The Breakdown - New Bitcoin ATH Following Trump Victory

Episode Date: November 7, 2024

NLW covers the crypto volatility on election day, and discusses what the Trump victory means for Bitcoin (and Ross Ulbricht). 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, November 6th, and today we are talking about Trump's big win and what it means for Bitcoin and crypto. 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 follow the link in the show notes or go to bit.ly slash breakdown pod.

Well, friends, we made it. The election is over. More definitively, I think, than many people would have thought. And of course, the breakdown is not getting into the politics or what it means for America. We are strictly focused on economic issues and more specifically crypto issues, which have, of course, become front and center during this election. When it comes to the specifics, Donald Trump declared victory early this morning, and aside from the normal political platitudes that were in the victory speech,

Helping the country hail, turning the country around, regaining control of the country, all that sort of stuff. For the Bitcoin community, who of course threw their weight heavily behind the campaign, he said in that speech, quote, I will govern by a simple motto, promises made, promises kept. All in all, election day was relatively smooth and quiet compared to the fear that some people had. On the crypto side, the lead-up to the election was tense. Bitcoin ETF traders wanted no part of the Tuesday volatility, pulling their cash en masse on Monday. Net ETF Outflows hit $541 million, which was the second largest outflow since the products were launched. The only other day in the $500 million range was at the start of May when Bitcoin hit a local bottom.

Outflows were spread across all products, setting a new record for Arcbitwise and Greyscale's newer Minutes. BlackRock was the only product to post minor inflows coming in at less than one-tenth of the pace of the past two weeks. Tuesday wasn't quite as bad, with $116 million in net outflows, highlighted by a record outflow for BlackRock. To a certain extent that could have represented cold feet and profit taking coming into election day. The past two weeks have been among the strongest on record, with a gigantic $2.2 billion added last week despite inflows slowing on Thursday and reversing to minor outflows on Friday. Particularly in the Tradfai world, Bitcoin was identified as the highest conviction Trump trade, and outflows seemed to follow the last-minute polls, which showed Harris was better position than many believed.

Flow tracker Whale Panda commented, everyone dumping their ETFs before the election tonight. If Trump wins, I expect some FOMO tomorrow. Now, with the benefit of hindsight, Penguin Curator tweeted, Funny that we had some record ETF outflows yesterday right before this. Cryptotrators, on the other hand, seem locked in for election day trading. CryptoQuant reported that Bitcoin inflows the centralized exchanges on Tuesday were much lower than previous election days. To be fair, this is, of course, the first election day with Bitcoin anywhere close to all-time highs

in active markets. Head of research, Giulio Moreno said, there seems to be less selling pressure for Bitcoin from traders and investors moving funds into exchanges than there was during the last election in the start of 2024. Now, when all was said and done, anticipated volatility certainly played out last night, but Bitcoin was volatile to the upside. At around 7 p.m. when the AP reported an early lead for Trump, Bitcoin took off. It put in multiple god candles rising by 8.3% over the next four hours.

Bitcoin topped out at 75,000, a brand new all-time high. At the time of recording early in the afternoon on Wednesday, Bitcoin remains above 75,000. At this stage, it's a little too obvious to point out that Bitcoin's price was closely linked to Trump's election odds, but this move was a clear demonstration. Marty Bent of 1031 Ventures tweeted, Bitcoin is the best prediction market. Some made the point that there's still very few newcomers to Bitcoin. Palm tweeted the completely flat chart of Google search results and commented, Bitcoin all-time high and no one knows yet. That will change. The victory lapse got started early in the evening as Bitcoin soared. Joe Burnett of Unchained Capital tweeted, the polls were wrong,

the experts were wrong, the Ph.D. Economists were wrong, the establishment was wrong, and the mainstream media was wrong. You were right. $75,000 Bitcoin knew all-time high. Aubrey Strobel wrote, just checking in on the anti-crypto army. Hunter Horsley, the CEO of Bitwise, said, the feeling when you own a lot of Bitcoin, but feel like you should own more Bitcoin. And speaking of who was right and who was wrong about this election, one of the clear winners on election day was prediction markets. On Tuesday morning, Kalshi was ranked number one in its category in the Apple App Store while Polly Market was number four. Trading volumes for the day were almost $4 billion across both platforms coming close to Coinbase spot volumes. This was a record day for

prediction markets as a category, and it's not particularly close. To sum, the question is what the future for prediction markets look like now that the election is over. Political betting has always been the major draw card for prediction markets, and the presidential election is the premier event. If the election is the peak of casual interest in prediction markets, they'll have to find something new to get people to come bet on the site. Polymarket was clearly a breakout success this year, so it's possible they could keep users on the platform with a new offering. Then again, some are worried that prediction markets get thrown on the giant scrap heap of once hot crypto ideas alongside NFTs and algorithmic stable coins. Still, I think that broadly speaking,

there's a sense that prediction markets are here to stay. Nick Carter tweeted, Reddit is fake, mainstream media is fake, pundits are fake, only Polymarket and Twitter are real. Polymarket CEO Shane Copland tweeted, just got word that the Trump campaign HQ literally found out they were winning from Polly Market. History was made today. Joe Wisenthal, who is a little bit more removed from the bullishness, said, it's been a phenomenal cycle for prediction markets. They're firmly part of the news environment now. A person watching Polly Market in the last month would have been more confident in a Trump victory than a poll or model watcher, yet still some big misses on things like the popular vote. Now, one thing that's worth noting, as we think about the crypto

implications of the election, it was not just the Trump victory that's likely to change the crypto environment in America. Brian Armstrong tweeted an image of the Ohio Senate race and wrote, Being anti-crypto is simply bad politics. What he was specifically referring to is the fact that Senate Banking Committee Chairman Sherrod Brown has been unseated in Ohio by Bernie Moreno. Brown has been viewed as a major blocker to crypto legislation within Democratic leadership. All bills needed to go through his committee and Brown's complete inaction made it impossible to pass crypto legislation during this Congress. Brown might not have been quite as vocally outspoken against crypto as Elizabeth Warren, but he was certainly an ally of the

anti-crypto army. Staying in down-ballot results, Ted Cruz held onto his seat in Texas where he's been a proud advocate for the local Bitcoin mining industry, and a special mention has to go to John Deaton, a crypto lawyer who contested the Senate in Massachusetts against Elizabeth Warren. While ultimately he secured less than 40% of the vote, he still had a fantastic showing as a first-time outsider candidate. Stand with Crypto called the next Congress the most pro-crypto ever. In a tweet at the end of the night, they pointed to their live election results tracker which had 14 pro-crypto-candidates elected in the Senate versus just nine anti-crypto-candidates elected, and in the House of Representatives 219 pro-crypto candidates, as opposed to 106 anti-crypto candidates. Republicans look to claim

majority control of the Senate, and given that the Senate is responsible for approving agency appointees, Republicans can insist on their own choices for important posts like Treasury Secretary, Fed Chair, and SEC chair without needing to compromise. The Senate committees also play an outsized role in setting the legislative agenda. Banking Committee Republican ranking member Tim Scott seems to be first in line to take over as chairman of that committee, and recently had floated the idea of creating a digital asset subcommittee to ensure the swift passage of legislation. One interesting lingering question is what Democrats will do with the information that crypto policy might have helped cost them the election. Finance lawyer Scott Johnson tweeted, you're not going to believe the speed of the

pivot Dems take towards crypto in 2026. It's going to make your headspin. Tim Gailback of Uncentered Systems commented, it's one of the only core issues they can pivot on without alienating a large part of the base. You just alienate some fin-tuit guys who are resentful that their carefully constructed portfolios lose to the coins, and that's not a big audience. And then he scaramucci, who served in the first Trump White House for a few days, warned it might not be that simple, commenting, you've got to be very careful of the Democrats if Trump's pro-crypto. There could be lots of Democrats that are against it just because Trump is for it, so I would like to see this calm down. I think we have to depoliticize our regulatory decisions and make them more about right or wrong as opposed

to left or right. Now, in terms of what comes next, once Trump is sworn into office, the Bitcoin community will be laser-focused on whether he follows through on campaign promises. Some require a lot of legwork and legislative changes such as establishing a strategic Bitcoin reserve. Others don't seem legally possible on their face, such as firing Gary Gensler, although the memes are coming hard and fast on that front. But one promise Trump can easily keep with the stroke of a pen is freeing Ross Ulbricht on day one. Ulbricht was, of course, the founder of the Silk Road, who was sentenced to two consecutive life sentences in 2015. We won't relitigate the case here, but suffices to say that many Bitcoiners feel his punishment was exceedingly harsh given it was for fundamentally nonviolent

offenses. Ross has served more than a decade in prison at this point, and he's clearly not the same person he was when convicted at 29 years of age. Last night, in fact, Bitcoin Twitter was filled with a single rallying cry, free Ross. Vijay Boyapati wrote, vote like Ross Ulbrick's life depends on it, because it does. American Hoddle wrote, Can't Stop Thinking About Ross right now, pacing the cell stuck between audacious hope and crushing despair, getting pieces of info over the phone not knowing what's going on outside, dreaming about being free, having a family, a life, speaking at conferences, traveling the world, enjoying the little things, a cheeseburger, a sunset, a warm bed. Still so young, still so many more years to go if Trump doesn't win.

Beyond just keeping a promise to Bitcoiners, freeing Ross would also allow Trump to address a growing sentiment around state overreach. For many Bitcoiners, it's not about whether Ross was wrongly convicted. Instead, it was about the idea that a double life sentence was an incredibly over zealous penalty, inspired by revenge rather than justice. Similar sentiments bubbled up in the closing days of the campaign when a squirrel named Peanut grabbed the attention of the nation. Peanut was euthanized by New York law enforcement after they raided the home of Mark Longo, who operates a wildlife sanctuary. Longo described police conduct as akin to a raid on a drug dealer. They turned his house upside down and kept him from feeding and watering his horses for several hours. Peanut's only crime was

being a squirrel without a license. While some dismissed this as being a pointless story about a squirrel and not something that should animate the vote, Elon Musk put it in context during his Joe Rogan appearance earlier this week stating, how can it be that we live in the land of the free and the government can barge into your home with guns, take your pets, and execute them? If they can do that to your pets, what can they do to you? I don't know about you guys, but for the last week and a half, my feed has been nothing but peanut memes. Physicist Casey Hanmer drew another connection tweeting, if you're mad mad about peanut, wait till you learn about Aaron Schwartz. For those of you who don't know

Schwartz's story, he was a Reddit co-founder and activist programmer in the early 2000s. the public had a right to free access to knowledge in the digital age, and to that end, he set up a server in an MIT closet to download scientific journal articles he had legal access to. He had the intention of serving them to the public. He was arrested in 2011 and offered a six-month plea deal. He declined, preferring to take his case to court in order to make a point. But tragically, he took his own life shortly before the trial began. And so for some, peanut isn't just a squirrel, but an indication that the land of the free has lost its way. Trump obviously can't bring peanut or Schwartz back, but he can free Ross on day one.

Will that happen? Who knows? For now, though, it is undeniable that Bitcoiners and the crypto industry more broadly are excited. There is a sense of a new lease on life and a new opportunity. And there's something to be celebrated there, even if Trump wasn't your preferred candidate. For now, though, that is going to do it for today's breakdown. Until next time, be safe and take care of each other. Peace.