael Saylor. During a Twitter space is hosted by Van Eck earlier this week, Saylor said that he has agreed to give a three-minute presentation at Microsoft Shareholders meeting in early December. The agenda includes a proposal to put Bitcoin on the balance sheet, which was put forward

by an activist investor. Saylor said he offered to discuss the matter privately with Microsoft CEO, Satcha Nadella, but was turned down. Instead, the activist shareholder invited Saylor to make the case for Bitcoin in the brief amount of floor time available at the shareholder meeting. In other words, this isn't necessarily the Microsoft board wanting to hear from Saylor. They're going to be forced to. During the Twitter spaces, Saylor outlined his argument. He said, I think it's not a bad idea to put it on the agenda of every company. It ought to be put on the agenda of Berkshire Hathaway and Apple and Google and

meta because they all have huge hordes of cash and they're all burning shareholder value. Saylor claimed that 98.5% of Microsoft's enterprise value is tied to quarterly earnings, while only 1.5% takes into account tangible assets. He continued, it would be a lot more valuable stock and a much less risky stock if half the enterprise value of the stock was based upon tangible assets or property like Bitcoin. So I think there's a great argument to be made. I think shareholders should make it. Microsoft currently has around $78 billion in cash on hand, which is a ton but still a substantial drop from the previous years after paying almost $70 billion to acquire Activision in 2023. So obviously this is all a long shot, but it does represent a tantalizing

idea for the Bitcoin community. David Bailey, the CEO of Bitcoin Magazine, wrote, If Microsoft went as hard into Bitcoin as they went into AI and not only put it on their balance sheet but shipped a Bitcoin wallet with all Microsoft software, they'd be unstoppable. Others were more focused on assessing how this vote even came to be. We don't have any information about the identity of the activist shareholder who put this on the agenda. At a recent conference appearance, Preston Pish shared his theory, stating, I personally think it's BlackRock pushing on them because they own so many Microsoft shares to force them to a vote to potentially put Bitcoin somewhere in that treasury percentage-wise, who knows.

This is a turning point. This is huge. If Microsoft starts putting it on their balance sheet because of a very strange vote, you don't think other large-cap companies won't be looking to do the same? I think this is a way bigger narrative than markets are crediting it for. One other story related to Saylor, despite issuing equity and debt at a record pace, it seems micro-strategy can't keep up with demand. The company announced that they have upsized their latest round of debt issuance to $2.6 billion, around 50% more than the original $1.75 billion. Investors will also have the option to buy more, which could balloon the issuance to almost $3 billion. The convertible notes are going out at a 0% interest rate termed out to 2029. It's difficult to express how unprecedented this is. A large Finto-It account going by TCB wrote,

MicroStrategy raising $2.6 billion of convertible debt for five years at 0% coupon and a 55% conversion premium is the most bullish signal for institutional appetite. Issuer is getting zero profits unless Micro Strategy's price goes above 67240. If they're getting those terms, it means they're oversubscribed. And indeed, to say the issuance is oversubscribed feels like an understatement. These bonds are being bought as though that 40% increase in the stock price is almost a sure thing. Microstrategy has now shifted from an interesting curio to one of the biggest stories on Wall Street. The rise in the stock price has been so sharp that the company is now unignorable. Micro Strategy is now one of the 100 largest companies in the U.S. based on market

cap. The stock is up almost 600% year-to-date, making Nvidia's 200% look small. Even over a five-year time span capturing the entire move in both stocks, Microstrategy is outperforming. Micro Strategy stock has now doubled over the past month and is frequently gaining 10% per day. Bloomberg's Eric Balcunas tweeted, MicroStrategy is the most traded stock in America today. To best, Tesla and Nvidia is crazy. It's been a year since the stock has traded more than one of those two. It may actually have been GameStop to last do it.

It's also almost double SPY. Today's episode is brought to you by BitKee, the hardware wallet built for Bitcoin. Made by the team behind Square and Cash App, BitKee makes securely managing your Bitcoin absurdly simple. BitKee is integrated with partners like Cash App, Coinbase, Robinhood, and blockchain.com so you can easily compare prices across exchanges before you buy or sell. And their app works like the money apps you already use because simplicity is the best form of security. Send, receive, and track your wallet value over time all in one place. Time magazine named BitKee one of the best inventions of 2024. Their simple three-key approach to self-custody

replaces complex features like seed phrases that make traditional wallets hard to use and easy to lose. Give the gift of simplified self-custody to the Bitcoin person in your life, and if that's you, get Bitkey and sit back and relax while the SATs stack. For a limited time, you can get Bitkey for $99. That's $51 off the normal price. Get yours today online at Amazon, Best Buy, or Bitkey. That's B-I-T-E-Y-D-Wold. Taking a glance around FinTwit, Stockwater, have certainly formed some strong opinions about what will happen next. Michael Anitonelli, Market Strategist at Baird tweeted,

How can you look at micro strategy and think anything you learned in serious finance classes matters? A made-up financial instrument based on some math formula and a whole lot of FOMO being bought by a company who sells $1 of their stock to earn $3 a market cap. Others who were early to the trade think it's time to count the money. Quinn Thompson of Lekker Capital, one of the loudest Microstrategy Bulls over the past year, is already out, commenting, if I were a micro-strategy holder right now, I would sell it all. macro researcher Andrea Steno-Larsen wrote, I am out of Microstrategie now, too crazy.

Probably the best trade of my life. We'll consider how to allocate in crypto from here. Still, what a crazy story. An indelible part of this cycle for sure. Catching up on options, the launch of iBit options has been a smashing success blowing volume estimates out of the water. However, the new derivatives market

is also giving us some insight into how frothy things are becoming. Position reports are showing most of the volume is clustered around the December 20th expiry date and heavily focused on upside call. Most of the bets are being placed on Bitcoin rising between 10% and 20% over the coming month. Some neat chip haul, a crypto-quant researcher, wrote, It's pretty interesting to see professionals D-Gen into $100 strikes, effectively meaning a doubling of Bitcoin prices given Ibit trades near $50.

His thread didn't contain a reasonable explanation for the outsized bets, but it did note that the same bet is showing up on Deribit. It's worth noting that these hyper-bullish options are priced like lottery tickets. They traded hands at just 15 cents less than half a percent of Ibit's current price. Still, the volume was completely anomalous and shows that there's still more than a few market participants willing to take that bet. Even outside of micro-stratage's epic run, potential top signals are the talk of the week. Phantom, the leading Solana wallet, hit number nine in the Apple App Store as TikTokers discovered meme coins. For context, that's higher

than WhatsApp and Instagram. DWF, one of the premium market makers in the space is launching a $20 million meme coin fund. In Bitcoin land, CryptoQuant put out a list of five indicators that price is hitting a local top. Alongside on-chain metrics, the Fear and Greed Index is persistently at the highs. CryptoQuant noted that old coins are being sold at elevated levels, but not quite at previous highs. Santiment, an intelligence platform that tracks social media sentiment, suggested we might have a little way to go yet. They wrote, The commentary across social media could be described as lukewarm at best. The lack of euphoria is an encouraging sign as FOMO typically leads to corrections. As long as there is retail trader

disbelief, whales can continue pumping cryptocurrencies with little resistance. Veteran trader mustache thinks it's just getting started, tweeting, 100K is coming, ladies and gentlemen. Bitcoin just started its parabola like in previous cycles. The professional capital allocators are telling an interesting story, suggesting this cycle is nowhere near over. Chris Berniske, a placeholder ventures, who is not among the hypsers in this industry, wrote, my email inbox is mushrooming with people looking to allocate to crypto, a sense of urgency in the requests. The entire capital stack is realizing it's massively under-allocated. The trend is higher. For now, Bitcoin looks relentless. The price jumped to almost 98,000 overnight and at the time of recording is in fact just above 98,000. Investor Meltem DeMirers really summed

up the mood at the moment tweeting, Bitcoin is what happens when an unstoppable force meets an immovable object. Bitcoin stocks had record volume traded, higher volume than the entire UK stock market. Record Bitcoin ETF options volume, new Bitcoin all-time high nearly every day the last week. Haters in disbelief. For author, Fortune, friends, that's the question, but regardless, it is very clearly fun. For now, that is going to do it for this breakdown. Appreciate you listening. As always, Until next time, be safe and take care of each other. Peace.