The Breakdown - Bitcoin in Santa Claus Mode Smashes to New ATH

Episode Date: December 17, 2024

Bitcoin punched up to a new all time high on Sunday as Strategic Bitcoin Reserve fever heats up. 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 Monday, December 16th, and today we are talking about a very good Christmas week. 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 of the show notes or go to bit.ly slash breakdown pod. Well, friends, we are entering this new week, really the last normal week of the year from a work perspective, with a new Bitcoin all-time high.

On Sunday night, Bitcoin surged past $104,000 for the first time to reach a new all-time high of $106,500. Prices retreated overnight, but entered today above $104,000, a 3% gain across the weekend. K. Shen, the CIO of ZK Squared, said that Bitcoin had likely entered Santa Claus mode. He predicted a price of $125,000 early next year, but warned that a 30% drop, drawdown is always in the cards with positive news mostly priced in. The inching up of price targets is now a common theme across the industry. Danny Marquez, a mining industry researcher at EY, now has his site set on 175,000 as the bottom of the range for this cycle's high. The top of his range is a

fairly optimistic 460,000. The targets are based on extrapolating from previous cycles and demonstrates how wide the range of possible outcomes is. Perianne Boring, the founder of the digital chamber, throughout the number $800,000 by the end of next year. Speaking with Fox Business, she said, If Donald Trump is successful in putting forth a lot of the proposals he's proposed to the community, the sky is the limit because Bitcoin has a fixed supply. That is the highest prediction I've seen for next year, but we will, of course, be watching for the first million-dollar call, which you know at some point is going to come. CoinDesk's James Van Stratten had some interesting thoughts about who is dictating Bitcoin

price. Rather than focusing on large and transparent buys from Micro Strategy and the ETFs, Van Straten believes that larger cohorts are in control of the markets. Between them, MicroStrategy and the ETFs have accumulated around 200,000 Bitcoin's each since September. In the same time frame, short-term holders have accumulated over a million coins. This is all offset by long-term holders who are still pairing back positions distributing 843,000 Bitcoin. Still, Bitcoin is up and the vibes are strong. European Bitcoiners finally got to join the party with Bitcoin now officially worth 100,000 euros. Bitcoin historian Pete Rizzo noted

that Satoshi had now surpassed Michael Bloomberg to become the 16th wealthiest person on Earth. Bill Gates is next if Bitcoin can go 1% higher. Pomp was delighted at the timing of the latest leg up, posting, it's hilarious to watch Bitcoin run on Sunday nights because Wall Street can't do anything until tomorrow morning when the stock market opens. It's like getting invited to Christmas dinner but having to sit at the kids table. Veteran trader Peter Brandt pointed out a fact that will make Peter Schiff weep, posting, it's now official. The Bitcoin gold ratio has now posted a new all-time high. Next stop will be 89 to 1. It will require 89 ounces of gold to buy a single Bitcoin. Even long-time holdouts are capitulating, with an attorney called the ranch lawyer

posting an all-time piece of copy pasta. I give up. I have to buy Bitcoin. If they make a strategic reserve and other countries get in line, I will never be able to live with myself if I miss the boat. It looks like pure stupidity has won. Put it on a t-shirt. Put it on a hat. Now, this idea of a Bitcoin strategic reserve is clearly entering the ether. Every week it seems to grow in stature. After ringing the bell at the New York Stock Exchange late last week, President-elect Trump said, we're going to do something great with crypto because we don't want China or anybody else. It's not just China, but others are embracing it and we want to be the head. Meanwhile, strike's CEO Jack Mahler's floated the possibility of a day-one executive order that would

establish the Bitcoin's strategic reserve. During an interview with Tim Poole, Mahler said, I know that Trump is looking at a day-one executive order. There's potential to use a day-one executive order to purchase Bitcoin. It wouldn't be the size and scale of a million coins, but it would be a significant position and it would be a message from the United States. He explained that President's team is looking at the broad powers to protect the currency under the Dollar Stabilization Act. It wouldn't necessarily have been on my bingo card to buy Bitcoin in the name of protecting the dollar, but stranger things have happened. Elsewhere, the competition to adopt Bitcoin at the sovereign and regional level is heating up. Last week, Bitcoin Reserve bills were introduced in the

Texas and Pennsylvania state legislatures. Dennis Porter of the Satoshi Action Fund has been working across the states for years, including helping to draft these two bills. He announced that a third state would introduce legislation this week. Porter also confirmed that Trump was exploring the use of an executive order, adding, if he doesn't, we will be ready to apply pressure at the state level by creating a wave of strategic Bitcoin reserves. We are in a race. to SBR, game theory at its finest. The race is also on outside of the U.S. Last week saw the first rumblings of a Bitcoin reserve out of Russia, although that proposal came from a minority party. On Friday, a Japanese lawmaker named Satoshi Hamada introduced

a statement of questions to the government asking them to consider, quote, the status of understanding the movement to introduce Bitcoin reserves in the United States and other countries. A great deal seems to have been lost in translation in that part of the story, but the main takeaway is that a lawmaker named Satoshi is pushing for Bitcoin adoption in Japan. Meanwhile, north of the border, the city of the city of the city of the city, Vancouver has passed a motion to explore making it a, quote, Bitcoin-friendly city. The city council will now look into accepting Bitcoin for payment of taxes and fees alongside establishing a Bitcoin reserve. We saw a few trial runs of these sorts of policies over the years in U.S. cities with very

little take-up or follow-through. Notably, the city of Utah accepted Bitcoin for several years before mothballing the program. They noted that only a single resident ever paid their taxes using Bitcoin. What makes the city of Vancouver's proposal interesting is how stark the messaging is. Drafted by the city's mayor, the motion said, quote, it would be irresponsible for the city of Vancouver to not look at the merits of adding Bitcoin to the city's strategic assets to preserve the city's financial stability. The city will now conduct a feasibility study to be completed by Q1 of next year. And so, whether it's a day one policy or come somewhat later, it's clear that the Bitcoin's strategic reserve is gaining steam. David Bailey, the CEO of Bitcoin

magazine wrote, A Strategic Bitcoin Reserve is an idea whose time has come. I think by this time next year, the USA, China, Russia, and Saudi will all have one. Lyle Pratt thinks it's inevitable, posting, good or bad, hated or love it, Trump, his family. and the cabinet know the easiest way to use the presidency to pump their personal wealth is a national Bitcoin Reserve. It isn't complicated. Their incentives are clearly aligned. This is the nature of the global Bitcoin game. What do you think happens when the rest of Congress realizes this as well? The big question that I keep pointing out is how much political capital a Bitcoin strategic reserve would cost Trump. This to me has seemed like the only potential barrier. In politics,

you can only do so many things. And even if this is one that he cares about, does he care about it enough to expend political capital. The thing that makes all of this interesting is that the more momentum it has, the less political capital from Trump it requires. As a small follow-up to a story from last week, Micro Strategy will officially join the NASDAQ 100 Index. The company will be added to index weights on December 23rd. Bloomberg analyst James Safart has predicted around $2.1 billion worth of price-incented buying as index funds rebalanced this week. That's to say nothing of the ongoing passive flows from millions of retirement accounts across the nation in the world. Michael Saylor flagged yet another weekly buy over the weekend. This would be the first above 100,000 confirming the

company's plans to keep buying the top forever. Tradfai analysts are dismayed that all of their models are destroyed, perfectly encapsulated by the Barron's headline, Micro Strategy is winning by breaking Wall Street's rules. Avoid the stock. Jeff Park, a bitwise, thinks the analysis is pretty clear. He summed up his one-page note on Micro Strategy by writing, The Trade of the decade is just starting. Buckle up. Speaking of Micro Strategy, JP Morgan analysts are looking for the next micro-strategy from within the Bitcoin mining sector. They noted that across the board, publicly listed mining companies are now building up the Bitcoin on their balance sheet. Marathon is the biggest example. Last week, the company bought $1.1 billion

worth, funded by their largest ever issuance of convertible notes. They're now the second largest corporate holder of Bitcoin with almost $4 billion worth. Riot platforms has now started buying Bitcoin from the open market, adding $510 million worth to their balance sheet last week. The news comes as an activist investor called Starboard Value takes a significant position in the company. The Wall Street Journal reports they plan to push Riot into repurposing their facilities into AI data centers. The shift to buying Bitcoin is so profound it forced JPMorgan analysts to rethink their valuations. They raised price targets on four mining stocks, including Marathon and Ryan. In addition, they wrote, we previously valued Bitcoin miners based on the four-year

gross profit opportunity for each operator. We're expanding upon this framework by incorporating the value of each company's land in power assets and a hoddle premium, which gives miners credit for holding Bitcoin on their balance sheet like micro strategy. Moving on in another sign of the continued blending of the crypto natives and traditional Wall Street, Galaxy Digital, have hired former 0.72 executive Anthony Paquette as their new CFO. 0.72 is one of the largest hedge funds in America, with $35 billion in assets under management. Paquette said he was thrilled to join Galaxy and thanks his predecessor for, quote, building a robust financial team that has helped prepare Galaxy for a potential U.S. listing.

Galaxy was listed on the Toronto Stock Exchange almost immediately after its founding in 2018. It began trading at less than a million dollars in market cap and has now grown to over $10 billion. The company plans to launch a new crypto equity hedge fund early next year, taking advantage of rapidly approaching regulatory clarity. Pacquette's appointment signals further professionalization at Galaxy. Prior to his four-year stint as the CFO of 0.72, Pacquette was a business unit leader at Sofi and a director at JPMorgan Chase. While Galaxy's last quarter was a little rocky with a net loss of $54 million, the firm has strong momentum that should position them well for an uplisting to the NASDAQ. The market, like the new hire, boosting the stock by 5% on Friday to a new

year-to-date high. Over in the unwind of Operation Chokepoint News, a federal judge has criticized the FDIC for their obstructive conduct in the Coinbase Freedom of Information case. Coinbase received numerous pause letters sent to banks insisting that they halt all cryptocurrency operations. The letters were heavily redacted and were only handed over following a court order. Late last week, the judge stated that she is, quote, concerned with what appears to be the FDIC's lack of good faith effort in making nuanced redactions. The defendant cannot simply blanket redact everything that is not an article or preposition. The judge has ordered the FDIC to make, quote, more thoughtful redactions and refile the letters. She warned the agency that they

should, quote, be prepared to defend each new redaction. These letters are important because they've given us a more comprehensive view into Operation Chokepoint 2.0, which of course severed the industry from banking access over the past few years. They create a pile of circumstantial evidence showing the policy was real and intended to be hidden from public view. Coinbase chief legal officer, Paul Grewell continues to be amazed at the lengths the agency will go in order to avoid disclosure, commenting, what is the FDIC working so hard to hide? Nick Carter added, FDIC, recipients of the most lawless federal regulator award 11 years running. Congrats! In separate but no doubt related news, the Trump transition team is reportedly looking into ways to shrink banking regulators.

According to the Wall Street Journal, Elon Musk's Doge advisors have been asking banking regulators whether they could, for example, abolish the FDIC. The hypothetical plan would include rolling deposit insurance into the Treasury and trying to rationalize banking regulation into a single agency. Currently, the Federal Reserve, the FDIC, and the OCC all have banking regulatory functions, which on the face of it at least does seem a little redundant. Elon Musk has already floated getting rid of the Consumer Finance Protection Bureau, an agency set up by Elizabeth Warren. Last month, he tweeted, delete CFPB. There are too many duplicative regulatory agencies. While there's very little love for the FDIC and the crypto community, a glance around the responses on Twitter suggests that monkeying around with deposit insurance might be an unpopular idea.

QE Infinity wrote, there's 18 trillion in deposits at the banks. Everyone knows the government doesn't have the money to bail them all out, but the FDIC insurance gave people confidence their money was safe up to 250K per institution. Why would you kick the sleeping dog? Are they purposely trying to create a panic? Why would they think of doing this? Let it lie as is. We don't need bank runs starting. And so I think, friends, the point is if you take all of this together, we are heading into a very, very interesting 2025 on so many different levels.

For now that is going to do it for today's episode of The Breakdown. Appreciate you listening, as always. Until next time, be safe and take care of each other. Peace.