The Breakdown - Everything in Crypto That ISN'T the Tariffs

Episode Date: April 10, 2025

Despite tariffs dominating the news (and the markets), there have been a number of important stories in crypto, including a wave of institutional tradfi-crypto collabs, a big $1B+ acquisition, and Tether considering launching a US-based stablecoin. Sponsored by: Crypto Tax Calculator Accurate Crypto Taxes. No Guesswork. Say goodbye to tax season headaches with Crypto Tax Calculator: Generate accurate, CPA-endorsed tax reports fully compliant with IRS rules. Seamlessly integrate with 3000+ wallets, exchanges, and on-chain platforms. Import reports directly into TurboTax or H&R Block, or securely share them with your accountant. Exclusive Offer: Use the code BW2025 to enjoy 30% off all paid plans. Don’t miss out - offer expires 15 April 2025! Ledger Ledger, the world leader in digital asset security, proudly sponsors The Breakdown podcast. Celebrating 10 years of protecting over 20% of the world’s crypto, Ledger ensures the security of your assets. For the best self-custody solution in the space, buy a LEDGER™ device and secure your crypto today. Buy now on Ledger.com. 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 Wednesday, April 9th, and today we are catching up on everything in crypto that is not about tariffs. 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 at the show notes or go to bit.ly slash breakdown pod. All right, friends. Well, obviously the macro is completely dominant in terms of driving the narrative and the discussion and markets and everything else right now. And so we haven't had a chance to catch up on the Bitcoin and Crypto News outside of that. And that's what we're going to do today.

Although I did lie a little bit because we're going to start with some Bitcoin tariff takes. Inevitably, this is the first big economic or market crisis that has happened in the period where Bitcoin has been mainstream and connected to Wall Street and traditional finance. And because of that, it's natural to try to understand how it's performing. Certainly Bitcoin has taken its fair share of blows. But while the drawdown might be painful, it certainly doesn't look like any sort of major macro event where previously it seems possible that Bitcoin was going much, much lower. Tuesday saw 3.6% drop for Bitcoin while the S&P 500 shaved off 1.6%.

But neither asset class revisited the Monday morning lows with Bitcoin finding support at 75,000. Investment Bank Bernstein wrote that Bitcoin's resilience has been, quote, nothing but impressive. Their Tuesday research notes stated, the current price action down 26% suggests demand for Bitcoin from more resilient capital. Now, it is of course unusual for a 26% drop to be widely viewed as a buying opportunity rather than a threat, but that's where we find ourselves. There are very few who are actually calling the bottom at this point, but the analysis is certainly skewed towards finding reasons to buy rather than looking for the exits. Bernstein wrote, in our view, Bitcoin on a timescale is probabilistic gold. It trades as a higher

volatility and more liquid version of gold. And interestingly, many are turning to China for the next catalyst that drives Bitcoin strength. The CCP has weakened their soft peg on the yuan for the fifth day in a row, allowing the currency to drop to fresh lows for the post-GFC era. The onshore currency market spent all of yesterday stuck at top of the fixed range, meaning the government is likely intervening in the market. The offshore yuan traded outside of the range, implying that the government is no longer interested in defending the soft peg outside of their borders. U.S. bonds have also been crashing. The 10-year interest rate, at least before the 90-day reprieve, which happened just as I was about to record, is now up 50 basis points from where it began the week, hitting 4.4%. Jim Bianco wrote

that Monday was a, quote, tell your grandchildren I was their day in the bond market. More specifically, it was one of the three most volatile days in the bond market dating back to the start of record-keeping in 1998. Explanations right now are wildly varied. The simple take is that China is dumping treasuries for cash in order to defend the yuan. More nuanced is the recognition that hedge funds have been the marginal new buyer of U.S. debt over the past few years. This inventory is either used as collateral for leveraged equity positions or forms one leg of a basis trade with the other leg being short bond futures. With high volatility and markets heading lower, there's good reason to think that hedge funds are derisking. Apollo chief economist Torsten Slok estimated that $800 billion was wrapped up on the

basis trade, which could be in the middle of unwinding. After watching the charts on Tuesday night, Bianco commented, something is broken tonight in the bond market. We're seeing a disorderly liquidation. If I had to guess, the basis trade is in full unwind. Since Friday's closed to now, the 30-year yield is up 56 basis points in three trading days. The last time the yield rose this much in three days, close to close was January 7, 1988 when the yield was 14%. This kind of historic move is caused by a forced liquidation, not human managers making decisions about the outlook for rates at midnight. Bitcoin co-founder Arthur Hayes believes the combination of stresses will switch on the money printers. He wrote, if not the Fed, then the PBOC will give us the YATSI ingredients.

Yuan deval leads to the narrative. the Chinese capital flight will flow into Bitcoin. It worked in 2013, 2015, and can work in 2025. Ignore China at your own peril. Ben Zhao, the CEO of Bybit, added, Translation, U.S.-China tariff war, China will try to lower the yuan to counter the tariff. Historically, whenever the yuan drops, a lot of Chinese capital flows into Bitcoin, so bullish Bitcoin. All week, Hayes has been commenting that money printing is the only way out of this doom loop, so it's just a matter of time. Commenting on yesterday's spike in bond volatility, he added, we are greenlit for Fed intervention. Real Vision CEO Raul Paul is also

also focused on China, stating, in the end, almost all other tariff negotiations and rhetoric are about getting China to agree to a deal. That is the big prize in both China and the U.S. understand it and need it. Everything else is negotiation posturing. China needs a weaker dollar and the U.S. needs tariffs. Vandali Bitcoin gave us the basic take writing, I'm going to mute tariffs now due to long-term irrelevance and overall annoyance. I enjoy the long posts and newsletters, but I'm a simple man with simple thoughts. All roads lead to the printer. All roads leave to Bitcoin. Everything around it is just more short-term noise. Now, moving away from the tariffs, even the Bitcoin side of the tariff conversation, let's catch up on some of the other crypto news.

Couple really interesting ones. First of all, the Justice Department has shuttered their crypto litigation division, effective immediately. The National Cryptocurrency Enforcement Unit, or N-SET was established in 2021. It took on cases related to tornado cash, samurai wallet, and quote-unquote highly profitable mango markets exploiter Avi Eisenberg. In a four-page memo to staff on Monday, Deputy Attorney General Todd Blanche said, the DOJ is not a digital assets regulator. However, the prior administration used the Justice Department to pursue a reckless strategy of regulation by prosecution.

He said disbanding the crypto unit was part of the DOJ's efforts to comply with Trump's executive order aimed at establishing regulatory clarity for the asset class. Blanche directed staff to focus on, quote, prosecuting individuals who victimized digital asset investors and not pursue cases against crypto exchanges, mixers, and offline wallets. Amanda Tuminelli, the executive director of the DEPI Education Fund, unpacked elite memo. She noted that NSET was prioritizing the investigation of Defy protocols and wallets that didn't hold money services licenses, writing, this was the team most responsible for opening investigations into digital asset projects simply for being associated with digital assets.

Bye. Consensus lawyer Bill Hughes commented, EnSET was never made for the long term. So much hand-wringing about it being disbanded when many, most, all of its temporary pseudo-detailed personnel have already been cycled back into their various enforcement divisions within the DOJ well before this memo. The important thing is that federal law enforcement continues to build proficiency in going after on-chain criminals. I'd be strongly in favor of building out the computer crime unit. The memo is also about prosecution, bringing charges and trying cases before a jury. It basically says nothing about how crypto-elicit activity is investigated, which is the province of the FBI among other federal investigative agencies. The FBI has a crypto unit and a DPRK unit.

No indication that that is changing. Now Hughes's comments were responding to a Twitter outcry, obviously from outside the industry, that the Trump administration was deprioritizing going after crypto fraud. And indeed, that is very much not what the memo says. Instead, it's about shutting down the team tasked with finding a way to criminally prosecute mixers and wallets, putting that responsibility back on financial regulators. If anything, it seems like it would free up DOG resources to deal with actual on-chain crime rather than enforcing unclear licensing requirements. Still, having the ability to write code and publish Bitcoin software without fear of a jail sentence is a really big deal. So much so that Bitcoin magazine called this one of the most significant federal crypto policy changes under Trump's second term.

Today's episode is brought to you by Crypto Tax Calculator. If you're looking for accurate crypto taxes with no guesswork, check out Crypto Tax Calculator. Get accurate CPA-endorsed tax reports with full support for IRS rules. For those who have fallen down the on-chain rabbit hole, CTC has you covered with more than 3,000 integrations. They have full support for Defi staking and NFTs. Import directly to TurboTax. or H&R block or share securely with your accountant. Create an account, import your sources, and review. It's that easy. Hello, friends. I am thrilled to share that Ledger is once again partnering and sponsoring with the breakdown. Many of you know, but for those of you who don't, Ledger is the most secure hardware

wallet for your crypto and logins. It's trusted by 7 million users and secures 20% of the world's digital assets. What's more, Ledger is a lot more than wallets. Over the recent years, they've built a comprehensive ecosystem of products and services, all of which are designed to make digital ownership more secure and accessible. You can buy your Bitcoin with Ledger and Ledger Live and so much more. Basically, not only did they want to keep your assets secure, they want you to be able to do more with them. Ledger's newest devices, the Ledger Stacks and Ledger Flex introduced the world's first secure touchscreens, making it

easier and safer to manage your transactions and assets. Alongside Ledger Stacks and Ledger Flex, the company also launched the Ledger Security Key app, offering a safer alternative to traditional passwords and enhancing your digital security. If you are in the same, this space, you owe it to yourself to at least check out Ledger and their ecosystem what they have available to you. So thanks, once again, to Ledger for sponsoring the show. Next up, an interesting one from M&A land. Ripple is acquiring Crypto Prime brokerage Hidden Road for $1.25 billion, one of the largest deals in crypto history. The press release claims that Hidden Road has 300 institutional

customers and clears over $3 trillion in transactions annually. The release stated that, quote, with the backing of Ripple's significant balance sheet, Hidden Road will exponentially expand its capacity to service its pipeline and become one of the largest non-bank prime brokers globally. And indeed, that highlights the issue for the company. With banks primed to enter the industry, crypto-native prime brokers could see their demand evaporate quickly. So what's in it for Ripple? CEO Brad Garlinghouse tweeted, this is the capital and activity that will tap into XRP and the XRP ledgers bread and butter, instant, efficient, scalable, and low-cost movement of value. Instead of waiting for 24 hours to settle trade through Fiat Rails,

Hidden Road will be using XRPL for clearing a portion of trades, and most consequently, using the RLUSD stable coin as collateral across its prime brokerage services, including cross-asset, crypto and traditional instrument, trades. Capturing much of the zeitgeist of crypto Twitter at least. Lawyer Gabriel Shapiro quipped, crypto is chaos magic. Ripple willed a really stupid idea, i.e. using XRP as a clearance currency, into reality just by shilling it relentlessly, dumping on retail, and forming enough of a war chest to buy businesses that will do it because they own them.

There's a lesson in there. Some are expressing a grudging respect for Ripple. With Mike Dutus of Six-Man Ventures tweeting, Whatever you think of XRP, Brad Garlinghouse has conducted an absolute masterclass as Ripple's CEO for the past decade, fomenting remail demand for the token, while threading the regulatory needle

and creating an acquisition currency to build a real institutional business. Blockworks co-founder Mike Epilito noted, XRP is almost at market cap parity with ETH, market cap, not fully diluted value. This will offend many people's sensibilities, but this should be a wake-up call. Crypto will compete on different axes that it has previously,

protocols that fail to adapt risk obsolescence. In a story of the coming together of Tradfai and CryptoNative, BlackRock has partnered with Anchorage Digital for crypto custody services to support their range of ETFs and private market products. BlackRock's head of digital assets, Robert Michnik said, as our footprint in the ecosystem grows, we continue to expand our network of service providers with a focus on the highest quality institutional providers.

After a thorough evaluation, Anchorage Digital clearly meets these standards. A new custody partnership, to be clear, is about the most boring financial news possible, or at least it should be. But this partnership comes after years of regulatory repression. Anchorage Digital is the only federally chartered crypto-native bank, and that should have made them a shoe-in-partner on custody as the Bitcoin ETFs were rolled out last year. However, banking and SEC regulations prevent banks from touching crypto,

leaving Coinbase to secure a near monopoly on custody services for the ETFs. That's no longer the case with numerous regulations being rolled back over the opening months of the Trump administration. The news then is a big signpost that Operation Choke Point has been rolled back to the point that banks can start getting involved. It's also a very big deal for Anchorage, validating their strategy of getting a banking charter and doing everything by the book. The partnership also makes for big practical improvements in crypto products in the U.S. BlackRock and many of the other ETFs were relying on Coinbase as the sole custodian for their Bitcoin. And even with a ton of respect for Coinbase, it always seemed like a bad

idea to mandate a single point of failure for these products. BlackRock can now diversify their custody risk across multiple institutions. In another crypto integration into Tradvye's story, Galaxy Digital has been given the all-clear to uplist to the NASDAQ. The SEC has approved their plans to relocate the company from the Cayman Islands to Delaware. CEO Mike Novogratz posted, Big milestone for Galaxy, our registration statement is now effective with the SEC. We're on track to list on NASDAQ shortly after our shareholder vote on May 9th. Let's go. Galaxy Digital has been listed on the Toronto Stock Exchange since the summer of 2020. He began life as a publicly traded penny stock on the TSX Ventures Exchange in 2018 before graduating to Canada's primary trading venue.

In that time, it's increased its market cap 13x, hitting a 40x at its 2021 peak. The company is currently at roughly half the valuation that would warrant inclusion in the NASDAQ index. Still, this uplisting is a big deal for Galaxy and something they've been working towards for years. They originally listed in Canada due to much more permissive regulatory structures for small-cap companies. Same reason that many Bitcoin miners found. found themselves going public north of the border. Once they grew large enough to warrant thinking about a bigger exchange, they were faced with the hostile SEC that refused to rubber-stamp their application.

After their last earnings call, Novogratz mentioned that they were currently responding to their ninth round of comments from the SEC. Galaxy's head of research Alex Thorin wrote, it's been a long road, but Galaxy is finally on its way to a U.S. listing. Finally, an interesting new one in the Stablecoin Wars, Tether is exploring the launch of a new stable coin aimed at meeting U.S. regulatory requirements. CEO, Paulo Arduino said, The new legislation gives us the opportunity to explore the creation of a U.S.-based

institutional-grade stablecoin. Unlike the stablecoins we've developed to support emerging markets and financial inclusion, such as in Africa, this would be tailored to meet the needs of large-scale regulated institutions with very different infrastructure requirements. Now, Tether isn't currently available to U.S. customers, at least according to the company's website. What that means in practice is that Tether doesn't service U.S. firms for creation and redemption, which must be coordinated through offshore entities.

As U.S. Stablecoin legislation gets close to the finish line, there's been a lot of hand-wringing about Tether's position in the world. The Stablecoin's reserves don't currently meet the new regulatory requirements, and there was even some suggestion that the firm should be barred from holding treasuries during negotiation. The current battle is over whether Tether should be afforded a two-year window to come into compliance. Spinning off a new compliance Stablecoin then could be a solution to the regulatory schism. Tether benefits greatly from operating USDT at scale, allowing them to roll the profits from reserve assets into venture investments in Bitcoin. A new smaller stable Applecoin with much stricter reserve standards would allow them to tap into the new U.S.

institutional market while maintaining the cash cow that is USDT. And so, friends, that is going to do it for our roundup of crypto-native stories. As you can tell, it's a little quiet, which is unsurprising given everything going on. I mentioned earlier in the show that just as I was about to record, Trump had announced the 90-day reprieve. And so I'm sure we will get into all of that and what has happened since then tomorrow. But for now, appreciate you listening, as always. And until next time, be safe and take care of each other.

Peace.