The Breakdown - ‘My 401(k) is now my 401(k9)': Doge, SNL and Why This Was Quietly a Massive Week for Bitcoin

Starting point is 00:00:00 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 nexus.io, neared.org, and genesis trading, and produced and distributed by CoinDes. What's going on, guys? It is Saturday, May 8th, and that means it's time for the weekly recap. We've been discussing for a while the idea or notion that this bull market has shifted into some new phase, by all accounts, this should have been Ethereum's week. As Bitcoin's price-liltered sideways, ETH soared up to new all-time highs, not just hitting 3,000, but continuing to rise, spending most of the week around 3,500.

Starting point is 00:00:47 As we've seen number go up and new all-time highs breathes life into communities. And the Ethereum's this week definitely started to revise their estimates up and clearly felt a new wind in their sales. This was only expanded with the launch of Uniswap V3, and V3 went off just as well as expand. created. Creator Hayden Adams tweeted a statistic that shows how much the DeFi space has expanded. Quote, in its first day, V3 has already seen more than twice the volume that V2 saw in its first month. Yet for all of this, Ethereum wasn't the thing sucking the oxygen out of the crypto space. First, we got a good reminder of why crypto communities do well to de-emphasize NGU technology as their main thing, because there's almost always some other piece of crap pumping more.

Starting point is 00:01:34 For example, Ethereum Classic ETC is up 234% this week, a literally absurd state of affairs that has no explicable logic. Nothing to take the wind out of Ethereum's sales like a zombie sibling chain that's been 51% attacked multiple times this year massively outperforming it on price. But still, that really wasn't the thing. Obviously, the thing is Doge. I asked earlier this week whether Doge was a triumph or an FU to crypto. By and large, the most common response was both. Based on this week, I've actually revised it, and I now think that there are roughly five camps, with many subcamps within them, on Doge. The first is, it's fun, and it shows the absurdity of everything. Let's call this the Joe Wisenthal Matt Levine take.

Starting point is 00:02:16 Joe has been incessantly trolling on Twitter. When Meek Mill tweeted asking about Doge, Joe wrote, Our Story Begins in 1971, with Nixon's closure of the gold window. In his column called Dogecoin is up because it's funny, Matt Levine wrote, Just imagine traveling 10 years back in time and trying to explain this to someone. Just imagine what an idiot you'd feel like. There's going to be this online currency that people think is a form of digital gold. And then there's going to be a different online currency that is a parody of the first one based on a meme about a talking Shiba Enu.

Starting point is 00:02:46 And that one will have a market capitalization bigger than 80% of the companies in the S&P 500, and its value will fluctuate based on things like who is hosting Saturday Night Live and whether people tweet a hashtag about it on the pot joke holiday. And Bloomberg will write articles and banks will write research notes about these sort of catalysts, and it will remain a perfectly ridiculous content-free parity, even as people properly take it completely seriously because there are billions of dollars at stake. Like I said, this is the funny slash absurdity camp. Looking for the best way to unlock your crypto's liquidity?

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Starting point is 00:05:08 Dogecoin. Whether or not you like crypto or Bitcoin, that's up to you. But personally, I can't but help feel very happy for the everyday people who have made a life-changing amount of money this year. The next camp is that it's the funnest protest, but make no mistake, it's protest camp. Easily, easily the best example of this is the reason wrap, dog money. This came out this week, and it's basically the story of a guy who realizes that his savings aren't only not making him money. They're slowly disappearing because inflation is higher than bond rates.

Starting point is 00:05:37 What's he to do? Well, obviously, he puts it all in dog money. All joking it all the dog money, and it's a reasonable argument to say doge is doge is doge right now because people think it's funny and it goes up so people want more of it. And that's probably mostly right. I think though that what the reason dog money rap explains is why the joke is funny. The joke that dog money might work involves inherently an argument that current money or the economy in general doesn't work. It's absurdist humor that has its roots in a critique of the world around us.

Starting point is 00:06:28 And yes, you're nuts if you don't think that PhD thesis will be written all about this shit. Okay, so those are the camps giving Doge some credit, but then there are two more camps that are a little bit more hostile and that are also pretty intermingled. The first is those who see Doge as a delegitimating force. They say that the successive Doge somehow exposes crypto as a joke or undermines the value of Bitcoin. I've spent a lot more time thinking about this thesis this week, and I've decided I just don't buy it. No one doesn't watch The Godfather or Citizen Kane because porn and Adam Sandler movies exist. We're able, I think, to tell the difference between things that share a genre. And yes, there is a difference with our nascent industry trying to prove its worth in a media landscape that is all too ready to dismiss it,

Starting point is 00:07:10 but still, I just have to give people enough credit to be able to sort through these as different. things. However, the next camp, the It's a Disaster Waiting to Happen Camp, has a version of the delegitimizing story that I buy a lot more, which is something like, one, people are going to get wrecked when this pump inevitably dumps, and two, that recklessness is going to draw the regulatory eye of Sauron in this direction in a very unpleasant way. I think this is much more likely than some generic delegitimization. There are a ton of people out there right now who just made thousands or tens of thousands of dollars on Doge. If you would put all three stimulus checks into Doge,

Starting point is 00:07:46 you'd have made more than a half million dollars. It doesn't take too many of those stories for people to start pouring money that they don't actually have to risk into a thing. And right now there is a quote-unquote obviousness to this trade of buying more Doge in advance of Elon Musk's Saturday Night Live appearance, which gets us back to the question in the title of this show,

Starting point is 00:08:05 what happens after SNL? If I had to bet, I'd say that Saturday Night Live becomes a big, steaming Sunday morning dump. Look, either the thing rips up stratosphericly while he's on, in which case at some point, like Icarus, it flies too close to the sun, people have had enough gains and they start to race for the exit, causing a cascading effect. Or it betrays expectations and doesn't pump.

Starting point is 00:08:28 In which case, people say, well, it's had its run and I'm already up a ton, and they race for the exits as well. You probably see where I'm going. In both cases, there's a race for the exit. That's not to say that there won't be some other pump at some other point this cycle, but it's hard for me not to feel like SNL is going to be the end of this one, one way or another. Now, let's take it back to something more fundamental, more long-term, and more important, ultimately. The funny thing about all of this is that Bitcoin has become boring to people at $55,000.

Starting point is 00:08:56 However, if you plop down the news about what happened in Bitcoin this week in any other week up till about a month or two ago, it would have seemed like one of the most insanely bullish weeks we've ever had. There was, of course, the NIDIG FIS news that I discussed with NIDIG CEO, Robbie Gutman, on the show on Wednesday. It's been interesting to watch the reactions and shows how connected to big brands we are. What I mean is that some folks absolutely immediately got the significance of the deal, the potential for 300 million bank accounts to have Bitcoin services plugged into them with the push of a button. But I got a surprising amount of, I don't know, doesn't seem really that big on Twitter as well.

Starting point is 00:09:31 I think part of that had to do with FIS not being a name that people know as well. And of course, that's the point. they're in the background. So let me just quickly TLDR the significance of this. Right now, buying Bitcoin requires people to add a new relationship with a financial provider. When you sign up for Coinbase, you're taking a time to go there, sign up, take a photo of your driver's license, etc. It's not the click of a button. That is a massive barrier in user experience terms. The deal between Nidig and FIS is creating a module that any bank that already works with FIS can simply opt into. Those banks represent about 300 million bank accounts.

Starting point is 00:10:06 It's basically every bank account except those with the five or so biggest banks that have the capacity to build their own tooling. For all others, they look to FIS for features like mobile deposits. Now, when your local credit union, that bank that you love because they have a different set of intentions, because they're focused on historically disadvantaged communities, whatever it is that makes your local bank the one that you're so excited about, when they're reviewing the experience their customers might want, when they say, hey, should we have mobile deposits? they also get to ask, hey, should we have Bitcoin buying and selling? And they can do it with the push of a button. That's massive. Banks are getting huge headlines for turning on Bitcoin services right now. There is a ton of client bottoms up pressure to do it. Here's another headline from this week.

Starting point is 00:10:49 Cityways launching crypto services after surge in client interest. That's from the Financial Times. City's global head of foreign exchange told the Financial Times that they had seen a rapid accumulation of interest. They said there were many discussions internally about what exactly to offer, but they also said they didn't feel a rush for a really interesting reason. Quote, I don't have any FOMO because I believe that crypto is here to stay, and that we are just at the very beginning of the market. This isn't a space race. There is room for more than just one flag. This is massively more bullish to me than if city felt they had to race to compete along a short-term window. It frankly gives much more credence to the super cycle argument when

Starting point is 00:11:27 the institutions aren't just trying to capture a wave, but are designing around an anticipated long-term shift. Speaking of institutions that do have a brand, it was reported earlier this week that Goldman Sacks is about to start offering derivatives tied to the price of Bitcoin. Then at the end of the week, they officially announced via employee memo that they were starting a cryptocurrency trading team. Now, this isn't exactly a surprise. We've known that Goldman Sachs is going to be offering new Bitcoin products for a while, but it does show how serious they are about the space. The point is that in these heady bull markets, there's a temptation to focus on all the shiny things, the glittering trinkets that are rocketing to the moon on the back of TikTok videos. Meanwhile, the entire

Starting point is 00:12:07 traditional financial order is quietly behind the scenes racing to play in the Bitcoin sandbox. Driven bottoms up by client demand that they anticipate is long term. That's the story that started this bull market and as the story will stand out when all is said and done. With that, guys, I hope you're having a great weekend. I appreciate you listening. Until tomorrow, be safe and take care of each other. Peace. We're witnessing the greatest paradigm shift in finance in modern history. Join thousands of newsmakers and influencers talking the future of money at Consensus by CoinDesk.

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The Breakdown - ‘My 401(k) is now my 401(k9)': Doge, SNL and Why This Was Quietly a Massive Week for Bitcoin

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