The Breakdown - Circle Soars, Trump and Musk Clash, and JPMorgan Embraces Bitcoin ETFs

Episode Date: June 7, 2025

Scott Melker joins NLW for a packed Friday Five: Circle’s IPO skyrockets, Musk and Trump’s crypto-fueled feud jolts markets, and JPMorgan quietly normalizes Bitcoin as financial collateral. Plus, lawmakers bungle crypto bill briefings and Cynthia Lummis sparks debate over Bitcoin’s role in national security. Brought to you by: Grayscale offers more than 20 different crypto investment products. Explore the full suite at grayscale.com. Invest in your share of the future. Investing involves risk and possible loss of principal. To learn more, visit ⁠⁠⁠⁠Grayscale.com⁠⁠⁠⁠ -- ⁠⁠⁠⁠https://www.grayscale.com//?utm_source=blockworks&utm_medium=paid-other&utm_campaign=brand&utm_id=&utm_term=&utm_content=audio-thebreakdown)⁠⁠⁠ Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/@TheBreakdownBW Subscribe to the newsletter: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://blockworks.co/newsletter/thebreakdown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownBW

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, June 6th, 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 on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod. All right, friends, we are back with a number. another Friday 5 with Scott Melker. It's actually a pretty diverse week, so without any further

ado, let's dive in. Good morning, sir. How are you? Better than a lot of folks out there right now. Things are great. I'm excited to chat. It's not a boring one this week. I'll tell you that. No, I want to start with Circle because holy wow, man. This thing was being offered on Robin Hood and in pre-IPO shares a day before at 27 to 29 bucks. Ended up closing the day yesterday after We're hugely trading at 83, but it's trading at 96, basically, right now, pre-market. I guess it's fair to say that Circle had a successful IPO here and successful for no one more than Jeremy Aller, I've had on the show quite a few times soon. Now is a casual billionaire, I think, $1.7 billion after this IPO at current prices.

He has played the long game for sure. I mean, it's hard to remember for people who weren't around. Like, people did not think that he was making a good move when he shifted Circles, focus. to be entirely about stable coins back in, you know, 2018, 2019. I think Alex Thorne from Galaxy Digital even said, you know, he was recalling when he was told about it. He was like, that's an insane idea. You're making an crazy mistake.

And now here we are. I mean, look, I think Circle is, it turns out that the story that everyone is paying attention to wasn't the important story, right? So there was a little while where everyone was analyzing circles financials, right? It was how much Rev Share they're giving to Coinbase and how it compares. to tether and yada, yada, yada, right? That was sort of layer one of analysis. And that's when things didn't look like they were going to go that well, right? That's when we started to have rumors of, you know, or reports of ripple and Coinbase potentially exploring acquisitions and,

you know, comparisons to the failed spec in 2021. Right. So that was sort of like one layer of analysis to circle as a company as it stands right now. Second layer of analysis, which started to take over clearly was momentum and an open moment window for crypto IPOs in general. E. Toro. obviously was the key catalyst in shifting this narrative. But it was very clear that there was sort of was an IPO window open. I think it's got artificial pressure and compression right now because, Mark, you know, no one has any belief or trust in how long there's going to be a good IPO window. And so there's a little bit of that energy. But those things do not, like the shift between those two things absolutely does not explain this. What's clear that what their roadshow bankers missed

and that what the analysis missed is how much demand there was for exposure to this category that doesn't really have other good options. This is not even really a circle story, except insofar a circle has very adeptly and adroitly over the last five years positioned itself as the U.S. you know, private domestic stable coin. This is stable coin demand, right? There's very clearly being expressed is a belief that stable coins are going to be key financial infrastructure, monetary policy infrastructure. And look, you know, someone had a great tweet. I'm, apologies for forgetting who it was, but they were comparing market cap to volume processed. And it was like, you know, PayPal is like a $70 billion market cap at $1.5 trillion processed.

Visa is $500 billion at $14 trillion process. And Circle was like $6 billion at $12 billion process, right? is just behind, you know, and so there's a disparity there. And the market clearly is seeing that, you know, so I do not think, I guess, is that TLDR here, that this is just exuberance of an excited, you know, IPO window. I think that this is category bet, you know, that this is, this is the equivalent in the stable coin space of, of the Black Rock Bitcoin ETF, basically. Absolutely. And I think the timing was just, Perfect to your point. And nobody's ever been more excited in hindsight that their SPAC listing failed than Jeremy Alleyer right now for a for a circle, because that would have probably been a disaster at that time and poorly structured.

And now you have this oversubscribed massive success and likely, as you said, now just to carry momentum for other IPOs and for the crypto industry as a whole. I mean, you talked about sort of this tailwind for stable coins in general. I just want to touch on this quickly. but Ubermulls using stable coins to reduce currency costs, right? So, I mean, we're on the grand stage now. Yeah, I mean, look, the other piece of this from a competitive aspect is that Circles life gets nothing but harder from here. And everyone knows that. And in fact, that was another reason that people were skeptical of the IPO.

But they have put so many more points in the self-fulfilling prophecy column because of, like, they now have institutional momentum in a way that is going to be extremely, like, already they were going to be tough to dislodge, given how anchored into existing stablecoin infrastructure. I mean, they are onshore stablecoin infrastructure, you know, period, full stop. But the fact that they now have this part of momentum with this buying from Wall Street means that all these sort of, you know, Johnny come lately stable coins that are going to come next, their task just got a hell of a lot harder. So not only was this successful from a financial standpoint, it makes Circle's success, for the future look a lot more likely than it did even, you know, two days ago.

I agree. And listen, the only thing that may have overshadowed a story like this on a day like yesterday is, of course, the Trump-Musk spat sees Bitcoin tumble liquidating $308 million in longs. I think we all know that Bitcoin bounced right back after anyone who was dumb enough to sell their Bitcoin because Musk and Trump were arguing decided that that was probably a bad idea. But clearly, this was like the fastest turnaround ever. I don't know if you saw that Jim Kramer actually tweeted.

I think literally yesterday that he loved the bromance between Trump and Musk. And, of course, then they started fighting. I mean, unbelievable. But, I mean, Musk, you know, full squirt here, as I said, Trump's going to cause a recession. He should be impeached. He's in the Epstein files, like the insane bomb after bomb after bomb. Here you go on the recession. And then, of course, you know, it just escalated to Trump responding, saying that his patience

was wearing thin, that Elon basically lost his mind when his suburb subsidies were not. included that he'd already seen the bill. You can see here that the easiest way to save money in our budget, billions and billions of dollars to terminate Elon's government subsidies and contracts, was always surprised that Biden didn't do it. Okay, you get the idea. And on the tail end of this spat, we're just going to do everything Trump. The cease and desist letter. We'll talk about the ETF. We're just going to knock it out sort of in one big trunch here. Yeah. So, okay. So let's actually go back to before the explosion, which I will quote Elon himself In retrospect, it was inevitable.

But what we had all week leading up to this was a couple things actually, three things happening in and around the Trump organization as relates to crypto. First of all, we had just absolutely deepened engagement, you know, just a flag planting left and right that screw you, Democrats, screw you criticism. Like, they were going all in, right? And so truth social applying for the ETF, which notably, and interestingly, did not use the Trump name, even though everyone knows who owns Truth Social, maybe some amount of sort of respect for the political process going on. But, you know,

filing for an ETF was one. Lots of debates around that, obviously, like, what, you know, where the value of the 12th ETF is. I thought those analyses were, you know, a little short-sighted, like everything's about brand, and this is a big brand, and this is, you know, they have a captive audience of people who might want their version of the ETF, not BlackRock. So, like, I think that there's a conceptual argument for it, at least. So you had that going on. But then you also had this spat between the Trump media organization and Magic Eden, because Magic Eden came out and said, hey, we've got the official wallet of, I don't even

know exactly what the phrasing was. But basically, it appears as though the folks behind the meme coin were collaborating with Magic Eden on something. And the Trump organization went off. Eric and Don just dumping on Magic Eaton, threatening lawsuits all day on Twitter. And interestingly, hold aside all that. The Trump or Don and Don Jr. and Eric had clearly made a decision at some point over the last few weeks, a few months to start moving back away from the meme coin.

They were on a squawk box or something earlier this week where they were explicitly kind of talking about their Bitcoin investment, the ETFs, you know, their mining investment, and things like that, not the meme coin and kind of trying to disavow that whole piece of things. So it came at a time when they were explicitly trying to remove their association with that particular side of things. Meanwhile, Democrats are just, you know, going off on their side. We'll talk in a minute about some of the specifics of the market structure bill. But the point is that coming into this spat, we really were seeing Democrats, even nominally pro-cropro-Democrats, really, really having trouble getting behind any sort of crypto legislation right now because of

Trump's involvement, the Trump family's involvement with crypto. And so here's the interesting question that I don't exactly have an answer to, but it's what I'm thinking about, sort of in our context for this whole Elon Trump spat. Like, how could it be good for Bitcoin and crypto, right? And so I think that there is a possibility that a weakened, not like an impeached Trump, but a slightly weakened Trump is actually a net positive for crypto, at least policy to get through. Because to the extent that crypto policy is no longer a Trump administration and Trump organization forcing it through despite conflicts of interest, but is instead sort of a common sense bipartisan thing, where Trump's political capital has been sidelined as the main political discourse for a little bit. Like, it seems to me that it could be positive on that way. Now, way too early to tell, you know, chaos can go either way.

But I don't necessarily think that given how much Trump had become the barrier to crypto legislation, a weakened Trump could be good if you are going for crypto legislation. So we'll have to see how it all shakes out. If you're throwing on tinfoil hats for speculation, I think there's also the chance that with Elon making such a big stink about this bill and about fiscal responsibility and about the national debt and showing that that's what he really cares about, that he also comes back to Bitcoin to some degree, right? And I think that that also could be a net positive. I mean, he's out there screaming like a Bitcoiner and all the things that Bitcoiners have

been screaming about the government since inception. So it wouldn't surprise me to see him come back. Honestly, like the most entertaining thing of all of it was me and my mind, imagining. like what it was like in the newsroom at CNN trying to figure out who to back and how to cover this story. Yeah, it just must have been exploding. Did you see Zach Foll's tweet, one of our own crypto folks had one of the,

I mean, there's a million. Oh, his brother with the Tesla. His brother with the Tesla. He had like 175,000 lives. Uh-huh. Yeah. It's hilarious. Yeah, he basically said now, like,

it was a screenshot of his brother texting and saying now like Republicans and Libs are going to keep my Tesla. Yeah. Today's episode, of The Breakdown is brought to you exclusively by Grayscale. Grayscale is almost certainly a name you know. They've been offering exposure to crypto for over a decade now and offer over 20 different crypto investment products ranging from single asset to diversify to thematic exposure to crypto and the

broader crypto industry. They have long been innovators at the intersection of TradFi and crypto. And one of the benefits for a lot of us is that Grayscale products are available right through your existing brokerage or IRA. Now, of course, investing involves risk, including possible loss of principle. For more information and important disclosures, visit grayscale.com. Go to gracecale.com to explore their full suite of crypto investment products and invest in your share of the future. So let's continue on with the Democrats. I don't think we need to beat this feud to death. It'll probably get resolved in some way, shape, or form, but good entertainment at the very least. But we have Dems say they're blocked from info on verge of crypto market structure bill hearings as the House is about to discuss its crypto market structure effort hearings. Stafford Democrats said the SEC has shut them out from technical information. And you got screaming vaccine waters, angry vaccine waters. You're going to be like crying Jordan with this picture. Yeah. So a couple things here. A few days ago, there was supposed to be sort of like a technical assistance hearing around this bill, which is basically where the SEC makes itself available to explain specific parts.

to the bill. And this is supposed to be not a partisan thing, right? This is just entirely mechanical, historically speaking. And the people they brought to that conversation basically had no idea according to reports. I mean, Democrats called it sort of the worst technical briefing bill that they'd ever heard. And in ways that like, you know, look, you have to have a pound of salt with any political discourse at this point. However, you know, watching anti-cryptodemps pretty closely, I think you start to get a feel for like when they're scoring political points. And and when they're just like actually saying things that they think. And when it came to their descriptions of just how bad and how useless this technical briefing was

as a matter of policy process, it had the air to me of just saying what it actually was, right? That it's like the people just didn't understand this thing. It's a 200-page market structure bill. It feels like it's being rammed down people's throw. And they have no idea. They just don't know what's actually in the bill. In fact, you know, there were a couple hearings then later in the week, House Ag and House Financial Services Committee no one was prepared for for for actual substantive discourse now debate on whether they would have had

any sort of substantive discourse even if they had been prepared but you know it's a mess right now and even more so than the normal no real progress seems to be being made on this on this market structure bill and frankly uh there is not the political capital for republicans to just drive this through right now in fact yeah everything well everything is up for grabs now i mean the you know obviously the big legislative focus is not on crypto bills at the moment. It's on the big beautiful bill, which has now become the flashpoint for all of this. So I don't know. I think that it feels to me like we're in the middle of a very liminal period. There's going to be some amount of political resetting. How different it looks than, you know, two days ago remains to be seen. But I don't think

we can know exactly what the sort of destiny for crypto policy is until we have a little bit of a settling of some of these bigger, you know, kind of core fights around the budget bill. Shockingly, we are not the most important thing on the docket all the time. Yeah. Well, hard to accept. I know. So listen, the title here says Bitcoin gets military backing. That is based on the lovely Senator Cynthia Lemmus saying that the U.S.

military now supports your plan to buy one million Bitcoin. Of course, as she said that, we get J.P. Morgan saying that this is a terrible idea. We should stockpile missiles, not Bitcoin. We actually have both videos. They're really quick. So just go ahead and show what both of them said. drones, planes, etc. What do you say to critics like Jamie Diamond who say this is a waste of resources?

Yeah, I would say that even the United States military disagrees with him, that there are generals, especially in Southeast Asia, who believe it's important to have strategic Bitcoin stockpile because we're doing an economic war with China and we have to prepare for a guns and weapons and bullets war, but we need both. And so all we need to do is look to the leadership of the country. The section between industrial policy in this country and national security, which sort of gets at what you're talking about with some of these different industries.

And it's spanning the last couple of administrations. Everybody devils in the details in terms of how the policies shake out across administrations. But I guess to that point, do we need to rethink what constitutes national security? I wouldn't rethink it. We know what it constitutes national security. We need, you know, I was saying we shouldn't be stockpiling Bitcoin. We should be stockpying guns, bullets, tanks, planes, drones, you know, rare earths. We know what we need to do.

This is not a mystery. Did you say stockpiling Bitcoin? I said we shouldn't be stockpiling Bitcoin. Oh, it shouldn't be. Okay. We should be stockpying bullets. Never miss a chance to take your shot at Bitcoin in a completely unrelated way for Jamie. in here, right? But listen, it leads into the next story about J.P. Morgan, but let's just

kind of, you know, briefly touch on this. I mean, one, just in my head, I see, I'm going to use AI to make Cynthia Lummis answer that question by saying, what I would say is, shut the hell up, Jamie, instead of this very diplomatic response. Very casual conversation about a kinetic war with China, as an aside, by everyone, apparently. Also, how much bullets are going to do. be the tools of fighting in the future as another big question. Look, I think that the story has nice headlines from Lummus with this military backing, but it's literally just this errant comment that, you know, that that that, that, that, that, I think that the subtext of this and the thing that's sort of true is that I think that there is a larger conversation and reevaluation of what

national security looks like in the future. And it does include economic dimensions. And it's not just Bitcoin. It's also about the status of the U.S. I mean, how we use the U.S. dollar as a weapon. I did a whole show this week, or I guess it's actually coming out on Monday, about sort of changing perception worldwide of how in play foreign reserve assets are as a tool of, you know, diplomacy and foreign warfare. You got Europe talking about freezing Israel's, you know, $55 billion in Israel's foreign reserves, right?

And this is now becoming increasingly normalized. That is a change. So the short of it is that Jamie Diamond is wrong. National security is not the same as it was 20 years ago. Anyone who thinks that it is is not paying attention. Whether Bitcoin has a stake at that table is a total, you know, reasonable debate between reasonable people. But, you know, he's on the, as usual, he's on the wrong side of things and, you know,

continues to be more so. But I think where you're going is maybe watch what they say, not what they do. Boom. The best segue in the history of the show, J.P. Morgan plans to offer clients financing. against crypto ETF. So interestingly, we know that they've offered Bitcoin and crypto trading services to their high net worth clients before, but they were pretty behind the curve on opening that door to all of their clients, which they've announced they will do over the past couple weeks. We've covered that before. But they're a bit ahead of the curve actually here by allowing

their clients to take loans, basically, against their crypto ETFs. This to me is like the biggest story being undiscussed because we've long said Bitcoin will become just like any other financial asset in your portfolio, and this is the end game of that. The end game is when it's your spot Bitcoin, actually, to be fair. But you can just put this next to your SPY or your QQ and in your mutual fund, whatever it is that it'll be included and just take a loan against your whole portfolio. This is how rich people buy, borrow, and die are never have to sell their Bitcoin or their assets. And this is just, it's now part of your portfolio for J.B. Morgan. Yep. This makes the ETFs a full financial asset.

not just a cool thing that's the new kid on the block in a huge important way that the impact of which will be manifest over time. But you know, you said it exactly. And I think that this was, you know, look, to the extent that the argument is Bitcoin as pristine collateral, this is a part of making that pristine collateral actually, you know, useful. We've seen how good Bitcoin is for people who have structured their organizations to take advantage of Bitcoin, both in terms of its liquidity, its store of value properties. But This allows people who have the proxy exposure to Bitcoin vis-a-vis the ETFs to have that sort of same impact. So it's, you know, extremely important for the evolution of this as an asset class.

And, you know, as we said before, you know, Morgan, you know, it's always important to watch, particularly J.P. Morgan, what they say and not what they do. And, you know, I think the question for Jamie Diamond always is, is Bitcoin in the room with you. And what is it doing to you? literally like show me on the doll or bitcoin touched you and it's wild and what a perfect way to end the show that was a great quit uh friday five i think we cooked through it all it's going to be interesting to see how a lot of this shakes out especially the uh Elon and Trump spat hopefully honestly I think it's in everyone's best interest beyond the entertainment value and proving that the simulation has a sense of humor that that calms down and uh is resolved uh with time guys give the breakdown a

follow and listen every single day and give NLW a follow of course. Otherwise, I guess we'll see them next Friday, man. Thank you very much. Later, guys.