The Breakdown - Crypto's Institutional Summer: Perps, Policy, and the Ethereum Surge

Episode Date: July 26, 2025

This week's Friday Five dives into a deceptively quiet but consequential stretch for crypto. NLW and Scott Melker break down Dan Tapiero’s massive $50 trillion crypto prediction, institutional progress like JPMorgan’s collateralized crypto lending and Christie's $1B real estate crypto push, and how Ethereum is finally finding its moment. Plus, a look at the evolving Senate version of the crypto market structure bill, lobbying momentum in D.C., and Coinbase’s bold new move with U.S.-based perpetual futures. The theme? The institutional floodgates are opening—and crypto is normalizing fast. 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, July 25th, 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, back with another Friday five. Kind of a quiet week, although a lot of things that are brewing that will be relevant for the future. We have some pretty significant institutionalization stories, progress being made on the market structure bill, which is extremely consequential.

So sit back and let Scott Melker and I tell you all about it. Good morning, everybody, and happy Friday. Let's talk about really big numbers. We've got Dan Tapiero here, friend of the show. So he's crypto ecosystem reaching 50 trillion as he launches the new 500 million fund under 50T rebrand. He used to be 10T for those who remember because he thought crypto would go to 10 trillion. I always mocked him and said, why so bearish? I guess he listened.

Changing times required changing updates, you know? Yeah. 50 trillion is a big number. Actually, though, I mean, you know, stable coins count as a part of the crypto market cap. And if they explode to, you know, 10, 20 trillion over the next 10 years, this is pretty doable. Yeah, I mean, 50 trillion is sounds. insane except when you realize it's a 10x from here. And also that like there's a calculation going on here about sort of the general increase in global wealth, what portion of that resides in crypto,

what portion of that is represented on crypto. There's a lot that goes into that. I think, you know, Dan is a sophisticated investor. He's not saying Dogecoin goes to a trillion or anything like that. This is a much sort of more comprehensive prediction. If I put that headline, I would get another warning and get a strike. I said that Doge coin was going to do that. They would tell me that it was harmful content again. Here we go, though, with our first real story of the day. Senate will end up passing House version of crypto market structure, says Tom Emmer.

This isn't exactly the story. Obviously, the story, as we know, is that Genius was passed into law last week. Going to the Senate, you actually unpacked this exceptionally well on the breakdown this week. Usually, there's not much deference to the House from the Senate that kind of rewrite their own and send it back and say, hey, guys, sign this. We actually got an interesting and quick write-up from the Senate, and it's not exactly the House version. So maybe you can explain this further. Yeah, so it's interesting. So we didn't really get like a full version of the bill, or at least

what we would have expected. The House version of this bill is, you know, hundreds of pages of long. What we got from the Senate was 20-something pages, maybe 30-something pages. It was really short relative to what you would expect. And the main point of difference is around how to handle the securities, commodities classification sort of piece of things, right? Whereas in the House bill, there's a whole system for how a security-like thing becomes not a security. In the Senate version of the bill, they're basically just treated as not a security a priori because they're named as some different type of asset class, an ancillary asset. It harkens back to the original Lummis Gillibrand bill from a few years ago, sort of closer to their conception. The key point, I think, for now is not which of

these wins, but it's more of how it gets reconciled from here. The Senate bill is also sort of missing the CFTC portion of how to deal with things. It's really just focused on, you know, handing over a bunch of stuff to the SEC. So it feels very starting place rather than complete, but it continues to advance the conversation. And I think it creates space now for people who are actually interested in this to have the discussion around the right way to handle these, this thorny question that's been at the center of things forever, which is, are they securities, are they not?

And if they're not, what are they? Yeah, they seem to have improved at least slightly and addressed a few more concerns. But even David Sacks said in an interview, he doesn't expect this to be law before, you know, late September, maybe October, November. clearly we're still in the early innings of it. I think it's just encouraging to see progress so quickly out of the Senate. It felt to me like a momentum continuation thing, right? If they put out something to discuss, then people discuss it. It keeps the balls moving. If they don't, then,

you know, we get drowned out and moved on to other topics. And so, you know, that's sort of how it reads to me. It's taking a bunch of concepts from, you know, previous legislation or legislative efforts, putting them together and particularly highlighting things that are different about how they might want to approach it from the House bill. So that's where the conversation naturally trends. Yeah, and sort of in line with politics, crypto industry boosted lobbying to past coveted stable coin bill. Not sure how much of a story there is here when we know that the crypto lobby is now willing to spend the lobby and push for anything that they want, but 6.9 million in the second quarter, a 21% increase over the previous three months. So obviously there's a heavy

from our industry to participate in Washington and get things done. Yeah, I mean, whatever, $6.9 million. These are lobbying numbers for ants. Yeah. What is this? Yeah. No, but this is definitely, we haven't had very many actual summer weeks so far, but Bloomberg writing a story about that basically says,

when important legislation came to be a focus, crypto lobby spent more on important legislation. That's really what the story is. So I don't think there's much to see here. Crypto lobby continues to be an important force in Washington. And, you know, look, one thing that is interesting if you're going to try to draw some actual interesting notes from this is in the immediate aftermath of Trump winning, there was a bit of a fracturing, a bit more fracturing of the crypto lobby than we had seen, you know,

which had been pretty consolidated when we all had a common enemy, right? Which is very natural. Like, you have a common enemy, so everyone comes together. They put aside their differences. everyone embraces even XRP and we all kind of fight together. In the immediate aftermath, when it seemed like, you know, crypto was going to have an easier time of it or, you know, now was the time to kind of go on the offense,

there was a bit more splintering. Subsequent to that, as these key legislative pieces have come up, there has been, you know, it's been interesting to track how much the crypto lobby is acting with one voice versus sort of, you know, fractional and multi-different tier of voices. So to the extent that you are watching things, rather than just how much the crypto lobby spends, watching to see, you know, are the groups that are representing Coinbase saying the same things

that are representing sort of broader industry groups. Like those are the types of things to watch for. Absolutely. 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 tradfai 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, visitgrayscale.com. Go to Grayscale.com to explore their full suite of crypto investment products and invest in your share of the future. Moving on, the next topic here is the state of alt season. Cryptos alt-coin season stumbles out of the gate being the first year. But you had a great breakdown. Sort of the implication is is Alt-season the beginning of the end here.

But alt-season or exit liquidity parsing the crypto markets next move. And then we can obviously dig into everything that's happening around Ethan Treasury companies here. But interesting take here, Cryptos All-Coin season stumbles out of the gate. Yeah, I don't know. I mean, the question is just, we are unmoored right now because we have so routinely had the sort of the precedent of the four-year cycle that we could lean back on and reference against, right? And everything was either this is how it was working then or how, you know, or it's doing a thing that's different than it was working then. Now we have such a different set of forces that I think no one really has a super clear idea of where we sit in the cycle. the cycle, what the cycle means is up for grabs. And so I think that we're trying to kind of read a lot of

those different signals into things when we might just be in a completely different paradigm now. Yeah, that makes perfect sense. But moving on, we do know that certain all coins have been moving like crazy, and that is Ethereum, namely, but Salon also. But Bitmine Immersions, ETH stash doubles to more than $2 billion in corporate Ethereum treasury race. I had Matt Hogan on yesterday. He talked at length about this demand show. Clearly, there's something going on with Ethereum here. I mostly attribute it to Tom Lee and the increasing interest. It just finally got the catalyst it needed to trade at a reasonable price.

Yeah, I mean, look, so there is a lot of like ketchup that's going on right now, which is important to note. Secondly, you know, you and I have talked about how it's been surprising to some extent, ETH's underperformance for the last, you know, period of time, just because it seemed like there was such a clear opportunity for it to be Bitcoin is the exposure to store a value. Heath is this, you know, exposure to everything else in crypto. But for whatever reason, it's taken this amount of time to get here, I think that there's a confluence of narrative and real factors that are helping shape this. You know, the fact that people are pointing to Ethereum in sort of mainstream financial analysis

as a beneficiary of the stable coin regime passing creates a little bit of a tail win for them. Then you pointed out, you know, larger analysts like Tom Lee talking about it, that's another tail win, the fact that there is now these corporate treasury structures, which creates a kind of a runback, the playbook type of thing for people who have watched the Bitcoin gains and wonder if it could just happen again. All of these things add up. And then you, you slap them into the fact that relatively speaking, it has underperformed looks like a good trade. Yeah, I think it's going to keep going. personally, it's been interesting actually to watch today. I haven't checked in the last hour or so,

but Bitcoin had a nice little correction, kind of trade it down to the bottom of the rage, and Ethereum continued up. And so we don't even have that thing where Ethereum falls a little more than Bitcoin because there's a slight panic in Bitcoin. It clearly is untethered to some degree. Yeah. You know, I think, again, Ethereum recapturing its place as sort of dominant number two and representing sort of something different for an investor makes sense to me. I think, again, the thing to watch is how far down the alt spectrum does it go? You know, does it extend to Solana? Does it extend, you know, even beyond that, right?

Yeah, absolutely. We're going to see time we'll tell, certainly. And this kind of brings us into treasury companies in general, one of the big stories of the week. David Bailey's fund is up 640% after converting Trump on crypto. But the real story here is that what the fund does, this is effective. collectively Nakamoto, to my understanding, to 10K capital. But they're a treasury company that not only buys Bitcoin, but invest in other treasury companies. Yeah. The story here that people have been interested in is, well, let me take a step back. Everyone is looking for signs

that treasury companies could ruin the party for everyone. That's where everyone is, right? Is, are these things going to be our big blowup of this cycle? And so what the story has attracted to attention is around ownership concentration, right? Because ownership concentration is the type of thing that can transmute wobbles and problems in one company to a larger sort of industry phenomenon. For people who are looking for the negative signs, it's obviously a fairly hyped narrative and it's hard to imagine that company number 300 can really do well. I mean, even these guys are talking about how many deals they're still seeing, you know, it's just insane. The flip side is, you know, leverage. These things aren't super levered.

it doesn't have some of the hallmarks of previous blowups where two different hedge funds were just trading back and forth with one another. But famous last words. But I think that that's the reason that people are interested is that everyone has their super spiky senses on, you know. It's hard not to. Yeah. Crypto PTSD, you have to know who the next main character of the collapse is going to be and what's going to do it. And listen, I have said exactly what you did. Company 300 is going to be bad. The question is whether that actually matters for the crypto market or just for the shareholders that were dumb enough to buy company 300. the scary thing is that the catalyst that rips us down very rarely comes from the most predictable

place, you know? So it's like, what is there to look at that's not a treasury company is probably a more fruitful? We certainly didn't see SBF really coming. So point well taken, but what we have seen coming is the institutions. JPMorgan Chase explores lending secured by clients, cryptocurrencies. This came coincidentally, I'm sure, right on the back of Schwab saying they were basically going to do the same thing three days before. But, But this isn't the only sign of a massive bank and institution coming in in a different way than maybe we had seen announced Goldman Sachs, BNY, to record money market funds on blockchain, obviously behind BlackRock and Franklin Templeton at all who have been tokenizing treasuries here for a while. But it's pretty clear the biggest banks, the biggest financial institutions, Wall Street is coming and they're coming to participate in every single part of this. Yeah.

we fully tipped into this is just the norm at this point. You know, it's all of the cracks of available products are getting filled in. It's like water flooding over a topography. Everything that could be a product is going to become a product. I think to some extent, extending this from the conversation that we were just having about where blowups are going to come, all we really need to avoid with this cycle is some insane blowup that makes people sort of want to run away from crypto forever. And look, the best down.

cycle that we can imagine is one where retail never fully gets in this time and, you know, gets a little bit bored again because things get boring. And what we're left with is every institution in the world offering every type of crypto product. And it's just as normal as can be. And that's sort of where things are headed right now, is just the complete and utter boring normalization of everything. Yeah, exactly where we're headed. But this isn't boring. Perpetual futures have arrived in the U.S. on Coinbase. I mean, this is crazy. This is a humongous story that would have been the biggest story ever if it didn't happen among all these other stories. But the fact that you can go full Bitmex now on Coinbase as an American is just massive.

Well, you can go a tenth of Bitmex, right? I think Tenek leverage, by the way, is still like very, very high for relative to speaking. But look, Perps are one of the more interesting actual kind of financial or market vehicle innovations that the crypto industry has had. there's really interesting benefits that they have over other types of structures. This, I think, is emblematic of another piece of the institutionalization story, which isn't just banks and traditional kind of financiers offering crypto products, but Wall Street taking cues from the way that crypto does things and actually starting to integrate them into the mainstream system.

Again, hold aside like the exact leverage numbers. There are really interesting reasons to like Perps as an available instrument from a market liquidity perspective. So I don't know, I think that it's a fairly positive thing. You know, again, not speaking to the leverage piece of it, but just having this instrument as an available tool alongside everything else, it feels inevitable to me, I guess. Yeah. I agree. I've just had a glitch over here one second. And finally, this was kind of a honorable mention story, but it's pretty big. Christie's offers one billion in luxury real estate to buyers paying with crypto. Basically, the auction house slash real estate, creating an

entire new part of the business here to specifically sell real estate to buyers that are willing to pay with crypto. This is one of those things that has happened a little bit, but still a huge story. And once again, we'll get completely forgotten. Yeah, I mean, look, I think that one of the things that's pretty clear is, although retail hasn't moved back in fully, although, you know, again, we talked about it last week how there are some signs of it coming back to life, a lot of the products that these companies are building for, and a lot of the sort of feeling of force driving them into this space is high net worth crypto buyers,

which represent a big, juicy market that they want to get access to. And this is sort of further result of that. So, you know, I think we're going to see more of this. And I think it's going to be less and less about novelty and capturing a headline, which is what all this stuff was about three, four years ago when you saw it. And more about there are these extremely valuable, niche markets of sort of, you know, crypto holders that are worth developing products for. Hey, we're done. But did you see the most awkward moment in TV history yesterday that I will say

could be the best new sitcom ever? I would watch this show day in and day out. I don't know. It's the odd couple or dumb and dumber, perfect strangers. The only Trump media that I saw yesterday was was South Park, and that was, I didn't see it. Speaking of awkward. I mean, Trump shows up at the Fed building. Powell, as if he's like the contractor or something, is not like, do you think that this is maybe below Powell's pay grade to be in a hard hat down there explaining the expenses of a construction project?

Tim Scott's not even wearing a helmet. So the two of them are wearing a helmet completely for show. Trump pulls out a document. It's like, this is up to $3.1 billion. Powell says, that's for a. building we did five years ago, man. I mean, this was pure insanity and comedy. I don't know where we're at in the simulation if we're 99% through and things are about to get bad, but it is wild. Yeah, it's something all right. You know, Scott, I think we've finally had our first true

summer week this week. When we were looking through and preparing this, I was like, man, this is actually a summer week. It's a summer week relative to a 2025 spring week, but relative to a previous fall week, it's still more action than we would ever have. Yeah, I guess that's true. It's just we are jaded and bored. If we don't have, I mean, these stories are massive. Whatever, I'm just saying everyone needs to touch some grass. I agree.

Go touch grass. Thank you, LW. We'll be back next week. Guys, check out the breakdown. That's where I get all the ideas now for my show. So I just go, hey, see, he talked about it on the breakdown. Breakdown again. Awesome show and awesome follow.

We'll see you guys next week. Thanks, man. Later.