The Breakdown - BTC Rallies, ETF Nudges Closer, and a Fresh Fraud Accusation

Episode Date: October 21, 2023

The Weekly Recap looks at the most important stories in crypto this week. 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 Saturday, October 21st, and that means it's time for the weekly recap. 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. Hello, friends, we are back with another live analysis show. This was a conversation filmed and recorded between me and Scott Melker, also known as the Wolf of All Streets, on Friday

morning. Now, for those of you who want to catch this live, it goes out every Friday morning at 9 a.m. It's on all his channels. It's on all my channels. And basically, this is a chance to get a little bit more talky when it comes to the news and what it means. This week, obviously, the big stories were once again the new NYAG suit against DCG, Elizabeth Warren's attempt to use the tragedy in the Middle East to bully her way to new crypto legislation that really doesn't have anything to do with Hamas, plus a little dose of SBF coverage. I think overall the way to sum it up, though, is from the last story, which is about a Morgan Stanley blog post that suggests that we are in what might be called Crypto Spring. Crypto Spring is neither the bull market of Crypto Summer, nor is it the brutal

bear market of Crypto Winter. Instead, it's It's a period where one day can be very good and another day can be very bad. It's messy and muddy and often rainy. But in it, you start to see the very first seedlings of what comes next. The stories this week, I think, are a pretty perfect encapsulation of that. We have this big Bitcoin jump up. We had ETF news, both fake and real, things that are very much about the future. But then we also had a heck of a lot of cleanup and stories about the messy in between that we still face.

Anyways, there is a lot here, both in terms of the future. of the stories themselves and also what they represent about where we are. So without any further ado, let's dive into the conversation. Happy Friday, good morning, and man, we've got a lot to talk about today. We do, and it's not all Sam. It's an amazing week. Although I will say, for whatever reason, people really engaged with our conversation about Sam last week. So it's clear that people are watching that trial and really interested in what's happening there. It's our exorcism. So, of course, you can't look away. That's It's the slow-moving train wreck that you have to watch and collective catharsis and therapy

all at the same time. Really good. Exactly. We can dig into the stories of this week. And we've touched on some of this, obviously, in the past. I like to put up her picture just to trigger everyone really early. We've got Elizabeth Warren here. U.S.

Senator Warren leads lawmakers to push administration on crypto-backed terrorism. Of course, she's getting the headlines, but there are 102 lawmakers that have signed this. Clearly, there's real interest in Congress and the Senate in pushing. this narrative that crypto is funding terrorism. Here's a bit of what she had to say or the letter did. It's not just her. Given the clear and present danger posed by the financing of these and other militant organizations, we ask the administration to provide additional details on its plan to prevent the use of crypto for the financing of terrorism. Congress and this administration must take strong action to thoroughly address crypto-elicit finance risks before it can be used

to finance another tragedy. Is this a third? Fair criticism of crypto, or is it not? This is why people hate politics in a simple, cute little package. A thing that is very, very tangentially related to an actual tragedy and horror show of modern life becomes a leverage point for someone who's just pushing an agenda that they had in advance. Nothing is new, just to be clear, about the bill that's being pushed from what it was being pushed earlier in this summer.

It has nothing to do with exchanges that, for example, have been known or proven to facilitate terrorism. It is entirely about just defy KYC, right? It's a very, most orthogonally related thing. But in the wake of this, you know, the horrendous attacks, and particularly after the Wall Street Journal writes this piece kind of saying that it's, you know, funded by crypto, So it's just exactly what, you know, she needed to go leverage this point. Now, there are a couple of things that make it perhaps less bad than it seems.

And some of these go back to what we talked about last week. The first is when it comes to these 102 people, my strong guess, now, I haven't sat down and gone through this with the fine tooth comb. My strong guess is that about 97 or 98 of those 102 were handed a letter. by a staffer that said, you know, this letter says the White House should do something and Congress should do something about, you know, crypto financing terrorism. And on the face of it, that's fine. People are going to sign onto that. And I think that this is sort of this point is, the evidence of this, is the fact that there are a number of pro-crypto-democrats who have signed on, right?

If the premise of the letter is just, hey, guys, this is an important vector for funding of terrorism in the future. We should make sure we have good policies for that. Totally reasonable. Everyone in crypto would agree with that. Now, what we know is that there's a bigger agenda behind it. Here's the other thing about politics. Even these 102 senators know, or the 102 people who signed on to this, they still know that that's not the same as actually supporting a bill. This is just a letter. It's an open letter. It is actually the cheapest, most convenient and least committal way to associate your name with anti-cryptoterrorism financing without having to actually use. do anything about it. So it's just as toothless as anything else she does, except in so far as it continues to kind of erode and distract from other conversations. So I think it is extraordinarily frustrating. It's completely predictable in some ways. But it in and of itself, I don't think

necessarily shows a lot of shift in momentum other than what we might already have seen around this. You know, when push comes to shove, this bill will either be actually kind of advanced or it won't. And when it is or isn't, you know, it will be debated on the merits of it then. So it's kind of just a distraction. It's a very annoying one. I do think that it has impacts for all the people who are in the crypto lobby in D.C. who are just trying to have, you know, common sense conversations and move things forward sensibly. But, you know, it's probably less impactful than it is annoying, is my kind of short take.

I think this goes back to the old adage, never let a good tragedy go to waste, right? And especially if you're a politician and you have a specific talking point and you can somewhat superficially attach that talking point to something that's happening in the world, you go for it. Now, I will say, I agree with you, this should be addressed, right? If crypto is being used in some way to fund terrorism, then sure, that should be stopped, but it's crypto. So they are freezing wallets.

They're actually taking action against these things, regardless of what, Elizabeth Warren says. And so you can take that criticism and it's valid, but you can't take it in a vacuum because you have to make the same criticism for every other form of illicit financing for terrorism like pallets of cash being delivered, you know, across the border, which we all know is happening. So I think that it's an unfair singling out of crypto. More importantly, when you dig in, I mean, here's the rest of the story. Chainalysis says some reports might be overestimating crypto's role in terrorist financing. And this isn't just an overestimating. I'm just going to read you what chain alice has had to say, easier than discussing it.

We've seen recent estimates related to the attacks on Israel that appear to include all flows to certain service providers that receive some funds associated with terrorist financing. In other words, these total include funds not explicitly related to terrorism financing. To the untrained eye, it might appear that 82 million worth of cryptocurrency was raised for terror financing. But is much more likely that a small portion of these funds were intended for terrorist activity and a majority of the funds processed through the suspected service provider were unrelated. So they're saying that with the estimate that Elizabeth Warren's talking about is $82 million,

has an extra few zeros there. It's about $450,000 worth of funds that actually ended up in terrorism-affiliated wallets. Yeah, the presumption, the presumption or the, yeah, the statistics that this whole kind of story was based on was the idea that this particular kind of exchange money transmitting business, in Gaza, 100% of it was illicit funds to terrorism, which obviously just isn't the case. No, listen, I mean, this is, again, it's why I can't ever get ultimately that frustrated is because there are so many obvious counterpoints. And at the end of the day, you know, people don't make policies. Even our terrible system tends not to make policies exclusively on bad information

unless you have a really extreme situation. You know, when push comes to shove, those reports are going to get identified. I'm glad chain alysis stepped up and did that. Now, it's an interesting sort of sub-story. One of the things that I think a lot of folks are watching about, you know, the chain alices, the elliptics of the world is to what extent they are sort of defenders of what, you know, the community might say are crypto values versus tools of a surveillance state and is a very tricky line to walk. And this is a great example of a company that is probably the biggest beneficiary of U.S. surveillance of crypto from a financial perspective still going out of its way to say that's not really true, you know? And I think that's an encouraging

sign. I wouldn't expect anything less from them from what I've seen. You know, the CEO of chain Alice has very famously had a, well, it was calm on his end. It was testing on Elizabeth Warren's end, but they had an exchange at a hearing once where she was really trying to get him to make her point about this exact sort of thing. And he just said it wasn't true. Yeah. I mean, she had the like prepared talking points that she could not stray from. It was a pretty incredible hearing for anyone who didn't see it because no matter

what he said, she just went on to her next question as if he hadn't even answered, which was classic, I think, politics and trying to, you know, do her stump speech on his behalf. There's a pretty big story number two here. Gemini DCG sued by New York for alleged $1.1 billion crypto. fraud, right? So Gemini being included here, we've only seen sort of the DCG side previously, but they're being sued by New York's top law enforcement officer for allegedly defrauding customers of $1.1 billion, escalating legal woes for two companies hit hard by last year's plunge in cryptocurrency markets. This is a civil. It's not criminal for everyone to be clear.

and we know that this office, the New York District Attorney General, has it out for crypto and is kind of part of the Elizabeth Ward anti-crypto army, but there's something here, right? Yeah, I mean, so there's a couple of ways to look at this. The question is, I mean, you could go kind of hyper-real politic and ask what the likely impact of this is going to be. And to some extent, then the question becomes, is there any real, new information or new accusation, or is it just basically the New York Attorney General saying the stuff that everyone already saw, we consider fraudulent, you know? And I think it's, you know, whatever, it's not minimizing the seriousness of this for the plaintiffs here or for the defendants here,

but the, you know, it really isn't some new smoking gun type of information, at least on my kind of initial read. It's not a, you know, a Sam kind of case where there's some new thing that's been addressed. In fact, I think in some ways, what seems more concerning to me around Genesis and DCG right now is some of the stuff that's been brought up at the SBF trial that raises questions about what was known when, you know, regarding those loans. You know, but again, going, going back to just, you know, real talk about this, this is the sort of kind of, you know, gray area, debatable, fightable, that a lot of these battles are going to take place in quiet courtrooms and behind the scenes. And, you know, I think in general, DCG's been on the drag it out

until crypto markets are good enough that we've saved ourselves kind of plan for a very long time. And this is just throw one more thing on the pile, you know, maybe the, maybe the amount that Bitcoin needs to hit or the number that Bitcoin needs to hit just went up a little bit to save them. But that's their whole plan has been weighted out, you know, for as long as they can. I mean, Gemini has even said that and their public kind of, you know, accusations against them. Yeah, I think the sort of additional information here, as I said, is that Gemini is being named and there's something like on the face of the Winkle by twins because they've sort of been the aggressor pushing against the evil empire of DCG.

And now it looks like at least Leticia James thinks they're kind of complicit in this fraud, that they knew Genesis had the hole in the balance sheet. We obviously saw the argument over the 200 plus. million dollars that the Winklewals twins had withdrawn from Gemini Earn a couple months ago. Of course, some said that that was them front running bad news that they knew and still telling their customers that everything was fine. They quickly responded and said, no, that wasn't even us. Actually, this was shoring it up and putting money into an insurance fund. But clearly, there's a lot of he said, she said going on here. And at the end of the day, it seems that the

biggest players knew that there was something wrong at Genesis. We saw it in the FTX trial, as you said. Carolyn saying, listen, Genesis said we need 500 million, whatever the number was to shore up our balance sheet. Can you guys send that to us? She sends a fake balance sheet. What this speaks to to me is the like endless clarity we're getting on how incestuous the big players of this industry were in this yield chasing environment that crushed us last year. 100%. I mean, so here's the thing. And again, maybe I'll be clear about why I don't think this is that big of a change.

I don't really think anyone was buying the, you know, Tyler and Cameron being the white night kind of thing, right? This is for some time now, I think that the average feeling in crypto has been a plague on all your houses, burn it to the ground, you know, go to jail, pay your fines, whatever you need to do, just get the hell out of the way and let us build. back, you know, the way that we were supposed to. And so it's sort of, you know, I do think that it's more confirmation or more kind of evidence in the column of that sort of perspective. But, you know, yeah, I think that your analysis that it's sort of, you know, further evidence of what has become

real clear about the last year is quite clear or is quite true. Yeah, of course, you have to point out this tweet Silbert that everybody's dunking on and brought back November 23rd, 20201. it's my turn Sam, to which Sam gave the eye, a few eye emojis. Everybody just sort of, you know, now saying it's my turn, Sam, implying that maybe it's Barry's turn to get called in by the court. Not exactly what he wants his turn to be. But of course, I think the big question then becomes, will the lawsuit against DCG impact GPTC's chances of an ETF conversion?

Because DCG is the parent company of Grayscale, And we all know once again there was an incestuous relationship, certainly among all DCG entities, Genesis, loaning to Greyscale, Loaning to Genesis and all of these other players, will this affect it? Well, I would say the market doesn't think so because we're still seeing that GBTC discount disappearing with time. And I would say that maybe it affects Grayscale in some way, but I don't think it affects a Bitcoin spot ETF in general. But most analysts who are looking at it, we have a lot of pundits who are saying they'll never do. it, but we have a lot of experts saying that this is a nothing burger. Yeah, I agree. I think, I think that the market is going to be the actor to punish DCG when the Graceco Bitcoin Trust converts.

I think all that money is going to convert and flow out and flow into I shares or, you know, Valky or whoever, like, you know, the, I would say that the, GBGC BlackRock, Grace Gale Blackrock. Let me choose. The average, I think, analyst position at this point is that it's far more likely that a big swath of these things get approved all at the same time, and they sort of let the market decide, then they hand, you know, the keys to the kingdom to just one. Also, if they do decide to hand the keys to the kingdom to just one, it certainly is not going to be gray scale. So, you know, listen, there are real serious problems. I would not be a long-term bull on that business in a lot of ways, but it's not going to be because they're not allowed to convert, I don't think. I think it's

going to be because rational market actors are going to say, no, thank you, and move to somewhere else. Yeah, I think consensus says that DCG is a bit of a train wreck and it's one that's probably priced in. That's how I feel about it. Everyone's expecting something bad to happen over there. So if it does happen, we're going to move on with the black rocks and arcs of the world and life will continue. Yep. And then we get to SBF. What's happening at the SBF, Sam Bankman, free trial. I think that last week we covered Gary and Caroline rather extensively. But now we have Nishad Singh and of course, Zach Prince from BlockFi being, I guess, the star witnesses of this week that we haven't spoken about. I know you've been following this closely. Is there anything brand new that

we're seeing here, SBF lawyer pokes holes and Singh's story on FTX spending? And of course, just to get these stories out of the way, the Sam Bankman-free trial is revealing crypto's amateur hour ways. And I think that's very clear circling back to the incest that we were speaking of before. But let's talk about what's happening in this trial. Any new revelations? Yeah, I would, I would view this, these two testimonies as less revelatory and more very specific parts of the story for the prosecution that are not going to be particularly good for the defense. So when it comes to Zach Prince, obviously the former CEO of BlockFi, that, you know, in some ways, the main thrust of the, the main thrust of the, you know,

that it was actually less about what the prosecution said in this case and how poorly the defense handled it that I think will be the lasting impact. The defense at one point went through a very long, sort of 40-minute extended line of questioning around a set of loan documents. And what they were clearly trying to establish was that basically it was Block Fies risk management department's fault that these things happened, you know, effectively the argument was, you are so stupid, you should have known our client was defrauding you, kind of more or less. That was the argument.

And at the end of the culmination of this big sort of long, you know, classic, whatever, you know, defense presentation, Zach Prince had to point out that the documents that they were talking about were for a loan that they hadn't approved, that they did approve loans later, but that one that they were literally trying to make their case, that the risk management department had said,

yes, it's too stupid to use FTT as collateral, unless there's a shitload more. of it and other collateral too. So no, we're not going to prove that. And Zach Prince agreed with his risk management department. So it was just, it was, you know, for people who were in the court, they actually said that in some ways it was even more embarrassing than other kind of moments, just because it was so dumb, you know, on the part of the defense. So that I think is, you know, the, they almost just lost an entire plank of the potential defense, which is other actors really knew what was going on and they, you know, they should have made different decisions. When it comes

to Nashad, I actually think that in many ways, the biggest impact will be with the jury and on sort of a human level. I don't really think there is particularly a lot new that came out with Nashad's testimony that wasn't already covered by Gary or Caroline. Caroline, I think, really did the biggest work in showing just how many points along the way, you know, sort of Sam had been running the show and determining exactly what they were and weren't going to do. And Gary kind of added this, you know, almost a technical aspect to that, like how they encoded that in the actual platform itself. Nishad in many ways just showed this sort of human side of a guy who was very clearly, you know, doing stupid things, but at least feeling guilty about it. Not that he came off as sort of like

super, you know, likable or anything like that, but it didn't matter. It just the fact that he showed some remorse, the fact that he was angry, the fact that he was frustrated, as opposed to, you know, the picture that's emerging of Sam is just this complete sociopath. And I think that that's going to really stand out to the jury. Now, the last thing that I think is interesting, you might have seen all these stories that say, you know, the defense finally got a blow in. Man, that is the most because they haven't been able to write that story exaggeration in this trial. Like they literally, what this entire thing is based on is that apparently at some point

Nishad told the prosecutors in an interview in December or January that he was somewhat hazy on what June and July 22 were like. And, you know, listen, I do think that Nishad was clearly still a little ass covering in a way with this. And it and it sort of, it stood out. But that's different than the defense landing some major blow. That just, you know, yeah. Yeah, it's like they finally got one jab in in in the seventh round after taking an absolute beating and they happened to still be standing up. So good job. Some of the funny revelations surrounding Nishad, though, where they said, you know, he really wanted to quit. He really felt bad. He was going to quit. He obviously didn't quit, guys. And just like a month before FDX collapsed, he took a loan directly from FDX

for a $3.7 million house that he bought in Washington. This is a shot. I think that's, I think that's the most damning piece of that. You know, to do the right thing requires two things. It requires you to know what the right thing is, and then it requires you to do the right thing. And it sounds like Nishad at least had half of that equation, unlike some of the others at FTCS, but he still didn't do the right thing. And that's why he had to plead guilty to all these charges as well. Yeah, and he'll pay for it. The amateur hour, by the way, part of that story is worth just mentioning because it shows how difficult

it was for all of these companies to vet any of this information and also how hard it was even to get an auditor, right? Paradigm BlockFi Genesis and other companies did not have access to audited financial statements prior to investing or loaning billions to FTX, etc. And this comes from the Zach Prince testimony. He said effectively any and all financial information that the potential borrower was willing to share with us is all that we had to go by. So he's literally saying, and this aligns with what Carolyn said about the fake balance sheets, nobody's auditing it, nobody's willing to audit it. Of course, everybody wanted to believe that they were giving the boy genius their money and he was going to

turn it into multiples. But the fact is that they were all doing these incestuous loans again on, well, if you say it's okay, then it must be. Right. Here's my, here's the balance sheet for my Excel that I will give you to prove what I have. Now give me a few billion dollars. Probably a screenshot of it as well, not even the actual chart. No, the other, the one other story that I just remember that I think is, is actually quite telling and may also resonate with the jury was in 2021 FTCS had $950 million in, you know, legitimate revenue, right? Trading fee revenue. And Sam really wanted it to be a billion, apparently.

And he had Nashad go back and backdate a set of contracts between another one of Sam's companies and FTCs where those other companies paid FTCS $50 million for staking serum, which was, of course, a token that Sam also made up. And so that's how FDX went from $950 million to a billion. And I think that what's so telling about that is how preposterously unnecessary it is. Like, again, a big part of the question for these juries are going to be. And what Sam is trying to prove is, is this a person who got themselves in over their head and made a set of bad decisions that slowly trap them in an ever increasingly bad situation,

you know, which is basically kind of the sense that or the feeling that Caroline tried to give, or was this sort of masterminded from the beginning? And we've heard about how, you know, these things were coded into the platform to allow Alameda to have a negative balance all the way back in 2019. Certainly seems like the beginning. But the egregiousness of making up these fake staking sales just to go from 950 million of legitimate revenue to a billion is so, so telling of the callousness and the lack of caring that I really think that even though it seems silly and is less egregious than some of the other things that were done, it'll stand out to the care, you know, as speaking to Sam's character. I agree. The guy was just a fraud from the beginning.

It was all about his ego and all about the perception. And that's why he had to be with Tom Brady and Jazeel and Shaq and Larry, David. Clearly this was just about stroking his ego. Ego he could do no wrong and nothing he did should have been considered bad because in his mind, you know, the ends justified the means. It's really crazy town, man. It really is. Yeah. Sometime after some of these class action lawsuits are done, maybe I'll give you guys the ranking of which of these celebrities were the most fun to work with and the most sincere and serious. Yeah, people, I think people even know here, like how involved you were in the marketing side there and how surprised you were, but one day I maybe will do a separate show to get into that.

Of course, our next story here, which everybody, this is number four, everybody sort of watched live on Monday when we were doing Macro Monday was the news that the Bitcoin Spot ETF had been approved. It was fake. It was Coin Telegraph, a single tweet that came out, sent the market flying from roughly $28,000 to $30,000 within moments. Seemingly, everybody found out that was fake. And it went down.

I think this speaks to an environment where these news, sources, not just in crypto, but maybe particularly in crypto, are much more concerned with being first than being right. The Coin Telegraph chief editor was on a panel right after this and said, hey, man, this isn't our fault. That's just the way the world is. We wanted to be first. We found it in a random telegram group. We went ahead and printed it because YOLO. And by the way, you guys are idiots for believing it. We're not really idiots for posting it. I mean, listen, and that's hyperbolic, but that was the gist of this. But this did give us, I think, at least as far as price action,

an idea of what could happen if we do see a Bitcoin spot ETF, and maybe that's the story people want to talk about. I actually never do this on Fridays. I brought a chart just because you can see what happened when that move happened a few days ago visually. Today, we've actually seen price go higher than that fake ETF news pump, although it's sitting lower. It actually did manage to go higher.

So clearly whatever happened, got people excited for what would happen if we see this approval. Yeah. So I think you're right that we shouldn't spend too much time on, you know, lamenting the fact that modern news rewards speed rather than accuracy because we all know that and we're not going to solve that here. I do think what's the most interesting part of the story is what it says or suggests about what will happen when an actual ETF is approved.

So there are the line of thinking that I saw from a lot of folks, people like Alex Kruger, who I, you know, I always respect what he has to say, even if I disagree. You know, they pointed out that the broad perception has been that a spot ETF approval is priced in and that it suggests that it is significantly not priced in. Now, there's certainly plenty of evidence of that. I mean, we, you know, ripped up 7% and then back down and, you know, $100 million of liquidations along the way.

The question for me, and I'm interested in your take on this, Scott, is to what extent it's almost like both parties are right, the people who think it's priced in and the people who think it's not in the sense that it is inevitable that there will be some absolute rip to some level on the news that it's happening. But that then when push comes to shove and the actual thing happens, it's likely to kind of recede or, you know, stay at some point. That it's, it's not going to be some massive inflows that jack the price up another, you know, 30% or something like that. But there's probably 5, 10, 15, whatever, whatever percent it is where, you know, the bottom resets a little bit because we know this is coming. I mean, what, what's your take

on that. I share the same sentiment. Dave Weisberger, actually in Twitter spaces, broke this down very well yesterday. He said, you know, there's three kinds of market participants, the speculators, those are the ones who spas and buy immediately when they see the news. Then there's like the more swing traders. Then there's the longer term investors. And the reaction of the market will be based on what each of those people do in their timeline. So basically we saw, you know, the speculators, by the way, this wasn't new money. If you looked, Alkcoins got destroyed against Bitcoin. So this was the old washing machine of crypto where a bunch of people said, Bitcoin's better than all coins right now. I'm going to sell my all coins into Bitcoin, right? So I don't think this was a bunch

of RIAs advising their clients in that 20 minutes to get in on Bitcoin and new fresh money coming in from institutional capital on the sidelines, right? So I think that we see what we saw the other day on steroids, exactly what you said. Maybe a move to 35 or 40, right? This huge kind of move. And then people say, okay, we have an ETF. Price slowly comes down and then fundamentally. over time, much like the Bitcoin having, which, you know, that supply reduction takes six to nine months before it actually affects the market outside of the narrative of it affecting the market. And then maybe we see sort of that sustained growth based on real volume coming in, real AUM coming into a BlackRock ETF and these things.

So I think it aligns well with what you're saying is that we'll see a big pump. Then we'll see a bunch of people take profit because they'll say that's it. and you'll get all these shorts and longs liquidated on both sides, and then we'll take some time to see what happens, what happens afterwards. I think that it feels likely to me that, or I guess one of the biggest questions, rather, is what is happening in the world around it? Because one of the most important things that happens when the Bitcoin price rips up is how the media frames it, right?

And if the media frames it as just, you know, this goes up because of ETF, hype, I don't think that that pushes anyone new in. If we get a, you know, if, if, uh, there's been some big geopolitical event the same day that the SEC happens to approve it and you see Bitcoin ripping in the opposite direction of other markets, a different story gets written, you know, and I think we've seen that a couple times this year. So that's kind of what I'm keeping an eye on is, is what sort of surrounds the news, uh, of whatever kind of little jump we have there. Yeah, I think that's right. But, uh, the moral of the story is don't fall for fake news until you see it reported very widely and quickly. But hey, it was fun.

to watch and fun to be reporting in real time. I can tell you that. So at least it led to some entertainment. I guess this will be the fifth story, right? We got the final story here. We are going to do an honorable mention at the end. But will Crypto Spring ever come? Now, interestingly, I wrote a Crypto Spring newsletter just last week and literally gave the exact same analogies as Morgan Stanley ended up giving this week. I'm not saying they're copying me. But clearly there's a lot of people who are now debating the seasons of crypto. I've been of the mind that Crypto Spring has been here for a very long time. Mark Yusko discusses this very well by pointing out that weather and spring sucks.

Yes, exactly. People forget how much spring sucks. Yeah, spring sucks. So, yeah, winter is horrible, but spring, most of spring is terrible. And you have a beautiful day, then you have a terrible day. And you have a sunny day and then it snows a week later. And that's what I think we've been experiencing here. whether it's CryptoSpring or not here is not why we highlighted this as a story.

It's that a article called Will CryptoSpring Ever Come is coming from Morgan Stanley. To me, that's the story. It's yet another massive institution really digging into the nuance of the four-year cycle and what happens with each year in crypto. I think that's the story here, really big. I completely agree. And I think that the, so a couple things. One is coming from Morgan Stanley.

Two, it's actually a fairly useful article. This is the type of thing that a person who was at, you know, Morgan Stanley or Bank of America or any traditional financial institution could send to a person who's not really paying as much attention to Bitcoin and crypto and say, this is a pretty good job of explaining kind of what this cycle actually means. It's a useful analogy, in other words. And I think that they do a good job of, you know, in whatever it is 400 words, you know, kind of crisply explaining it.

So it's not just that they wrote it. I think it's actually a useful piece as opposed to a lot of these things. So that's one part that I think is notable. The other part is that I think in some ways, the measured sort of rational markets are thawing, keep like one little tiny piece of your brain take from Morgan Stanley is a hell of a lot more useful than a, if they had blown it out and said, you know, the bull is back and, like, kind of, you know, if they had gone too far, because that just looks like analyst high. That looks like it's trying to get people to share it.

This feels like a piece that was written because they're actually trying to understand where in the cycle we are and what evidence we have, not that they're trying to sort of make big, fuzzy social media headlines. And I think markets and traditional markets especially can smell bullshit. And so when you have this sort of more measured piece, it contributes to this overall sense of, you know, we are past the worst point. And there are these people who are sort of lining up around the edges and starting to kind of, you know,

replace their chips on this table and, you know, maybe I should start paying attention again. And I think that's a much healthier place to be than sort of either, you know, assuming it's dead or assuming it's, you know, we're so back. And guys, I think it's worth reading if you do want to dig into it. We won't do that now. But it does offer actually metrics about what's happened in past cycles, how far the width the drawdowns tend to be, when you can gauge that maybe the bottom is in based on the bounce.

They really dove in and did this right, which I found very impressive. Go ahead. No, I really dragged this, I did this for, I do a long read Sunday on the show on Sundays where I take an article and then sort of analyze it. And I really tortured this analogy, extending it. And I think, you know, for me, the thing that I was sort of talking about on that is part of what shapes that transition from spring, you know, when we move from very early spring, where it's just the thought to late spring in the beginning of summer, I think in a lot of ways is the stories that not. crypto market participants are resonating with that bring them in. And if you look back at other cycles, there's always a Bitcoin story, but then there's other things as well, right? So in 2020, we had Bitcoin leading the way with great monetary inflation thesis, but that was quickly followed by Defi Summer for the DGens in the space to get their hands dirty and get excited again, which was followed then by NFTs for Normies, right? This year, we're very, we're just starting to see the first kind of shadows of what the Bitcoin

narrative might look like, right, with people talking about geopolitical instability and Bitcoin being a flight to quality with that. We have no idea yet what those sort of resonant narratives are going to be either for the sort of like, you know, the insane internal traders or for the normies. And I think that as is those things, as we start to see more contenders for those, for those stories, that's when you're going to know that we're kind of transitioning once again. Yeah, I'm putting my money on RWA because it's got a new three-letter title, Real World Assets. That's my leading fighter right now. Guys, we're going to do a very quick honorable mention.

I know that we're way over our intended time here, but there's a lot of talk about. We have to mention this. SEC drops charges against Ripple CEO, Garlinghouse, Chairman Larson, to be clear, they're still pursuing the central Ripple case. So any of the bad takes you saw that the SEC was completely dropping this are false. But the SEC is clearly capitulating here once again on another part of this case. Seemingly, Chris and Brad are out of trouble here for any personal response.

responsibility or liability. And you just love to see the SEC continuing to take these small losses. Yeah. I mean, this one is fascinating. We could have done the whole show on this. You know, basically when the judge's most recent decision was that the SEC was not allowed to appeal part of the case that had been decided so far. They had to wait until this piece of the case was done, basically the executive piece. And so the read that I've seen from people who I think are the most sort of dispassionate is that the SEC clearly wants to have the fight around the judge's interpretation of Howie and how they were going after that, as opposed to, you know, executive culpability. And they want to start having that now. I mean, that reads to me, like, that is a fight

that Gensler wants to pick before he's potentially out of office. So I would expect more, not less fireworks because of this decision, at least in the short term. That's a good take because I think, to your point, they're focusing on what they can win and getting rid of all the nonsense that might deflect from that case. I think that's absolutely correct. Guys, that's our, that's our Friday five plus kind of half. We'll call that with the Friday five and a half today because we did get in Brad and Chris there at the end with Gary. This happened apparently on Gary Gensler's birthday, by the way. So Twitter was really excited to see him. I love to say it. I love to see it. Once again, guys, you can see, hear this on both of our audio channels, both of our YouTube channels.

and you get to go and hear NLW give a better introduction after actually listening to it and knowing what we ended up talking about. So we're checking out there. And of course, it's daily show. And I do love your long reads on Sunday. I think that's great. Everybody should check that out, especially I'm not here on Sunday. So you got to find something to listen to.

Man, thank you so much. Appreciate the extra 15 minutes that we did here. I hope you guys enjoyed it. And that's all that we have, I guess, for today. So, man, I'll see you next Friday. Later, guys.