The Breakdown - Bitcoin's Quiet Rally and the Stablecoin Standoff

Episode Date: May 13, 2025

Bitcoin has surged back above $100,000, but why does this record-breaking rally feel so muted? As markets quietly climb higher, NLW explores the curious lack of excitement, alongside major developments like the U.S.-China trade truce and ongoing struggles over crucial stablecoin legislation in Washington. Is this calm confidence or cautious skepticism? This episode decodes the week ahead and what's quietly shaping crypto's new normal. 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, May 12th, and today we are talking about Bitcoin above 100,000, and everything coming up this 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 in the show notes or go to bit.ly slash breakdown pod. All right, friends, well, we have kind of an interesting one today. As I was looking across these stories from this weekend and the very end of last week, I noticed that we kind of have a perfect set of look forward stories

that I think really give a good example of where we are right now. And anchor at all, as I'm sure we'll have not escaped your notice, Bitcoin is back above $100,000. After preaching that fundamental level on Thursday, Bitcoin held firm throughout the weekend. We didn't see a tick below $102,000, and a Sunday night surge saw Bitcoin reach $105,000 and change. Now, it's down a bit from that, but still, we are hovering up in the 102 area. This is the seventh time that Bitcoin has crossed the $100,000 mark. However, this time feels decidedly different.

The first few times felt like a celebration as full-on euphoria overtook the market. In late January, it felt like Bitcoin was holding on to the key level as the new administration made rapid and disruptive change in Washington. This time, it feels a little bit more like. the price is anchored to 100K. Momentum built as Bitcoin led the recovery out of Liberation Day, registering a 35% gain from the bottom. April was the strongest monthly move since November, and the question is, how much of this is a reversion to our actual base and the temporary discount of the past few months getting priced out versus the market's desperately looking

for a reason to go up. It's not just Bitcoin. Ethereum chalked up a 39% move last week, and there were plenty of triple-digit moves in memecoin land. Bitcoin dominance, had its largest drop since November, rapidly moving from 65% to below 63%. The same is true in stocks with S&P 500 futures up 1.5% overnight on Sunday, an abnormally large move. And yet it definitely still feels tentative. The timeline is particularly silent. Content creator Max Gagliardi tweeted, Bitcoin casually at 105k and no one cares anymore. All the haters from the 2020-2020 cycle have disappeared, while the long-term holders know it's going much, much higher, so they yawn at 100K.

People on the sidelines think it's too late and they missed it. Wild times to be living. Fun manager Ronnie Stoufferly wrote, We're close to the quietest all-time high of Bitcoin ever. Outside of crypto circles, meanwhile, it seems like no one has noticed. Stack Hodler commented, Bitcoin is back over 100K and nobody cares. We're quietly approaching new all-time high territory and the average man on the street hasn't a clue. We can easily run to 200K from here and Joblo wouldn't even notice.

100K, 200K, barely a psychological difference. 500K? whoa, that's crazy. You catch the game last night? One million per coin is the next big battleground. That's where Joe Blow leans in again. For what it's worth, I agree with the part that people are not really paying attention to right now. I, however, think that there are a lot of points between here and a million where people definitely pay attention. For the on-chain analysts, this seems to be a time of reassessment. Ki-young Zhu of Crypto Quant published a lengthy Mea-culpa for his bearish calls, tweeting, two months ago I said the bull cycle was over, but I was wrong. Bitcoin's selling pressure

is easing and massive inflows are coming through ETFs. He explained that Bitcoin analysis has become much less simple, with new traders bringing new behaviors in retail playing a diminished role. Zhu added, it feels like it's time to throw out that cycle theory. New liquidity sources and volume are becoming more uncertain, signaling a transition as the Bitcoin market merges with TradFi. Now, instead of worrying about old whale selling, it's more important to focus on how much new liquidity is coming from institutions and ETFs, since this new influx can outweigh even strong whale selloffs. He said that the market still feels sluggish with no clear indicators of where it goes next, commenting, it doesn't feel like a clear bullish or bearish market right now. Of course,

the recent price action is extremely bullish, but I'm talking about the profit-taking cycle. Fellow on-chain analyst checkmatey responded, my recommendation is to start thinking about how time pain is replacing depth pain. Corrections are not as deep, but they are longer. I'd also recommend calibrating your signals to account for unrealized loss, which is far more important to track than people realize. And so this is roughly where we are headed into this week. In earlier cycles, this would be a clear risk-on situation with Bitcoin ripping and all coins outpacing by a wide margin, but we're just not seeing the flurry of activity on socials that usually accompanies these moments. Dave Weisberger, the co-founder of coin routes, noted that this has been a very

calm face-tearing rally, commenting last week, anyone else noticed how Bitcoin is almost to 100k with funding rates on derivatives exchanges well below normal? This is what spot-led buying from smart money looks like. Those tracking Bitcoin against M2 money supply seemed to believe the next move is a straight line pumped to 150, but still there's a strange feeling of tension in the air. The rally is on, but euphoria is nowhere to be seen. So what's going on surrounding Bitcoin that might be giving shape to this, and that Bitcoin might be reflecting? Well, of course, one of the reasons the move has felt so tentative is that the entire global market is essentially trading off of the president's tweets. We saw Bitcoin start to take off for the

current leg up on Thursday, as Trump made the announcement of a big announcement. That deal was likely one of the easier ones to negotiate with the UK already running a trade deficit with the U.S. The actual terms were reduced tariffs on U.K. cars in exchange for better market access for U.S. meat, essentially zero consequence in the macro picture. But the deal signaled that the administration felt a need to demonstrate some progress. The big news came over the weekend as trade talks between the U.S. and China played out in Switzerland. Markets rallied on nothing more than Treasury Secretary Scott Besson, announcing that the talks were yielding what he called substantial progress.

overnight on Sunday we got news of a de-escalation agreement. Both sides will lower their tariffs for 90 days. The U.S. will reduce their 145% tariffs on most Chinese imports to 30%, while Chinese duties will be lowered from 125% to 10%. Besson said, we had a very robust and productive discussion on steps forward on fentanyl. We are in agreement that neither side wants to decouple. His statement also noted that, quote, the parties will establish a mechanism to continue discussions about economic and trade relations. What's abundantly clear is that the market markets don't care how detailed this quote-unquote trade deal is. A week ago, they were pricing in empty shelves and global trade slowdown, so even if this is incremental, it's a decidedly better

place to be. Beijing later confirmed the cooling off period and signed a joint statement, which is their first of the second Trump era. Jeff Park of Bitwise commented on how differently this is being presented between the two nations, tweeting, U.S. we reached a trade deal, China. We agreed on establishing rules for future engagement. Interestingly, the joint statement specifically lists Besson and U.S. Trade Representative Jameson Greer as the negotiators for the administration. An encouraging sign for those on Wall Street who think that Besson is throwing his body between some of the administration's worst impulses when it comes to trade. Still, there are a ton of takes around the idea that this is a fake trade deal.

Endgame macro wrote a long thread comparing this to similar stopgap solutions hastily agreed to in the 1970s and 80s commenting, this isn't a trade deal. It's a controlled narrative to stabilize sentiment and delay the inevitable clash over global economic power structures. The real question isn't what was agreed, but what crisis are they to? trying to quietly diffuse before it explodes into the open. Peter Schiff tweeted, the quote-unquote great China trade deal simply pauses Trump's trade war for 90 days.

The only deal is both sides roll back their escalated tariffs. This means we're in the same position we were before Liberation Day, except Americans are paying 30% tariffs while the Chinese are paying 10%. Over the next few days, I think we'll have a little bit more of a chance to see how markets digest this all. Now, the other big story we're following is, of course, the progress on stable coin legislation. As Melker and I discussed on the Friday show, a Senate vote was blocked on Thursday with dissents on both sides. A group of Democrats pulled support for the bill at the last minute alongside Josh Hawley and Rand Paul on the Republican side. There are a lot of moving pieces in backroom whispers here, but the simplest explanation is honestly just discontent over Trump's

crypto involvement. Democrats have introduced several bills that could have been attached as writers to the legislation and seem to have genuine disgust at the conduct. However, there is a procedural issue here as well, with the bill that went to a vote on Thursday, actually being a different version of the one that passed through the banking committee with bipartisan support back in May. Reportedly, many senators hadn't even had the chance to read the updated language, and the bill was introduced with no Democrat co-sponsors. Lobbyists also haven't read the bill, but as far as they can glean, there are significant changes around compliance and treatment of offshore firms. The tether clause isn't that interesting and is largely about negotiating how long transitory

arrangements will be in place. The new bill reportedly gives a three-year grace period. The compliance Tweek is another example of the way crypto actually works, not quite making contact with the way lawmakers think about regulation. The bill that passed through the committee has very broad language to define digital asset service providers. The definition would have included many defy protocols attaching KIC and anti-money laundering requirements that introduce impossible compliance, essentially the same old backdoor defy ban that we've seen in countless policies over the past few years. Republicans seem to have taken advice on the issue and changed the language, but were unable to get agreement from Democrats. This raises a potential issue down the line

as a new round of negotiations begin. And unfortunately, with this political climate, Democrats might not be on board for anything that appears to be a concession to the industry. The changes also give additional context to comments from Ruben Gallego that the bill had been changed after an agreement was reached. Now, on the Republican side, Josh Hawley is concerned about big tech issuing stable coins, and Rand Paul believe there are far too many unnecessary regulations in the bill. We don't know whether there are concessions to be made to win their votes, especially in the context of a tense negotiation with Dems, so this might just represent two additional votes that need to be found. Senate leader John Thune also voted against the bill as a procedural quirk, reserving his ability

to call a new vote at will. In comments to the press, Thune said the bill had six versions in response to Democrat complaints, stating, I just have to say, frankly, I just don't get it. I don't know what more they want. Adding to the mix, Congress is also getting pressure from the administration to get the bill passed. Secretary Besson tweeted, for stable coins and other digital assets to thrive globally, the world needs American leadership. The Senate missed an opportunity to provide that leadership by failing to advance the Genius Act. The bill represents a once-in-a-generation opportunity to expand dollar dominance and U.S. influence in financial innovation. Without it, stable coins will be subject to a patchwork of state regulations instead of a streamlined federal framework that

is more conducive to growth and competitiveness. The world is watching while American lawmakers twiddle their thumbs. Senators who voted to Stonewall U.S. ingenuity today face a simple choice. either step up and lead or watch digital asset innovation move offshore. So trying to get a sense of where things actually stand, the positive side is exactly what we talked about last week, which that it does not appear to be just some full obstructionist idea of trying to not pass any legislation. Instead, there seems to be general agreement

that passing the legislation in some form is extremely important. Even the Dems who led the recent revolt have made it clear that this remains a priority for them. However, the Trump issue remains. Michigan Senator Alyssa Slotkin, who was a co-sponsor, of the bill, said that passing crypto legislation is a distant second priority to stopping Trump. She said, we've got a more immediate crocodile closer to the boat, and that's the president of the United States, selling his own currency and marketing his own currency and using it as a form

of payment to line his pockets. Ultimately, though, things remain tense. Galaxy Digital Head of Research, Alex Thornt tweeted, the Stable Coin bill is on life support. Dems need to propose reasonable suggestions, not fundamental overhauls if they want to get serious about legislating on this issue. If the Stablecoin bill can't pass the Senate, the prospects for markets, structure passing are greatly diminished, and that's something big crypto really does care about. And so that's where we are heading into this week. We have a rally but one that people aren't really willing to fully lean into yet, progress on trade, but many questions around how temporary that progress is, and continued tension around legislation that we thought was a sure thing.

This week we will, I'm sure, continue to review these themes, but for now, that is going to do it for today's breakdown. Appreciate you listening, as always, and until next time, be safe and take care of each other. Peace.