The Breakdown - Bitcoin Holds Up Better Than Stocks in the Tariff Turmoil

Episode Date: April 5, 2025

Scott Melker and NLW count down the 5 most important stories in crypto this week. 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 Friday, April 4th, and that means it's time for the Friday 5. 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 in the Breakers Discord. You can find a link in the show notes or go to bit.ly slash Breakdown Pod. All right, friends, welcome back to an episode.

Friday 5, lots to discuss today, by which I mean there is lots to discuss about the tariffs. Obviously, they are the big dominant economic force in the world right now, and so we discussed them in a number of different ways, most excitingly in terms of why Bitcoin is holding up so well comparatively. One thing that's for sure is that we do not live in uninteresting times. And so with that, let's dive into today's show. It's tariff time. And no one has any goddamn idea what it all is going to turn out to be. And anyone who says that they do is, lying to themselves or to you or to both? I mean, it's either 40 chess or 1D checkers, and I really have no idea which one it is at this point. I mean, if you look at the comments of

Bacent, who's obviously a smart guy and Lutnik and Trump, it seems like there's a greater plan here, but generally tariffs are not used as a blunt force instrument against every person you can possibly find. Usually they're very narrow and targeted and temporary, and it really feels like they're causing purposeful mayhem. Now, I guess the people who are huge fans of Trump and the administration will tell you that this is about a strategy to bring down rates, force the Fed to reduce, to bring manufacturing back home to stimulate the economy. Some of that makes sense. Critics will tell you that, uh-oh, China just went ahead and hit us back with a 34% tariff, which shows that they're not really scared or willing to negotiate. I don't think anybody, as you said,

has any idea what's going on, but I also don't think we're going to relent here. I think it's very ugly. Absolutely. So, I mean, I think that you have, you can kind of divide the world into three different areas, right? On the one hand, you've got the people who are just going to hate this policy no matter what, which includes people who dislike Trump. And then also a lot of people who have kind of like, you know, a traditional background in economics who think that this is insane, right? Everyone's rereading, you know, up on Smoot-Hawley. So there's that whole category. Unfortunately, Like that group doesn't really have that much to offer the conversation right now because the thing is happening, right? Whether it was stupid or not, like the thing is now here.

There's no historical precedent that we can really look to. And even historical precedents are really only useful before a decision is made. So here we are. And so then you have kind of these two other groups. One of the complicated things, I think, is that the people who are in the support this side have very, very different logics for why they are supporting this or why they think it's a good idea. To your point, some of them say it's about bringing rates down. Some of them say it's about fairness in the global system. For some, it's about a restructuring of the economic order. For others, it's about, you know, a new way of distributing, you know, the sort of the cost burden of a society away from things like individual taxes towards tariffs. Others think that it's just a power play based on where the U.S. sits in the world. And I think that the challenge is that this administration, has at various points kind of vaguely articulated all of those things. But it's not clear which, you know, what the ranked order is of priority, which is the most

important relative to the others. And it makes it hard to kind of understand what they're driving towards. And that's not just relevant for us kind of sitting here, jawboning about it. It's relevant for investors who are making decisions about what to do with this, right? if the goal is to resure manufacturing, that's a generational process where you really need people to be convinced that these policies are not just a temporary tool to change negotiations, but instead some long-term consistent thing. And I think, you know, Trump is answering that critique sort of by screaming that his policies are never going to change on truth social, which is a recent message that was posted. But anyways, the point is that I think that the lack of

clarity around which of the 10 possible types of 4D chess that this could be it is or that they're going for is tough. I also think, frankly, that, like, people didn't believe Trump that he was going to do this in the first place. I don't think anyone really did. The new denial is that Besson and Lutnik are actually on board with this. I think there's a lot of sense that, like, their hand is sort of forced. And the version of this that maybe they were on board with isn't this version, but, you know, they're under Trump, so what are they going to do? And who knows? Maybe that's right. Maybe that's wrong. Maybe they're full-throatedly interested in it. But the point is that when it comes to the market having any sort of anything that they can hang their hat on, there's just nothing there.

The middle area, the last sort of group of people are the people who are trying to, without being kind of like blithely dismissive or blithely accepting of anything that comes, like analyzing this from the standpoint of how likely it is to have the desired impact, whichever of those potential 4D chess moves it is. And I think that the challenging thing is that most of those folks, that I'm seeing are coming away from this with just a really strong sense of not seeing how this approach to shock and awe actually delivers that. Bala Jish Rinawsen made an analogy basically to a 98-year-old man who used to be able to bench press 315 pounds, hasn't bench pressed in 50 years, and tries to go straight to 315 pounds, and how does that work out.

His point being that you can't unwind, I think the exact phrase is you can't unwind 45 years a policy with 45% tariffs. And so even if that's what you're trying to do, it just seems unlikely to succeed. But, you know, look, we are now officially in the most aggressive, large-scale, turn-on-a-dime economic pivot in the history of modernity. And I don't see it going away. So all we have to do is what's next. It's interesting because he obviously said, this is policy, that he will not relent. We saw China come over the top, as I mentioned. But then adding to the confusion, I think, and the frustration for a lot of people, as then he gives an interview and says, yeah, we're totally negotiating and open to, you know,

phenomenal offers of negotiation, which, by the way, anyone would be rationally. If you get a great offer, you take it. But I just think that there's been wildly inconsistent messaging from Trump himself to some degree, but more than that from other people close to him. You have the one side that's aggressively saying, you know, this will replace the IRS. It's going to bring so much revenue into the United States. Tariffs are amazing. And then you have others with a full-throated commentary that this is a negotiation tactic

to get rid of evil unfair trade and to get rid of tariffs as a whole. And you can't have both of those things. And I think it just speaks to this incredible chaos and uncertainty that we've had that markets hate. I mean, you can take a look really quickly at pre-market. I mean, Dow is down 929. It was down as much as 1,200 this morning. I'm old enough to remember, and I'm not going to hold it against him because things change.

But when Trump literally tweeted if the Dow goes down 1,000 points in a day, the president should be immediately impeached, more than happened yesterday and is about to happen likely today. I mean, we're talking about 2% across the board pre-market after the worst day in four years when we had the S&P down 5%. NASDAX 6%. Now 10-year yield is 3.93 here. It was 3.9 just a few moments ago. Dow was over a thousand points down. Maybe a little relief, crude oil at 62 crashing, obviously. That's a good sign for consumers at the pump. But I mean, we can talk for days about what people think. We know right now what markets think. And it's not great. That said, taking a look at the crypto market, Bitcoin is up 1.5% in 24 hours. I'm up 1.22. In fact, everything that's not a stable coin in the top 10, is up in the last 24 hours. What do you make of Bitcoin's resilience in the face of this insanity? It's effectively been $82,500 all week.

It's gone up and down around that, but that's where it's been at the open and close of every day for now a week. Yeah. I mean, everything outside of Bitcoin, you kind of have to feel like it's nihilism and who cares and throw it to the world. We might as well try to get rich on the way out. I think with Bitcoin, I mean, look, there are a million possibilities. but I do think that it makes sense.

Like Bitcoin and markets tend to be correlated when times are fine and then start to see the decoupling a little bit when Bitcoin has to shift into this other gear. One of the things that makes Bitcoin interesting and why I've never been much for the critique that it looks like a stock sometimes and gold other times is that it's kind of designed to. Part of what makes it as amazing portfolio asset is that it can have the dynamics of a risk asset when people are piling in who aren't necessarily in the exact kind of profile or buyer profile at any given time and sort of get the gains alongside markets as that's happening.

But it also has a very different profile on the other side. And the attributes that make it exciting when times are bad obviously rise to the four and in conversation and narrative, in conception and in value, when times get more chaotic. And I think that that's obviously a thing that's happening now. In a world of extreme volatility, extreme predictability looks very, very appealing, right? You also have the fact, I think, that one of the great things, which I think we actually do not talk about enough, or at least market analysts don't talk about enough because they haven't fully appreciated, is that Bitcoin has another thing besides it's sort of intrinsic properties of, you know, only 21 million fixed supply, fixed schedule, and all that sort of stuff. It now has

the most robust defensive base of holders of any asset on the planet. There are a huge number of people who will never, under any circumstances, sell their Bitcoin. And that has almost become an intrinsic property of the thing, which again, in moments of extraordinary volatility, make a difference. And so, you know, I think you're seeing a little bit of that. And then I think the last thing is that, you know, Bitcoin probably as a holder base has a higher percentage of people who are at least, you know, who are long-termist in general. and who are kind of willing to see what radical change, you know, who are comfortable with the

idea of radical change, even if this might not be the radical change they preferred, and are kind of willing to rock and roll with it. I think that you've seen this, you know, Nick Carter has sort of expressed some of this where I don't think that he's not pumping it here where he's kind of full-throated defending the tariffs, but he also is sort of, you know, playing the role of reminding people that there are a lot of people in the base that are going to not judge policy based on what the stock market does over two days of trading. So I think all of those reasons combined could be partial explanation of why Bitcoin is holding a little bit more steady. I agree with that entirely. The only thing is people are gauging the stock market's performance

because Trump has always said that his gauge of the success of his presidency is the stock market's performance. I mean, it even said, you know, Bitcoin should be $150,000 in my first six months. It'll be one of the things that I look at as a marker of my success. I agree that people voted for change. I'm fully on board for breaking whatever we were doing before because it's never worked. But it's very hard to say, I look at markets as a gauge of my success and then say, I'm perfectly happy to destroy markets to the voters who thought that you were going to do. otherwise, I don't think people expected austerity and tariffs at this level and to do this to the market at this time. I will give the benefit of the doubt. I will say maybe they know what they're

doing and I just don't understand what it is, but right now it seems like chaos. Yeah, I don't think anyone actually knows what they're doing. I think that the only quite, the benefit of the doubt is whether they might be right, like even if they don't know what they're doing. It's sort of the thing here. Austin Campbell had a great tweet about this. I think that you're right that this is not the Trump that people thought they were they were going to get. But boy, is it the Trump that he's decided to be this time? And he has made it very clear that this is, this is the, the Trump that he wants to to be and do. So Austin Campbell tweeted yesterday, we've gone from far left populist anti-progress economics straight into far right populist anti-progress economics. When neither candidate ran on that

platform, I did not have Trump as right-wing Biden or Warren for 2025. Now, you know, whether that's a fully accurate kind of depiction. I think there's directionally a lot of people feel like that's what they're feeling right now. And it's part of why markets have nowhere to look anymore. You know, it's sort of bombs from all sides. Yeah, it could get worse before it gets better. Let's just hope that that's the path that we're on. 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 have fallen down the on-chain rabbit hole, CTC has you covered with more than 3,000 integrations. They have full support for defy staking in 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 digital ownership more secure and accessible.

You can buy your Bitcoin with Ledger and Ledger Live and so much more. Basically, not only did they want to keep your assets secure, they want you to be able to do more with them. Ledger's newest devices, the Ledger Stacks, and Ledger Flex, introduced the world's first secure touchscreens, making it easier and safer to manage your transactions and assets. Alongside Ledger Stacks and Ledger Flex, the company also launched the Ledger Security Key app, offering a safer alternative to traditional passwords and enhancing your digital security.

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. Yeah, I mean, I think that they do get there. I think that a lot of the discussion is, I mean, one, people can't help but compare their financials to tether, not necessarily in a super favorable light. Second, I think that, you know, generally speaking, there is a sense that this is a real sneak-it-under-the-wire effort. There's a very short period of time, it seems like, before the giants in the space are going to be able to come in

and start issuing their own stable coins. And so, you know, it's kind of this is get some capitalization, get some liquidity before that happens. And I think even if you're a big supporter of circle, that's, you know, it kind of feels like that is part of this, the strategy here is that it's, not desperation, but like it's a move that has to happen right now because it's going to get more and not less challenging. There's some who think that this is a bad idea. This guy, cranky, cranky old man, cranky old pad of stable quotes. Kevin Lettonitty.

Can you pronounce his name? Come on. I'll give you $10. I would say letnity. Letnitty. Letnitty. Lee, Tyneye, Titt, T, warns of circles, pop. possibly path to IPO amid shrinking profits. Interesting. You argues that Circle's position is the second

largest stable coin issue is not secure largely because the market is becoming saturated and commoditized. Do you think that Circle is too late here? I don't agree with this, by the way. I do think we're going to get a billion stable coins. We'll have private stable coins from every bank. We'll have Elon stablecoin and meta stable coin and all those things. But I think Circle is well past the point of no return as far as a dollar. option and their user base. I think that it's a stronger company than people are giving it credit for by by looking at these financials. Okay, the next story, which we've talked about Larry Fink's slow orange-pilling over the years many times, but holy crap, man, if we didn't want to see

the final form here, we got it. The democratization of investing here, BlackRock's letter, annual letter that he writes to investors. He's been writing about crypto, by the way, for years. It was two years ago that he talked about the ETF before it got approved, but also talked at length about the tokenization of everything. Well, now he's fully saying that if the United States continues on its fiscal path, that Bitcoin can become the global reserve currency. I mean, even the most diehard of Bitcoiners sometimes say, I don't know if it could get to global reserve currency status, man. and Larry Fink here going full Kaiser, full Satoshi, full, you name it, as orange-pilled as you can possibly get. He's reached the end of the line.

Yeah. Yeah. I mean, look, I think that he's both, he's using it both as a sort of an upside and a downside as a fear, kind of, you know, a weapon of an instrument of fear to talk about how much needs to change, but also a place that you can hedge if you happen to have that fear. But it's super consistent with. where he's been headed. If you charted his change in trajectory, this is, this is absolutely sort of the end state. So, you know, I think that what, what continues to make him a valuable voice is

that he is not cheering these things on. He does not, you know, have a burn baby burn shirt on, you know, there's no down with the Fed. He's not ripping dollar, a hundred dollar bills in half at the Bitcoin conference and throwing him in the air, right? Exactly. And so it just obviously carries a lot more weight by virtue of that fact. So anything like this sort of strong, full-throated endorsement in these kind of times is, I think, very, very important for everyone. Yeah. It's just been among a sea of craziness and insanity and prices up and down. He's just been the most consistent voice, the silver lining on everything that's happened with our industry over the past few years. And eventually, I really think that the most powerful people are

going to listen and it's going to make a huge difference. It already has. I mean, the approval of the Black Rock Spot ETF among the others and the way that he positioned himself around it is arguably the reason that we're trading at 80 instead of 50 or 60 right now. I 100% think it is. I've said it before. I think that he put a stop in the slide post-SPF. I mean, it was there was a reasonable argument to be made that, you know, the industry was just dead after that in America, at least. And he said, Nope, it's not, and we're going to make money from it. Yeah, and they're going to make a lot of money from it. The next story we have here is the Salana Policy Institute.

We're excited to announce the launch of Salana Policy Institute, a new non-partisan, nonprofit focused on educating policymakers on how decentralized networks like Solana are the future infrastructure of the digital economy, why the people are building on and using them need legal certainty to flourish. I love when I see these double dash marks that let you know that even the Solana Policy Institute is writing their tweets with chat GPT. There's no human being uses those. Do you know that the generation, Gen Z or Gen Alpha is now calling these the chat GPT dash, not the M-Dash?

Is it really? I didn't even know that. So there you go. And this is actually pretty big. Blockchain Association CEO, Kristen Smith, is leaving to work with this Salana advocacy group here. So clearly, Salana making a play to prove that they're not just a meme coin casino here. Yeah. I mean, so this is a story that I don't think would normally make our register. It would be, you know, interesting, you know, honorable mention category, maybe part of a larger kind of D.C. story. What makes this particular interesting is so, so one, Miller White-Hlavian leaving the Defi Education Fund, you know, which was hugely influential in a lot of these court cases over the last couple of years, was largely, it was very associated with Ethereum. It was largely funded by a grant from the Uniswap Foundation. So that's sort of big on its own. But then Kristen Smith moving over from Block.

chain association. I think people would have imagined that, I mean, that was her baby, right? It was sort of like the thing that she had built. So the fact that there's a move there seems notable. Now, of course, this could all just be money. Maybe the Salana policy institutions is paying a lot of money. And it's as simple as that. But to the extent that it's not that, or at least it's not only that, it is, you know, pretty notable in terms of where, like, the voices are going to come from in D.C. I honestly, as someone who's fine with Salana and has no sort of beef with them and things that generally, you know, they found an important niche in the space. I don't love the extent to which some of the most powerful policy voices in Washington are

now associated with a single asset. I think, you know, I'm sure that they're going to say that Salana Policy Institute is not just advocating for Solana, but, you know, I mean, it's probably inevitable. Like, ultimately, industry associations, the way that they evolve is, it's more about, you know, whoever's paying the bills than it is about the underlying. But it's interesting, is the short of it. Hopefully, they really can represent sort of the whole industry, not just Salana, but we'll see. Yeah, and non-specific to Salana, this was always the way that this was eventually going to end. We had this unified lobby that came together to defeat the common enemy in the last administration, but we all know from spending any amount of time in this

industry or on crypto Twitter that the tribalism and self-interest in this market is second to none, and that that would obviously fracture from a cohesive singular lobby to lobbies for the individual assets and programs, which is not that surprising. Yep. I mean, it's the way that this would happen. Like, there's a bank lobby and then there's Goldman Sachs lobbying for Goldman Sachs. It's not as surprising. It's part for the course. But interesting to see how it happens.

Let's hope that at the end of the day, like you said, it's for crypto as a whole and not specifically to Solana. We don't want this to turn into a, hey, SBF's on the hill lobbying for crypto. and you realize that he was literally just lobbying against all of crypto in the interest of FTCX. Yeah, not even really FTX as much as him. But yeah, look, I will say that I think that both Miller and Kristen have earned the biggest benefit of the doubt when it comes to being able to represent the industry as a whole. So we'll see what happens. Yeah, that was all of the official stories we had. I think just a final honorable mention, SEC nominee Atkins advanced by Senate Banking Committee.

We know that Hester Purse has been the acting SEC commissioner, but Atkins is going to get in. He's smart, generally an advocate for the industry. We thought that about Gary Gensler, too, so I'm always a little gun-shy about supporting anyone at the SEC, but I do think that he's the real deal and it will be a benefit to our industry, just like all the other appointments largely have. I'm burned out. I got to see it before I believe it. The only person at the SEC that's got my full, full-throated support is Hester Purse.

I guess Mark U.S. I guess Mark U.S. earned it at this point, too, but. He looks better. He looks better, but I'm old enough to remember when I said that about Gensler on the show. Yeah. And we all did, right? He thought blockchained MIT, guys. And our last honorable mention that we had, how stable coin bill advances in U.S. House with support of Trump and Democrats. So this is interesting because obviously we had the genius legislation passing through the Senate Financial Committee. Now we have the Stable Act coming out of the House Committee.

Looks like Stable Coins very much the low-hanging fruit that will get legislated. I actually recorded a podcast that'll be out on Sunday with Kirsten Gillibrand, who was one of the authors of the Genius Act. That was yesterday. I said, hey, how are these bills different? And she said, this one literally passed 20 minutes ago, dude, like, let my team get on it and we'll mark it up. Right. So these are getting marked up, but I can tell you that even the person who's most on the front lines with all of this

is still trying to wrap her head around the difference is which parts need to be incorporated and how they get one cohesive bill to give it a better chance of passing because that's what she wants. Yeah, I mean, look, it would be very good to get these points on the board. I think that we should get this done. I'm looking forward to seeing continued progress. I continue to watch this issue of interest bearing as this sort of big stucking point. We talked last week about how it seemed like a banking lobby talking point. And sure enough, it was a banking lobby talking point. So that's the thing that I'm watching. But I think I'm still generally optimistic about this getting through in a way that's net positive. Absolutely agree, guys. That's all we've got for you today. I mean, the market's probably just opening right now. I don't even want to. Bitcoin's at 83,000. So listen, this is generally a crypto show. Whatever happens to markets, Bitcoin is actually up on the last two days, which is absolutely astounding. Maybe this is our moment. Maybe this is our moment. That's what great. It's always maybe our moment. That should be like my Twitter description. It's always maybe our moment. I love it. And we'll see you guys next week. Thanks, man. Later. Thank you.