The Breakdown - In Retrospect, It Was Inevitable: Elon Musk Pumps Bitcoin to Space

Episode Date: January 30, 2021

Last night, Tesla and SpaceX founder Elon Musk changed his Twitter profile to a single word: “bitcoin.” He also tweeted a cryptic message: “In Retrospect, It Was Inevitable.” The price of bitcoin surged in the wake of the tweet, as did Google searches for “bitcoin.” The price increases liquidated some $387 million in short positions.  In this episode, NLW breaks down the market reaction to Musk, the significance of the tweet and why it all connects to the larger story of WallStreetBets, Robinhood and shifting financial power. -- Earn up to 12% APY on Bitcoin, Ethereum, USD, EUR, GBP, Stablecoins & more. Get started at nexo.io -- Enjoying this content?   SUBSCRIBE to the Podcast Apple:  https://podcasts.apple.com/podcast/id1438693620?at=1000lSDb Spotify: https://open.spotify.com/show/538vuul1PuorUDwgkC8JWF?si=ddSvD-HST2e_E7wgxcjtfQ Google: https://podcasts.google.com/feed/aHR0cHM6Ly9ubHdjcnlwdG8ubGlic3luLmNvbS9yc3M=   Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW   The Breakdown is produced and distributed by CoinDesk.com

Big surprise, today Robin Hood put even more limitations on what users could do on its app. They cited, quote, extraordinary market conditions to temporarily turn off instant buying power for crypto. My feeling is good riddance. This is an app that wouldn't even let you withdraw your Bitcoin. Who needs them? But still, for that set of users who's there, it's just yet another betrayal. Coinbase has absolutely surged as people try to get off Robin Hood, and Coinbase and Cracken and other apps have actually struggled to keep up with the load today. The point is, something is shifting, it's all connected, and we can all feel it. 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.

The breakdown is sponsored by nexo.io and produced and distributed by CoinDesk. What's going on, guys? It is Friday, January 29th, and today we're talking Elon. Now, just a little bit of housekeeping before we start, you may notice that the audio is a little more echoey than normal. As you guys know, I move this week and the new studio isn't fully set up, so apologies for that. We should be back to normal quality by the beginning of next week. Now, let's talk about the brief or the absence of the brief. Usually I do the brief. It's three topics. It's a way to tell other stories that aren't the main thing I want to discuss in the day to keep you guys posted on what's going on in the macro world. But right now, everything is so heightened. It feels like what matters isn't these

sort of smaller detail stories. Like, am I really going to cover another initial jobless claims report today? Instead, right now, what feels like it matters is taking the space to try to make the connections between everything. I feel, you feel, we all feel the tectonic plates of history shifting under our feet. forces that have been building for a generation are erupting into messy, chaotic upheaval, and we're all just trying to make sense of it. I'm sure at some point next week it'll be the right call to use the brief to cover these smaller topics again, but right now, the lines between Bitcoin, macro, stock markets,

politics, the internet itself is all blown to hell. We're in the convergence and the eye of the storm of messy radical change. So with that, let's discuss our main topic. Elon Musk pumps crypto to the moon. Looking at Bitcoin and crypto over the last few days, on the one hand, they've been almost entirely overshadowed by what's been happening with Wall Street bets and Robin Hood. There's a collective sense, as I described yesterday, of the significance of this moment, that it transcends one segment of the industry but is instead about power and whether

markets will continue to only serve large interests or whether they can be wrenched back to something that is truly free. The newest Twitter superstar WSB chairman put it this way. The entire system has been exposed as corrupt. We must stand united as one people. The media will try and divide us again, but we must not give in. Certainly one dimension of that uniting is the crypto kids and the Bitcoin kids and the Wall Street bet kids coming together. And with that said, the two conversations did start to converge a little bit. Let's go back to that same Twitter user, WSB Chairman. Here are a few tweets of his from yesterday. Sorry I missed your call, I was busy exposing Wall Street and watching Dogecoin Moon. Has Doge ever been to a dollar? They can only control us because we

use their currency. Anybody own Bitcoin? There are a bunch of connection points here. First, you have this individual, WSB chairman, who is explicitly making the connection between a meme coin like Dogecoin, between Bitcoin as a different system and the currency system as a whole, and obviously the corruption of Wall Street that the whole thing is about. Dogecoin got wrapped up in the whole Wall Street Betts thing as well when it got turned off by Robin Hood as part of the series of assets that weren't allowed to be trade in the same way. And we'll come back to Robin Hood turning off trading of things in just a minute. And then there's an Elon Musk connection.

WSB chairman tweeted, On Tuesday, I had 12,000 followers. Then Elon Musk liked my tweet and life got crazy. Thank you to all 600,000 of you that have joined the movement. We're just getting started. And of course, as per the title, Elon is the starting point for this discussion today. Last night, Elon changed his Twitter profile to a single word, Bitcoin. He also added an extremely cryptic tweet,

In retrospect, it was inevitable. First, let's talk about the reaction to it. The market, it liked it. Bitcoin jumped over 10%, landing over 38,000. In the process, it sparked a boatload of short liquidations across exchanges, 387 million in liquidations to be exact. Up to that point, the market had been skewing bearish, and this unexpected event ripped it in the other direction,

which, by the way, is an absolutely big, beautiful analogy to Wall Street bet's savage struggle to short-squeeze Melvin Capital and other professional shorters that we talked about yesterday. Musk himself has a known contempt for short-sellers, so you have to think he's at least a little pleased with himself. Looking for the best way to stay on top of your investment game? Nexo.io has you covered in three easy steps with their high-yield savings account for digital assets. Step one, create an account at nexo.i. Step two, transfer assets to your secure nexo wallet, with no minimum or maximum limits on funds deposited.

Step three, sit back, relax, and earn up to 12% compounding interest paid out daily on your crypto and fiat. Your passive income made simple. Get started at nexo.io. A few other interesting notes on this point, the current largest mining pool by hash rate F2 pool embedded the tweet in Bitcoin Block 668197. There was also, according to CoinDesk,

a huge increase in Google searches for Bitcoin, following the tweet. Alex Kruger summed it up incredibly well, as he often does. The fact is, we don't know if Elon Musk adding Bitcoin to his bio means something. We must wait for that. However, everyone is now thinking about Tesla adding Bitcoin to its balance sheet, which would be massive. The possibility alone is enough to send the market roaring. On top of that, consider that the announcement came immediately after the largest options expiry in Bitcoin's history, not giving traders much chance to reestablish their long exposure or close their short hedges. Shorts just got taken for a wild ride. His tweet to me indicates that there will be positive news,

sooner or later. When someone responded, quote, Elon Musk likes to joke a lot. He likes Bitcoin, but it doesn't mean he will buy a lot of it or will make the purchasing public. Kruger responded, he also likes to get things done and to say fuck you to the establishment. And nothing says fuck you better than Bitcoin. Which is a perfect segue to the second part of our conversation, which is about what this actually means. Elon is, of course, not the first person to have this one-word Bitcoin Twitter bio. It's also the Twitter bio of Jack Dorsey, the CEO of Square and Twitter. Let's go back a couple of weeks to when Twitter permaband then-president Donald Trump. Jack wrote a threat about this, and it started, I do not celebrate or feel pride in our having

to ban Donald Trump from Twitter or how we got him. here. He then explained the decision and why it sucked. But really, the TLDR to me of the whole thread was that it sucks that companies even have the power to make these decisions at all. Indeed, he said in the same thread, the reason I have so much passion for Bitcoin is largely because of the model it demonstrates, a foundational internet technology that is not controlled or influenced by any single individual or entity. This is what the internet wants to be, and over time, more of it will be. This sentiment was echoed last night in a tweet from Naval. He said, there's only one technology stack capable of taking on government-backed gatekeepers,

and it ain't free mobile apps. He followed this up with it's easier to build a new financial system than it is to reform the existing one. And this, this is the connection point between everything we discussed yesterday about Wall Street bets, about generational frustration, and everything we're discussing today about Bitcoin. A number of others followed Elon's example. Alexis O'Hanian, the co-founder of Reddit, a prominent investor, a former best-selling author about the internet with his book Without Their Permission,

the husband of Serena Williams, one of the greatest athletes of all time. He also changed his profile to simply the word Bitcoin. Mr. Beast, one of the most prolific and interesting creators in the YouTube economy, also changed his profile to Bitcoin. A few days ago, Mr. Beast said that he's putting a million dollars of Bitcoin in a time capsule that will be delivered to the moon. This is a guy who has this tweet pinned. I want to build other channels like Beast Gaming and Beast React's so I can

run my main channel at a loss and grow as big as possible, and then use my main channel's influence to one day open hundreds of homeless shelters and food banks and give away all the money. That's my game plan and if you don't believe me, just watch. I promise I promise I. I'm dying with zero dollars in my bank account and I refuse to live a materialistic life. Now, in case you're skeptical of his capacity to do this, this is a guy who has three of the top five growing YouTube channels right now. He clearly has a sense of what he wants to do with money and the power that money brings, and it is not what other people expect young, rich people to do. I started the show by saying that everything is connected, that there is a moment of

significant change, and this is what I mean. Yesterday, as I mentioned, Doge became the first crypto to get swept up in the ban of all of these Wall Street bet assets. And although I'm talking largely about a bigger Bitcoin change, I'll spend a second on Doge. Here's what I tweeted today. Doge is truly the most perfect antidote for fundamentals concern trolling. You say we're breaking the rules by not caring about PE ratios and shit? Fine, here's a meme coin, made entirely as a joke, with 800% more today than yesterday. What are you going to do about it? The point that I was making is that one of the most patronizing and frustrating responses to all of this Wall Street bets stuff is the idea that somehow this group of people just doesn't get what the stock market is about,

that somehow the only legitimate stock market strategy is making bets based on fundamentals. Effectively, if you're not a hedge fund, if you're not a big institutional investor, you only get to be a value investor. That's your only strategy available. We even take today have Elizabeth Warren saying that the stock market should be entirely based on fundamentals. Should is a whole separate conversation, and I'll refer you to my Bitcoin philosophy show when we want to talk about should, but the reality of free markets is that you don't get to make those choices. So I do think on some level I appreciate just what a middle finger to all of these people Doge really is. But going back to its banning, big surprise, today Robin Hood put even

more limitations on what users could do on its app. They cited, quote, extraordinary market conditions to temporarily turn off instant buying power for crypto. My feeling is good riddance. This is an app that wouldn't even let you withdraw your Bitcoin. Who needs them? But still, for that set of users who's there, it's just yet another betrayal. Coinbase has absolutely surged as people try to get off Robin Hood, and Coinbase and Krakken and other apps have actually struggled to keep up with the load today. The point is, something is shifting, it's all connected, and we can all feel it. All right, that's it for today, guys. On tomorrow's show, I'm going to dig back into what's been happening with Wall Street Bet specifically, and Sunday's long read will be Ray Dalio's new letter on Bitcoin. I appreciate you

listening. I hope you're falling along. I'm excited to be building the future with all of you. And until tomorrow, guys, be safe and take care of each other. Peace.