The Breakdown - Bessent Says US to Stick with Bretton Woods Institutions

Episode Date: April 25, 2025

NLW discusses market reactions to US tariff negotiations, potential tariff reductions with China, and Bretton Woods institutions facing criticism from the Trump administration for mission creep. He explores Bitcoin's reduced volatility, increased institutional adoption—including the controversial SoftBank-Tether Bitcoin venture—and ends on Trump's meme coin gala announcement driving speculative crypto behavior. Sponsored by: Crypto Tax Calculator Accurate Crypto Taxes. No Guesswork. Say goodbye to tax season headaches with Crypto Tax Calculator: Generate accurate, CPA-endorsed tax reports fully compliant with IRS rules. Seamlessly integrate with 3000+ wallets, exchanges, and on-chain platforms. Import reports directly into TurboTax or H&R Block, or securely share them with your accountant. Exclusive Offer: Use the code BW2025 to enjoy 30% off all paid plans. Don’t miss out - offer expires 15 April 2025! Ledger Ledger, the world leader in digital asset security, proudly sponsors The Breakdown podcast. Celebrating 10 years of protecting over 20% of the world’s crypto, Ledger ensures the security of your assets. For the best self-custody solution in the space, buy a LEDGER™ device and secure your crypto today. Buy now on Ledger.com. 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, April 24th, and today we are talking about the remaking of Bretton Woods. Before we get into that, however, if you're 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 in the show notes or go to bit.ly slash breakdown pod. Well, friends, tariffs continued to be the most important driver in markets, but a relatively quiet day in the headlines led to one of the least volatile trading sessions of the month. Stocks opened strongly after the latest news of de-escalation was digested overnight, but

pared back gains throughout the day. Bitcoin traded in a tight range around 93,000 as traders waited for the next move from the administration. The Indian Trade delegation was in town for their turn at the negotiating table. Economic Affairs Secretary A.J. Seth said that the first order impact of U.S. tariffs would cause GDP to drop between 0.2 and 0.5%. Something he called not a huge impact. However, he added that, quote, the second order would be important. The second order is if the global economy grows less than expected. Bloomberg reports that the bargaining chips on the table are the removal of tariffs on bourbon and high-powered motorcycles. Similar to the idea of importing American trucks to Japan, it seems like this administration likes the idea of Harley-Davidson's on the streets of Mumbai.

Perhaps more importantly, the Wall Street Journal reported on a rumored policy shift on China tariffs. They characterized the move as a, quote, bid to de-escalate tensions with Beijing that have roiled global trade and investment. One senior White House officials said that China tariffs were likely to come down from their current 145% to between 50 and 65%. There's also apparently a plan to apply Chinese tariffs in tiers across different sectors. Items that the U.S. deems to not be a threat to national security will see a 35% tariff, while items that are deemed at strategic U.S. will have 100% tariffs applied. This style of approach was proposed by the House Committee on China late last year. Notably, the accompanying bill proposed phasing in those tariffs over five years rather

than five minutes, but here we are. Beijing is now signaled that they are open to trade talks with the U.S., but warned that they wouldn't negotiate under the shadow of continued threats from the White House. WS.J sources familiar with Chinese policy circles said that Trump's comments from Tuesday were viewed as a sign of him folding. bristling at the idea that he was capitulating, Trump reiterated. to the press that China tariffs were still at 145 percent, stating, I haven't brought it down. Circling back on the events of the week that led us to this point, Axios reports that Trump met with the CEOs of major retailers, including Walmart and Home Depot on Monday. An administration source said, the Big Box CEOs flat out told Trump that prices aren't going up. They're steady

right now, but they will go up. And this wasn't about food. He was told that shelves will be empty. James Sirawicki, the author of Wisdom of Crowds, wrote, These stories are amazing because they all involve people telling Trump what everyone else already knows, but which he's somehow been oblivious or indifferent to. Still, overall, this was one of the slowest days of tariff news since Trump unveiled his poster boards in the Rose Garden three weeks ago. But that doesn't mean that there weren't some interesting signals to be seen. Throughout the week in Washington, annual meetings have been held for the IMF and World Bank.

Yesterday, Treasury Secretary Scott Besson made it clear that the global institutions are falling short in the eyes of this administration. In a speech at the Institute of International Finance on Wednesday, he said, the Bretton Woods institutions must step back from their sprawling and unfocused agendas. The IMF's mission is to promote international monetary cooperation, facilitate the balance growth of international trade, encourage economic growth, and discourage harmful policies like competitive exchange rate depreciation. Besson committed the administration to playing a continued leadership role in the two organizations.

However, he said that the White House would, quote, demand that the management and staff of these institutions be accountable for demonstrating real progress. Bessett added, the IMF and World Bank have enduring value, but mission-creas. has knocked these institutions off course. We must enact key reforms to ensure the Bretton Woods' institutions are serving their stakeholders, not the other way around. The speech was littered with references to social and diversity agendas adopted by the institutions over the years, with Besson stating, these issues are not the IMF's mission. He stopped short of announcing a withdrawal from the institutions, which had been proposed in the Heritage Foundation's Project

2025. Instead, he declared, America first does not mean America alone. To the contrary, it's a call for deeper collaboration and mutual respect among trade partners. The Treasury Secretary expressed a belief that the two institutions, quote, serve critical roles in the international system, and the Trump administration is eager to work with them so long as they can stay true to their missions. Turning to the ongoing trade war with China, Besson said, there's an opportunity for a big deal here, that the U.S. is looking to rebalance to more manufacturing, the identity of that would be less consumption. If China is serious on less dependence on export-led manufacturing growth and are rebalancing towards a domestic economy. If they want to rebalance, let's do it together.

The speech seemed to be well received by the upper echelons of the central banking world, with former Bank of England Governor Andrew Bailey saying that he was, quote, frankly, very encouraged by Besson's comments on the IMF and the World Bank. I think the challenge here is that while many people probably had a very similar reaction to that, being pleased to see this very high-ranking Trump official, affirming that the U.S. wanted to stay involved in these international institutions, rather than burn them to the ground unilaterally, but at the same time, I don't think anyone is quite clear on how much Besson's words actually reflect the opinions of the administration. In fact, I think if anything, there's a sense that maybe they don't.

Besson has sort of become this interesting bellwether of how much Trump is willing to listen to mainstream financial institutions in Wall Street versus just completely being willing to go it alone. Now, taking a short detour into the world of gossip and innuendo, Axios reports, speaking of Bessent, that Elon Musk and Besson almost came to blows. One witness said it was two billionaire middle-aged men thinking it was WWE in the Hall of the West Wing. The two were reportedly shouting at each other chest to chest, with another witness stating, they were not physical in the Oval, but the president saw it and then they carried it down the hall. And that's when they did it again. It was quite a scene. It was loud, and I mean loud.

The dispute was apparently over a disagreement about who should leave the IRS, but spilled into more personal territory. Axios wrote that, quote, Besant criticized Musk for overpromising and under delivering budget cuts with Doge. Musk clapped back by calling Besson a Soros agent and accusing him of having run a failed hedge fund. There seems to be a huge number of sources willing to air out the dirty laundry, with one admin official saying it wasn't a fight about right or wrong, it was about control. It does seem like Elon's days in the West Wing are likely numbered. The billionaire announced during Tesla's earnings call that his doge work would, quote, drop significantly starting in May in order to allocate more time to his car company,

which is facing its own struggles. The Doge tracker claims that the cost-cutting agency has, save the U.S. government $160 billion, a far cry from the $2 trillion promised by Elon on the campaign trail. Haden the transit guy on Twitter summed up the feelings of many when they wrote, so Doge just cut a bunch of staff in random agencies without making meaningful efficiencies and call it a day, question mark. Today's episode is brought to you by Crypto Tax Calculator. If you're looking for accurate crypto taxes with no guesswork, check out Crypto Tax Calculator. Get accurate CPA-endorsed tax reports with full support for IRS rules. For those who

fallen down the on-chain rabbit hole, CTC has you covered with more than 3,000 integrations. They have full support for defy staking and NFTs. Import directly to TurboTax or H&R block or share securely with your accountant. Create an account, import your sources, and review. It's that easy. Hello, friends. I am thrilled to share that Ledger is once again partnering and sponsoring with the breakdown. Many of you know, but for those of you who don't, Ledger is the most secure hardware wallet for your crypto and logins. It's trusted by 7 million users and secures 20% of the world's digital assets. What's more, Ledger is a lot more than wallets. Over the recent years, they've built a comprehensive ecosystem of products and services, all of which are designed to make

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If you are in this space, you owe it to yourself to at least check out Ledger and their ecosystem what they have available to you. So thanks, once again, to Ledger for sponsoring the show. Anyways, the Macro Show continues unabated, and we will continue to keep track of the machinations. For the second part of this show, though, however, let's turn our attention to the Cryptosphere,

where Bloomberg is reporting that Bitcoin is now trading with a much lower 10-day volatility than the NASDAQ or S&P 500. They suggested that, quote, the much-reduced volatility could be because Bitcoin is less exposed to derivatives and program trading. Gotta say, never thought there would be a day where the crypto trading bots would be viewed as less risky than institutional market makers like Citadel and Jane Street. Bloomberg suggested that this lack of volatility could lead some corporate managers to, quote, revisit whether it could be more resilient in the complicated global trade environment.

Saying this differently, the premier financial news outlet is now suggesting Wall Street might flee their risky S&P 500 exposure to the safety of Bitcoin. Meanwhile, Bloomberg ETF analyst Eric Belcunis is picking up on some crazy hedging behavior going on at the moment. He wrote, this is wild. There's basically record flows going into leverage long ETFs, but also cash and gold ETFs, as people buy the dip and hedge the dip at the same time. May the best DGen win. Now, the strategy of getting levered long on risk assets while also holding gold seems to have an analog in the digital asset space. David Seamer, the CEO of Asset Manager, Wave Digital Assets said, institutional and sophisticated retail traders are increasingly turning to crypto derivatives platforms

to navigate macroeconomic risk and uncertainty. This is perhaps why crypto platforms are increasingly building out their derivatives platforms as traders seek leverage like never before. Coinbase, Robin Hood Cracken, and the CME have all announced new markets, new acquisitions, and new strategies as the fight for control increases over the growing crypto derivatives market. Speaking of Coinbase, interesting comments from their institutional head of strategy, John D. Augustino, he basically said that if you've been selling Bitcoin or over the past few weeks, there's a reasonable chance that sovereign wealth funds have been buying your bags. Appearing on CNBC, he said that institutions and sovereign wealth funds were accumulating

Bitcoin this month while retail traders were exiting the markets. He argued that these large players were looking for hedges against currency inflation and macroeconomic uncertainty. In a follow-up to yesterday's story on the new Bitcoin joint venture between SoftBank, Cantor Fitzgerald, and Tether, Jack Mullers has been tapped to join his CEO. The strike founder joined in an announcement on Wednesday firming up details around the new firm. The announcement said that the company called 21 Capital would launch with $3.6 billion worth of Bitcoin in its treasury. Plans are already in place to add to that sizable stack. The company will go public via SPAC and begin issuing equity and convertible bonds, very referentially duplicating the Michael Saylor

Playbook. Their 42,000 Bitcoin starting treasury will be enough to make the company the third largest Bitcoin firm behind strategy and Marathon Digital. Tether will have majority ownership with SoftBank as a minority stakeholder. The announcement wasn't clear whether Cantor Fitzgerald would have an equity stake in the company or merely participate as a partner. The investment bank's 5% stake in Tether will give them a slice of the pie in any event. The press release stated, 21 is structured to be a day one Bitcoin native company that will strategically allocate capital to increase Bitcoin per share. The company stated that they intend on, quote, supporting financial products built with and on Bitcoin, including lending models, capital market

instruments, and future innovations that will replace legacy financial tools with Bitcoin-aligned alternatives. Tether CEO, Paulo Ardino stated, with Jack at the helm, we're proud to support this effort to further Bitcoin's adoption and reinforce its role as the ultimate store of value. And of course, as you would expect and hope for, even something that seems so robustly, clearly good, is generating debate among Bitcoiners. Tales from the Crypto cheered the announcement, tweeting were winning, but podcaster Daniel Price wrote, were being co-opted. This isn't winning. This is not winning. Rob Hamilton, the CEO of Anchor Watch, pointed out, quote, some of you really thought hyper-bitcoinization would happen without institutional adoption?

What, million-dollar Bitcoin by using it in a farmer's market and bake sales? Did you think all the companies and governments were just going to ignore it? Bitcoin author Adam Livingston believes that this is a big strategic play from Tether, posting, let's be real. This is a corporate exoskeleton for Tether's global liquidity machine to operate inside U.S. equity markets and hoard the scarcest asset on Earth without regulatory speed bumps. It's like giving a cartel diplomatic a community than asking them to do quarterly earnings calls. SoftBank didn't join for fun. They saw micro-strategy minted 2,000% return on Bitcoin purchases and said, cool, now let's do it ourselves. The company is launching with $585 million in pipe funding, $385 million of it on convertible notes backed by Bitcoin at a

three-to-one collateral ratio. That's financial LSD for every structuring desk on the street. The moment Bitcoin rips, they release collateral, unlock capital, and buy more. Recursive Bitcoin compounding inside a public vehicle. This is Sailor, but with a global stable coin treasury, high-frequency derivatives desk, and a Tokyo war chest. And here's the kicker, Tether will own majority control. That's like OPEC launching a public oil ETF that owns half the oil and pricing it at Nav. And Wall Street's fine with this. Why? Because the fees are good, the volatility is tradable, and the suckers at home still think were early. This isn't the institutional adoption phase anymore. This is the corporatized colonization of the Bitcoin Protocol, executed through a Cayman's

shell and priced in your grandchildren's tears. You're not front-running Wall Street anymore. You're being front-fed the illusion that you are. And the price? You'll watch it go vertical while CNBC blames inflation and seven sovereign ETFs pretend they understand what just happened. Bitcoin's next leg up won't be demand-driven. It will be capital, structured, engineered, manufactured, monetized. Megacorporations are now turning Bitcoin into the new global collateral standard and selling you the derivative. Welcome to the Great Absorption. Hope you brought a chart. Now obviously this is a little bit of a pessimistic view. Certainly a well-written one, I have to say. But again, I always continue to think it's healthy, that even things that seem as robustly and clearly good for Bitcoin are still debated by

bitcoins. That's the thing that gives me the most confidence in this asset and in this community in the long run. Lastly today, President Trump has announced a gala dinner for his most loyal bagholders. The top 220 holders of the Trump meme coin will be invited to a gala at the Trump National Golf Club in Washington at the end of next month. While the meme coin experienced a hot launch, it was down 85% in the three months following inauguration. The cynics will say this is just an exit pump as team tokens began unlocking earlier this week, and if that's the case, it certainly worked with the token gaining 52% on the announcement. It's still 75% down from the highs, but of course, that's not a problem for tokens allocated for free to the team. Crypto Caleo tweeted,

if you're curious, around 500 million worth of Trump unlocked less than a week ago, which also kicked off a daily unlock of around $5 million worth of tokens, which will last for the next couple of weeks and be increased in July. Enjoy your dinner, though. Others took a more optimistic view. Runner XBT believes the president is assembling the greatest minds of crypto Twitter to resolve the trade war, tweeting, top five Trump holders will get to pick new tariffs on China. For now, that is going to do it for today's breakdown. Appreciate you listening, as always. Until next time, be safe and take care of each other. Peace.