The Breakdown - Bhutan Times the Top, CLARITY Hits Markup, and the Onchain Pokemon Card Boom | The Breakdown

Episode Date: May 13, 2026

Bhutan timed the Bitcoin top almost perfectly. The CLARITY Act may only let 10–20 chains qualify as “decentralized.” And onchain Pokémon cards are popping off. David runs through all three. TIMESTAMPS: (00:00) Intro (01:31) Bhutan Sells (06:37) Nexo Ad (07:12) Bhutan Sells (Cont.) (14:39) CLARITY Markup (15:40) Nexo Ad (16:31) CLARITY Markup (Cont.) (25:30) Onchain Pokemon Card Boom FOLLOW THE SHOW › David — https://x.com/dcanellis › The Breakdown — https://x.com/TheBreakdownBW SPONSORS › NEXO Nexo is the premier digital wealth platform. Receive interest on your crypto, borrow against it without selling, and trade a range of assets. Now available in the U.S with 30 days of exclusive privileges. Get started at http://nexo.com/breakdown Get top market insights and the latest in crypto news. Subscribe to the Blockworks Daily Newsletter: https://blockworks.co/newsletter/ DISCLAIMER As always, remember this podcast is for informational purposes only, and any views expressed by anyone on the show are solely their opinions, not financial advice.

It is Wednesday, May the 13th. This is The Breakdown. I'm your host David Canales. We've got a few quick stories for you this morning to get you ready for the hump day ahead. We have clarity is finally headed to markup in Congress, which means they're going to debate it. They're going to amend it. They're going to push it forward. Hopefully we're going to find out.

We're going to look into the latest on that. We're also looking at the Kingdom of Bhutan. Their sovereign fund, Drew Holdings, offloading their Bitcoin. seemingly endlessly right now. We're going to take a look at the numbers and see how those sales stack up against other selling miners and against strategies upward momentum.

We're also going to be looking at on-chain Pokemon cards. Hella bullish. NFTs might not be back, but figital cards. Real world collectibles. You've heard of real world assets. Now it's real world collectibles. They're popping off.

We're going to take a look, close look, at what's going on over there. So, without further ado, this is the breakdown. Let's get to it. This episode is brought to you by NXO. Step into a new era of digital wealth. Earned interest on your digital assets. Borrow against them without selling and trade all in one platform.

Get started at nexo.com slash breakdown. Nothing said on the breakdown is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only and any views expressed by anyone on the show are opinions, not financial advice. Host and guests may hold positions in the company's funds or projects discussed. Okay, so first up, let's, let's, take a close look at what Bhutan is doing because Bhutan, you know,

it was big news when a sovereign kingdom like Bhutan started mining Bitcoin a few years ago. And it wasn't just Bitcoin that they were doing. They were also, they also were involved in deposits to Celsius. They're also Ethereum validators.

They get validator rewards for what they do on Ethereum. And they've also done some other stuff on other chains too. So it's not just Bitcoin, but Bitcoin was by far in a way the most high profile and attention-grabbing activity that Bertan was up to. And if you don't know, Bhutan is very rich in hydropower. So it made sense that they would start mining Bitcoin with some of the untapped energy associated with its hydropower

facilities and natural resources. So since then, I mean, they built up quite a sizable war chest of Bitcoin in those years. We have Arkham up here on screen, which tracks their holdings. And we can see that at its peak in July last year, their Bitcoin holdings were in excess of $1.4 billion, close to $1.5 billion worth of Bitcoin. So quite a lot of Bitcoin. And I mean, since then, you can see on screen that there has been a massive liquidation. And this isn't, This isn't used to anyone that's been following this even somewhat closely. I think it was reported last month that they had already offloaded 70% of their holdings, which, I mean, it's a decent chunk.

And so what I've done is I've just kind of taken this data from Arquam and plotted it onto my own chart because the Bitcoin market is much bigger than just Bhutan. You know, there's also mine is offloading. Marathon is offloading a bunch of Bitcoin. A bunch of other miners are doing the same thing because they're pivoting to AI to servicing AI companies and they don't really need to hold the Bitcoin on their balance sheet if they want to fund those developments. But at the same time, we also have strategy that has just started buying Bitcoin again after a brief hiatus. So I just wanted to plot all of these things together on the same chart,

just so you could have some kind of visual context over how these flows are at least showing up to the eye rather than just in the news headlines and in charts like this one, which they do show the value of Bhutan's holdings drop, but it doesn't plot that against the price of Bitcoin, and it doesn't really compare it to other flows of similar entities. So let's have a quick look. Okay, so you can see on my street here. I've plotted the net flows of Bhutan by, I think, by Fortnite,

against the price of Bitcoin in blue. And this is all the day. data going right back to to 2021 when Bhutan started fooling around on chain. And this is just Bitcoin. So like I mentioned that there was also, they were doing some stuff in Celsius. They're also doing some stuff with Ethereum. That stuff is, it's on a much smaller scale. They are actively receiving Ethereum validator rewards at least over the past month or two, but it's on a much smaller scale than what it's doing with Bitcoin. So we can see that these are net flows. And it's not like Bhutan hadn't sold.

Bitcoin before. They had sold Bitcoin periodically, effectively throughout the end of the 2021 ball market, and even at times through the bear market, but you can see that they mostly mined, they mostly had positive flows from their mining throughout even the bear market, and even as Bitcoin was going up towards the start of the 2024 bull market around President Trump's victory in that election season. all of a sudden something changed. Something changed around July 2025 just as Bitcoin was reaching its peak. So whoever is in charge of Bhutan's sovereign fund perhaps understood that Bitcoin had a high chance of topping around this time. And actually, their biggest offload came really just before the top.

So I have to say that Bhutan managed to time the top almost perfectly. And since then they've been selling quite regularly. Most the biggest offload was clearly around October 2025. And the recent sales from Bhutan are only about on par with what they were doing when the market it first peaked a few months before that October, October, November 2025 top. So this might give you some context of the trajectory of Bhutan's involvement in the Bitcoin market. They aren't mining that much right now.

They are effectively only selling. Step into a new era of digital wealth with NXO, the premier digital assets wealth platform. Earn interest on your digital assets. Burrow against them without selling. Trade a wide range of crypto. currencies, all in one place. Nexo is now available again in the US with an evolved product suite tailored to today's market. For a limited time, new US clients can unlock 30 days of exclusive wealth club premier benefits, including enhanced interest rates, reduce borrowing costs,

and up to 0.5% crypto cashback on trades. Get started today at nexo.com slash breakdown. As always, investments in blockchain technology involve risk. Terms and conditions apply. Do your own research. Yeah, so if we go back to Arkham and have a look at their inflows, we don't see any mining activity here and perhaps there are mining addresses that Arkham has not added to its API that is reflected in the data that I'm showing on screen but there is effectively no flows in here

from any mining pools usually they would be mining through ant pool but going back now 10 months there are no inbound transfers from their mining activity So at least from what we can see publicly, Bhutan has seemingly stopped mining Bitcoin and now are exclusively selling it. And we can see here, you can see what I'm referring to here, Titan Builder, is paying out small amounts of Ethereum, small amounts of ether to Bhutan. But it was never very much.

It was only $50 worth of ether at a time. So quite small scale operations there. Perhaps they were just dabbling and testing the waters, so to speak. So that's Bhutan. Now, I've actually plotted these against Marathon, being Bitcoin miner that's pivoting to AI, at least for some of its operations, and strategy,

which is, of course, the Bitcoin buyer in chief still. At least maybe BlackRock's ETF is rivaling it for that, but at least micro strategy is a single entity, we'll say that. So I have another chart here. Let's take a look at this. Okay, so an apologies if you're listening to audio only. I'm going to do my best to make it easy on you to follow along,

even though you can't see what I'm showing on screen with the charts. So I've localized this data to just the past two years now. And so this is again, this is the flows of Bhutan against the price of Bitcoin. We can see again this massive dump around October of close to half a billion dollars worth of Bitcoin. But Marathon, if we just add Mucon, marathon into the mix, we can see the day have also followed a similar trajectory as Bhutan. When Bhutan is selling, Marathon has also been selling. And actually, I mean, aside from that big dump from Bhutan in October,

Marathon has actually been selling more Bitcoin than Bhutan and continues to do so. And in the past few weeks, a few months, they actually have been selling about the same amount of Bitcoin each. That might tell you something that perhaps, no matter who, you are sovereign state or highly funded publicly traded company you are feeling the burn so to speak when it comes to the price of bitcoin and overheads and trying to make sure that everything on a whole remains remains hunky dory for you as a company or mining outfit i suppose i should say so for one that's interesting but and as as bleat as this looks that

this selling coincides with the price of Bitcoin going down. And it might be easy to think that perhaps that Bhutan or Marathon or whatever other miner are actually keeping the price of Bitcoin down. And only if these types of entities stop selling would we see Bitcoin head back to 100K. I'm just going to add micro strategy flows into the mix on this chart and just see what happens to these outflows. Boom. You can see that whatever micro strategy is doing,

vastly outweighs the dumps from Bhutan and Marathon. And I would even hedge a bet that if we cumulatively put all of the publicly traded mining net flows together, they would still not outweigh what strategy is buying. So, you know, you might see headlines. You might see headlines all the time. This miner sells Bitcoin. Bhutan has dumped all its Bitcoin. Mining isn't profitable anymore.

The market is shifting away from a reliance on miners only. I've said it before. I said it I think only on Monday or maybe even last week. The Bitcoin market is so vastly diversified, especially considering ETFs. If I put ETFs into this mix as well, I would say we would not even be able to see the net outflows from Bhutan and Marathon anymore. So this would give you some kind of indication of how close attention that you need to pay to the Duma headlines that say Bitcoin miners are dumping their Bitcoin and this is bad for the price of Bitcoin.

What we should be looking at is are ETFs buying? Is micro-strategy still buying? And on both those accounts, it does seem to be the case. If we want some context on that, we can jump into the Blockworths research platform because we do have a handy crypto ETFs tab here. And let's just go only to the Bitcoin tab. And let's have a look at net flows. We'll set it to weekly.

How about that? We set Bitcoin ETF net flows to weekly. We can see that we have just recorded what seems to be. be the best inflows week on record since, since January. So, ETFs are buying. And I'm sure that it isn't just strategy that's buying either. I'm sure there are other digital asset treasury companies that are ready to buy as well. So that'll give you some context. Now, in terms of Bhutan, so I ran these numbers very quickly based on the full history of Bhutan's, uh, operations on the Bitcoin network.

But what I found cool is that I actually took a look at the dollar value of the Bitcoin that flowed into Bhutan's wallets based on the time of the transaction. So the value of the Bitcoin that Bhutan mined. And compared that to how the value of the Bitcoin, when they sold it, to see how how much money U.S. dollar-wise, Bhutan was able to generate from its mining activities at the end of the day. So they've mined Bitcoin and then they've sold Bitcoin. Did they make a profit on that, a quote-unquote profit? And of course, we don't know how much it cost to run their mining operations. So there is overheads, of course, in this. But at least from a raw dollar amount,

it seems that the value of the Bitcoin that Bhutan sold, the value of the Bitcoin that they sold, It's actually $467 million more than the value of that Bitcoin when it was mined. So potentially almost half a billion dollars, Bhutan made in at least revenue from selling its Bitcoin, we'll say that. So bidups to Bhutan, hopefully they put that money to good use if those numbers are indeed close to reality and it didn't cost almost half a billion dollars to start mining Bitcoin with hydropower in Bhutan. but somehow I doubt that.

Okay, what have we got next? All right, so we seem to be getting closer to closure on clarity. Clarity is set for markup tomorrow Thursday, May the 14th, which if you're not familiar with how Congress works and how bills work through Congress, markup essentially means that we are headed for the final stage of debates is my understanding. and I just want to put a word of caution that if you've been following clarity and even the Genius Act, then you'll know that the specific language that are in these bills gets debated constantly and it gets changed all the time.

So I'm not too sure the utility in really unpacking step by step every single change that is going into these bills because as far as we know tomorrow, they might be amended, they might be debated, they might be changed, and we're going to end up with a different clarity act altogether after this next round of deliberations. Let's take a moment to talk about Nexo. Nexo delivers a premier digital assets wealth platform designed to help clients build, manage, and preserve their wealth, earn interests on your digital assets, access crypto-back credit without selling your holdings, trade with advanced tools, all supported by 24-7 client care. Now back in the US, Nexor offers new clients 30 days of exclusive Wealth Club Premier Access. That means enhanced

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Do your own research. But in any case, we have this tweet here from Gabriel Shapiro. I don't want to say Twitter crypto lawyer, but crypto lawyer that tweets a lot. He is saying that U.S. Congress is officially more cipherpont than most of you on here. He says the New Clarity Act is much better than ever on respecting decentralization, loosely speaking, and gets rid of the we didn't promise anything. So now we're unregulated loophole many of us were worried about. He's making the case that there is a more specific definition for,

decentralization in in the new language and he says that corpo chains will struggle to meet this standard this doesn't mean that they're illegal but it will mean sales of the token by insiders etc are much more regulated a much more disclosure is required l2s will have to make sure their security councils are quite narrowly scoped and he has some i believe it's chat gbt or claude output here so personally i would take it with a little bit of a grain of salt but his framing is that the language in the Clarity Act as it is going to mark up tomorrow says that there are triggers that says something is not decentralized and one of them is that a personal group under common control or acting in concert can control or materially alter functionality operation

or consensus agreement rules so if one person or group that is controlled by by one entity or one person can make changes to the code base or the consensus rules at all, then it's probably centralized. And it demands certain rules when it comes to token sales and registration and disclosure. And there is, at least in the current language, there is like a safe harbor that gives teams a few years in order to decentralize. So all of this is quite fluid, so to speak. There are guard rails in order to launch a chain that is centralized because we all know, Even Bitcoin when it launched was really centralized. Now it's not.

Same goes for a bunch of other chains too. What's curious is the third one here is that, and this makes the most amount of sense, is that if the chain is not censorship resistant, then it's probably not decentralized. A personal group under common control can restrict sensor or prohibit protocol use or system-based user activity. And I mean, all this sounds really good.

I'm hoping that in practice that it can actually be figured out because I'm not the first person to point this out, but we have never, ever had an exact definition of what decentralized actually means. The SEC used to say stuff like sufficiently decentralized and stuff like that, but we still don't even know what that means. And at least it seems from the outset

that the Clarity Act is trying to give some definitions for what that means with these three non-decentralized triggers here that Gabriel Shapiro is sharing. So that's all well and good. As someone points out in the thread that there are probably maybe 10 or 20 chains, networks protocols that would actually not set off any of those triggers. So in terms of how many protocols and chains are sufficiently decentralized, maybe it is only a couple of dozen.

That would make sense to me, considering how difficult it is to actually build up enough of a, resilient decentralized network to where no actually no one entity is in is it can control it even through proxies that sort of thing what i have historically always figured is that the most interesting projects are always the ones that do have robust decentralization and so if you extrapolate interesting to worthwhile then we know that sufficiently decentralized protocols cannot be regulated. The US government cannot regulate the Bitcoin network.

The US government cannot regulate the Ethereum network. These are global networks with global scale that are impervious to what human law says. Now, there's, there are on ramps and off ramps. there are functions within the crypto space that can be regulated when they do interact with these networks at points in time where they do connect with chain space. But that's very different than regulating the Ethereum network itself. There's no laws that demand Ethereum validators or Bitcoin validators must do this or must do that. It's always to do with money transmitter rules and how you hand.

the intersection of the Fiat world and the crypto world. So at that point, to me, the most interesting and worthwhile crypto projects, crypto protocols, chains are ones which will never be able to be regulated because the networks themselves are ultimately decentralized. If you take out one Bitcoin miner from the network, more Bitcoin miners will join in order to fill the gap. I am hoping that we can get to a point where it is the goal to sufficiently decentralize in order to escape the restrictions in the Clarity Act, in the Genius Act.

And I know that it's very bullish for investors in the space, people operate in the space, thought leaders operating the space to say that as soon as we get regulation, as soon as the Clarity Act passed, As soon as the Genius Act passes, we're going to see massive growth because we finally have an understanding of what regulators are going to focus on if they do start enforcement actions all over again. And having clear boundaries in which to operate in can only be bullish for the space. And on one hand, I do agree, but on another, just like what this tweet is saying.

Because I'll read this tweet out on screen. any idea why every project or protocol simply ignores these requirements, is that that enforcement was deprioritized when Trump came into office? Any idea if that simply just carries on? Based on the above rules, there are no more than 10 or 20 projects in the entire industry that are clear. And Gabriel Shapiro replied, they're not requirements yet. Ultimately, all of this is tied to fundraising. After clarity passes and is implemented, new projects will need to craft their capital raising strategies and will be much more likely to take these requirements seriously from the beginning. as part of their plan.

I do see how that could be the case. I worry that there are many projects, especially the most established projects, that are basically on the line between what these definitions of decentralization are and what was before in that they were operating in this wishy-washy world of perhaps we are sufficiently decentralized.

It would take a regulator to decide throughout a court case as was the case with Ripple and so on. So we're probably fine. We'll just keep going until an enforcement letter shows up. Well, now we're going to have regulations that seems to be trying to define what decentralization means. There is clearly going to be a transitionary period where there will be a need to actually pay close attention to how, How decentralized are we really at all levels of the stack? I would love to know what the final language is, as the rest of the industry would in the

Clarity Act. What about multi-seeps? How many signers on a multi-seek that can change the code base do you need to be sufficiently decentralized? Is hyperliquid sufficiently decentralized? we're going to find out, I suppose, or at least it seems that way. I also wouldn't be surprised if just this dragged on for another five or six years and we have a regulator start trying to enforce these regulations all over again with messy court cases as we did, and we're essentially back to square one in terms of adherence to these types of rules in particular because it does seem quite subjective at the end of the day

and you ultimately might need courts to decide. But hey, let's see how this plays out. We'll say that. Okay, on to the next one. Okay, so I thought I'd quickly touch on this because the topic of NFTs has come up quite a lot on the show lately. Originally, I had framed this as well, it's NFTs or its prediction markets. These are your two options.

I mean, in the meantime, another option has emerged, and that is real-world collectibles. And I have collected crypt up on my screen here. year. And how this company works, there's a bunch, there's a bunch like this. There's a lot of projects like this where you send in your physical cards if you want to trade them. And the company will scan them, upload them, keep them safe, and then allow, and tokenize them, and then allow you to trade them on their marketplace. And collected crypto is one of them that runs on Solana. And it is really popping off. So I've got the marketplace on street. And I mean, if you're familiar with,

I mean, it looks like OpenC, it looks like, you know, trading, trading amnets, and it works exactly the same way, except you get and actually get to inspect the actual card that was, that was scanned in, into the system, which is quite cool. And it all runs on, on Solana. You can use USDC. You can also use credit card and sold, but an overwhelming majority of transactions happens with USDC, with Sablecoins. I'll pull up the Blockworths Research Portal here.

Let's have a look at how, at how, how, collected trip is actually doing because it's really it's really growing quite well so you can see this is on my screen here this is the financials overview so net revenue is really climbing um and this is in a weekly view so last week was the third biggest week on record in terms of revenue um whereas the end of april it was the it was the highest when they when there was about two and a half million dollars worth of revenue flowing through the platform. About, I mean, you know, 60% of that seems to be gross profits. So collector crypto in very well.

And if we look at users, let's see how many users that the platform actually have. And yeah, so every day, I mean, it is a small crowd that is operating on the platform, but they do seem to be very highly engaged. We've got about 350, sometimes 400, 500 active addresses using collector Crypt. And it's not just a marketplace. They also have a Gatcha system, so which is essentially like a vending, a digital vending machine that spits out Pokemon cars and you open them. So there is a little bit of a gambling loopbox element to the platform, but, but I suppose that's, that's perfectly fine. So it might not be NFTs that are coming back just yet, but it is clearly on-chain digital

collectibles are having a moment. And it's not just collective crypto either. Over on, over on June, pull up a June dashboard. This dashboard is from ZK.Ape. We can see that collector crypt isn't even the biggest platform in terms of, in terms of revenue. Yeah, the biggest seems to be courtyard, which actually runs on Polygon. But the trend is still the same. Courtyard is the revenue is literally going up and to the right. There's also Emporium, FidgetTools and Collector Crypt, at least on this dashboard.

So all things looking positive for the on-chain digital collectibles part of crypto, bigger growth in anything that's happening in NFTs, that is for sure. But what I will say is that all this is well and good. It's really cool that these platforms are popping off. Because what it says to me is that this is servicing a crowd that might not be crypto-native. When you look at the discourse around these platforms, it is not within crypto circles that a lot of the discussion is actually happening.

It is in Pokemon circles. It is in trading card game circles that there are these marketplaces where you can trade your cards. And so that is a really great entry way in for people outside the crypto space to understand the utility of crypto rails and how cool stable coins are for peer-to-peer trading and all of that sort of stuff. what I would like to see is that these platforms are actually pumping the price of the Pokemon cards themselves. And it's very difficult to get this specific data because there's so many different Pokemon card selections. And Courtyard also, it is just Pokemon cards. It's also like sport trading cards. They also do watches and stuff like that too. So any real world collectibles essentially you can tokenize. But I mean the closest that I could get

is pokey data. There's a few other websites like this too. I'm showing it now on screen. So if we have the case where we have these trading card game platforms that are popping off, more cards being traded, more revenue is flowing through the platforms, lots of trades, lots of USDC, is that actually positively affecting the price of the actual cards themselves? So, I mean, let's take a look at some. We're looking at a mega-starmi.

And we can see that at least from last or from the end of April, there was a big spike up in the price of at least one of the grades in this particular card. But it's not like it was all the cards across the board that started pumping. Let's have a look. a mega cliff able let's see how the price of that is seemingly nothing happening there let's look at the highest value cards okay we're looking at a mialf and also i mean there is a slow rise in the price of of this particular card so hopefully what it would be really cool to see i really I really liked that these platforms are making money and I like to people using the platforms.

What I want to see is, can crypto bring deeper liquidity for these cards? And does that deeper liquidity convert to higher prices across the board? Which from then, I have to say that there's nothing more that you'd hope for in terms of crypto adoption and crypto process, at least within the trading context for real world assets and real world collectibles. Let's see if we can just find one of these ones. What else are we looking at? Let's look at Gengar.

Cheaper card. Yeah, prices have stayed exactly flat. So TBD on the impact of the rise in on-chain digital collectible trading and its impact on the asset prices itself. But in the meantime, there is clearly a lot of interest in this particular. side of crypto. So if I was to make a bet, I would say that that only emboldens the case that we might be headed for NFT season two, especially if this kind of activity percolates and then people start to say, well, do we just need to trade physical cards? Can't we just trade pure

digital art as well? And then all of a sudden, we're off to the races. So this is just what I'm looking at this morning on Wednesday, May the 13th. Check back in on Friday for more head. lines, more takes, and hopefully some more data. In the meantime, take care of yourselves. We'll catch you next time.