The Breakdown - The Five Most Important Bitcoin Stories This Week

Episode Date: December 7, 2024

Recorded live with Scott Melker on Friday December 6, 2024. 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 Friday, December 6th, 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. at.ly slash breakdown pod. All right, friends, well, this was a fun week to do the Friday 5.

It was, of course, 100K week. It was SEC new commissioner week. It was, actually, I'm just realizing now we didn't even talk about the new AI and Cryptozar, David Sacks. So lots and lots going on. It's a good one. Let's dive in. So yesterday, man, I had a plan.

My son's best friend's sixth birthday. We took our kids to Hollywood studios at Disney World. Of course, the one day I had randomly planned to take off, we hit $100,000 and I don't stream, but maybe I was just saving it for you. You're saving it for this morning. And look, I think, you know, one of the things, one of the greatest testaments to where Bitcoin is, is that you know that in six months, this is going to feel like just another day in Bitcoin's inevitable, sort of inexorable march forward to what it's going to become.

Listen, it's just another price. It's just another number. It's just another level. It doesn't have more meaning than any other line on. a chart, but there's something about 100,000 that feels different. We've had two numbers in recent Bitcoin history. So the last six years, let's call it, the last seven years, that we've anchored two in a serious way.

The first was, of course, 20,000, right? Once that number was hit in 2017, it became the bellwether mark for like whether we were so back, baby, right? For the entire next cycle, you know, it didn't matter when we got to 16 or 17. It was like, when are we going to hit 20? And then after 20 was breached, no other level around it really had psychological power. I mean, almost as soon as that was breached, it was like laser eyes to 100K. It was the obvious next thing.

And so because of that, it's really been a bigger marker, narrative line in the sand, than 60 or 70 or 80. And so, you know, from just a sheer kind of emotional standpoint, I do think it's a big deal for folks. I've tweeted quite a few times what happens when we hit 100,000 to the laser eyes because obviously they had to keep them through an entire cycle, but people seem to forget exactly what you said. It was laserized to 100,000. My proposal, which I jokingly tweeted was laser thighs to a million. And chat GPT came up with this guy with laser thighs just because it rhymed. But will the laser eyes keep or remove their laser eyes, I wonder. Well, Jesse Powell, contrarian that he is, decided that his approach would be laser eyes after when.

100K. Nice. So he came prepared with a very dramatic profile picture upgrade. That's a go check out if you haven't. It's Jess Powell on Twitter. Awesome. So here we go. We've got quite a few takes, obviously, on this 100,000, which is clearly our first story. So you have obviously Donald Trump. Congratulations, Bitcoin's $100,000. You're welcome. If you didn't see that, I'm not subscribed to Truth Social. So sorry about what that looks like. But he posted that 100 social. I love that he kind of took credit for it. We have El Salvador president, Naiba Kli, tweeting, it ain't much, but it's honest work, meme, hilarious. So we have multiple presidents, one posting of mean. And of course, Peter Schiff, without expected government intervention, this milestone never would have been hit. It seems to not realize that the same rules applied to gold.

But hey, here you go. Of course, Novagrat celebrating 100,000. Brian Armstrong pointing out that if you had bought $100 of Bitcoin when Coinbase was founded in June 2012, it would now be worth $1.5 million. And if you had just kept that $100, you'd have $73 worth of buying power. And of course, Skaramucci finally kind of coming around saying, I owe present, like Trump, a McDonald's gift card for Christmas, admitting at least to some degree that, of course, Donald Trump's support of Bitcoin has led us to this point. Yeah, I mean, you know, there's no denying that the changing political nature and destiny of

this thing has been a huge part of the story throughout this year. I think you can, can even argue that, you know, while it wasn't political in the sense that a politician getting on board was, I've said before, I really think that it was BlackRock filing the Bitcoin Spot ETF that drew the line in the sand post-FTX collapse that said, sorry, anti-crypto army, it's not going to die this time. You know, up until that moment, it could have gone lower. It could have been more and more insecure when the world's biggest asset manager said, no, we want it. Then, you know, that stopped for all intents and purposes. It threw a big brick wall. And, uh, and, and, And, you know, it's been a political story throughout this, this entire time.

Now, would it have hit these numbers even without that? I believe absolutely. But it wouldn't have happened in the same way or on the same timeline. Yeah, I think it would have taken us a little longer, certainly to get to $100,000. But I don't think that there's anyone who's been around for a few cycles that thought this wouldn't happen eventually. So here we are. And, you know, you can't talk about $100,000 in the political environment without talking about these incredible appointments that Trump is making. I kind of bundled a few of them together. We have Scaramucci once again. Listen,

you got to give the guy credit where credits do. He was the biggest critic, but he's giving support where he feels he should. Scott Besant, Kevin Hassett, Paul Atkins, Michael Falkender, have to admit Trump is cooking with his economic team so far. So we officially have SEC chair. Paul Atkins, guy was on the Securities and Exchange Commission before. Wildly outspoken in favor of crypto, even owns an agency that effectively does a company that does consulting in that. And then this just broke. Trump names David Sacks as White House AI and Cryptos are. We saw names like Chris John Carlo being floated for this job. Of course, this is David Sacks of VC and All In Pod fame. I mean, this guy is wildly pro crypto, pro AI, pro tech, pro mergers and acquisitions,

pro innovation, anti-regulation. The hits just keep on coming. I don't think you can be upset as a crypto native about any of these picks. I can see other political reasons maybe you would, but from our perspective, I mean, we are humming along here. Yeah, I mean, I think what this AI and cryptos are, with that position, no one knows exactly what it's going to do, what authority it's going to have. I think that putting someone who is, you know, the heart of Silicon Valley as that clearly indicates where the trajectory is in terms of what the priorities are likely to be. And Sachs is a pretty open book when it comes to his particular politics. and how he thinks about these things.

Yeah, I agree. I mean, listen, you know, I think Scaramuchi's Post is reflective of something that you see a lot right now, which is there are a lot of folks who still have whatever issues they have with Trump himself and really can't get on board the Trump train, but who recognize or who do appreciate

that the coalition that has been built around this administration this time, it looks a little bit different than 2016. You know, it looks a lot different than 2016. It's a much sort of wider set of folks, and a lot of it tends to be, pretty heart and center, you know, when it comes to, you know, what's good for this particular industry. So I think there's a lot of enthusiasm out there for very clear reasons. Yeah, I mean,

you've talked about this quite a few times, but I think the first Trump election was a bit of a surprise. It took them months and months and months to even get key people in place. They were ready for victory this time. And regardless of your thoughts on Trump as a person, as you said, you have to give credit for putting in extremely competent people, whether you politically agree with them or not, but competent people into every meaningful post and seemingly a willingness that was not there in the first term to listen to younger, smarter people and just kind of wipe your hands of these things that are not your core competency. That's what you would want a leader or a CEO to do. In the first Trump presidency, a lot of people maybe didn't think that he treated it like

the business that they thought he would. He clearly is now. He's saying, you're a charge of this. You're my CFO, you're my CMO, you're, you know, especially on the business side of things. I think, like, there's a lot to discuss for various people around. That's what I'm talking. Defends, education, whatever. But yeah, but when it comes to the business. Our agent. Yeah. Yeah. When it comes to business and economics, there is a very clear through line. It is the next generation of pro tech, pro innovation, pro America, like excited builders. Like, this is, every single one of these positions has that feel and that flavor. You know, Atkins is interesting. Atkins is not an ideologue deregulator for the sake of deregulation.

He's a person who feels on a very fundamental level that on average, government rules introduce that there's always a balance of complexity versus what sort of benefit they have. And he just tends to think that most times they introduce, you know, undue complexity that doesn't actually add value. He's not opposed to consumer protection. He wants fair and free markets. He wants markets to function well. It's not going to be, you know, when we think about what it's likely to be for crypto, he's not going to turn and look the other direction.

He's going to be a champion of common sense, get out of the way, but make sure it works well, kind of rules and regulation. So, you know, and I think that you're seeing that sort of, there's an energy more than anything else that is as aggressively forward facing that I think has people excited right now. Yeah, this is the part of Make America great again that I think the Wall Street educated, I mean, I've, I've, highly educated Wall Street people could actually get behind. And you see a lot of them that hated Trump kind of getting behind it. People do view America in the past as being great as innovators and entrepreneurs and leading the world in these things and not stifling innovation. And it seems like, at least in this regard, we are moving in that direction. So I think there's a lot to be excited about it. I mean, we don't need to beat it to death here. But it's pretty exciting. Yep. And it's

expressed in the price of Bitcoin. 100K. And now we have the next story when coming to the U.S. government that maybe people won't like quite as much. U.S. government moves nearly two billion in Silk Road Bitcoin to Coinbase. It made a stop in another wallet on the way. A lot to unpack here because I've heard some say that this is scheduled selling that they had sort of planned before and that these tranches being sent to Coinbase was preordained. But this is also our strategic reserve that Trump has planned to hold on to. And it could maybe to somebody possibly feel like the Biden administration or someone in the Biden administration who actually knows what's going on in the world on a day-to-day basis might be selling this off in spite.

Yeah. Yeah. It's kind of hard not to feel like. I mean, so look, the analysis that says this was planned, it's been a long thing in the works. All of that is absolutely true. You know, 100%. However, when you're in a lame duck period in an administration, it doesn't matter.

matter what has been planned, you still have authority to decide what you are and aren't going to care about. And the fact that someone decided to care about this, it's hard to read, no one's doing this because it's on their checklist and they're going to be docked on their allowance if they don't get it done before they go. Whoever is architecting this knows exactly what they're doing, in my opinion. And it's a, you know, look, there's a lot, there's a lot of doors that hits you on the way out. And this feels like one of them today. Is there any way that this isn't being sold. I feel like it could be just going to Coinbase custody, right? We don't know exactly why it's being moved. And we do know that the government has effectively, you know, chosen Coinbase as

it's trusted custodian and the place that it will buy and sell the irony of that when this SEC has been going after them, should not be lost on anyone. But is there a chance to just moving into different custody? The issue that I've seen, I think it was Scott Johnson, who is tweeting about this is that there are very specific rules around how the U.S. government Bitcoin has to be custodied. And I think that some meaningful portion of this is in basically Genpop with all the other kind of, you know, malange of it's a general coin-based wallet, it's not segregated wallets, which would suggest that it's either going to be sold or someone's doing something wrong. So it looks like its intention is to be sold, but, you know, who knows?

I mean, it really does take the wind out of the sales of a strategic Bitcoin Reserve if all of a sudden we can't just transfer it and put it on the balance sheet would actually have to buy. That's a very different conversation. Yes. No, I mean, it's a meaningful, it's a meaningful spite action is kind of the, you know, it's why it's probably appealing to someone who wants to be spiteful. Yeah. So the next conversation that we have to have, which is always one of my favorites because

we've been waiting so long, is it alt season. Alt coins have obviously been blasting off across the board. We saw the dinosaurs like XRP and Cardano, absolutely going nuts. XRP in particular. There was a lot of disillusionment. All coins are dead. They're never going to move again. It's over. It's only going to be Bitcoin. I just want to bring up a quick chart of my own. This is a Bitcoin dominance chart, which many people look at. If you look at when all seasons have started in the past for those who believe in four-year cycles, December 16, December 2020, here we are December 2020. And Bitcoin dominance dropping from 62% to already sub-56%. And in context of

this, of course, we have XRP going absolutely nuts, people saying that all season has unofficially begun, ether seeing some major inflows, even on some days outpacing Bitcoin, parabolic rallies. Of course, this is a Bloomberg take where they think that it's a pandemic boom that's going to burst. And finally, my favorite story maybe ever, U.S. lawmaker Michael Collins, revealed to be trading meme coin scheme ask dog. Yeah. I mean, that's that season. Is this means That's my favorite indicator. I mean, the thing about that one that's crazy is that like, you know, congressional disclosures are now the context for something doing, you know, a 10x, right? Look, we live in a world of financial nihilism. And I think that there are there are cynical

takes on that. And then there are cynical, but it's still fun takes on that where a lot of this is just like, I have this money to lose and I may as well do something fun with it. And that's certainly what I think, you know, ski dog mask and these things are. Look, It feels pretty clear that we're in another phase of the cycle, right? I mean, I think to me, the sloughing off of the, you know, the sleepy eyes from like the XRPs of the world is one thing. I think the fact that the ETF, the ETH ETF inflows have on a number of days now beat out Bitcoin inflows is to me the biggest indicator that something meaningful is shifting in terms

of allocations. One of the things that has always kind of felt clear to me when it comes to just a very kind of baseline Wall Street understanding of crypto is it's not unreasonable for someone who just wants exposure but who doesn't really want to think too hard to say Bitcoin's the digital gold thing, ETH is the tokens and all the other crap stuff. So if I have exposure to both of those, I basically get exposure to everything, right? Obviously, that's not how people inside the industry feel. And as you get a more sophisticated analysis, I think there's going to be.

going to be lots and lots of flavors of, you know, traditional financial products that people buy. But it's a not unreasonable take as sort of a, you know, 80, 20, set or as peribus, let's go, you know, get my exposure and be moving on. And so it's been interesting that that hasn't been how it's played out at all. People have just been interested in Bitcoin. The ETFs have basically done nothing. The fact that they are now seeing some action, I think indicates that we are seeing some shift in how people are thinking about it and interest again and the rest of the non-Bitquit. part of the industry. Yeah, and total crypto market cap is now $3.5 trillion. It was topped at $3 trillion in 2021. So clearly a lot of that is the movement of Bitcoin adding that value. But there's new money

coming in. And it's very clear that that new money, whether it's money that was here before and is regaining interest or is completely brand new retail, there is new money in this space. And that should increase as we see bigger headlines about $100,000 Bitcoin and Ethereum ETF inflows. That money is going to find a new home every time the market gets even slightly boring just as it did in past cycles. I would expect to see, and this is, I think, the thing that we should look for over the next couple months, some pretty serious narrative competition, right? We've talked a bunch of times about how there hasn't really been that altcoin, non-bitcoin side of the market narrative to really drive new behavior in. The closest thing that we've had to it is meme coins and God, God bless.

A lot of people have tried to become mean coin philosophers. but it certainly hasn't had at least yet the broad resonance that NFTs or ICOs did, although I think some of the flavors are the same, particularly with the ICOs. You see now people kind of trying to take the same narrative juice that ICOs had of decentralized everything with meme coins. That's sort of where I've seen some people try to take that space. But as more money becomes available for non-Bitcoin things, inevitably there's a vacuum, there's a narrative vacuum that needs to be filled with something to be, you know,

AIX crypto coins. Is it going to be, you know, something is going to rise up as a trend in the through line that people get excited about. And I think that'll take a lot of shape of the rest of whatever the cycle we have. We will have our big bubble and we will have our little bubbles that go up and pop and narratives. I really reiterate, I think it will be very similar, at least rhyme, to previous cycles. And I think we're just getting started right now.

We talked about obviously President Trump speaking favor. about Bitcoin repeatedly, Naibu Keli, other world leaders, other huge names. Here's another maybe meaningful world leader that's been talking about Bitcoin of late this week, of course, saying that nobody has the power to ban Bitcoin and that crypto will naturally continue to develop. And he signed a law, Putin, that declares cryptocurrencies, its property, a significant step in regulating the industry. I don't know if we want to unpack him before we get into Powell and Griffin, but we've got some big, big, big. names speaking favorably about Bitcoin. Maybe we'll talk about Putin quickly first. Yeah, I mean,

my favorite comment around this, and I apologize. I quoted them on my show. Maybe it was Neil Jacobs, but I quoted them on the show the other day. In the wake of these comments from Putin, there were a number of folks who basically said, very reasonably, whoa, whoa, whoa, hold your jets. You don't want to hold up Putin as, you know, as your example of adopter. And someone made the point that it wasn't Putin embracing Bitcoin. It was Putin capitulating to Bitcoin. And that's very, very much what all of this felt like. These were not full-throated endorsements of these aren't Larry Fink, right?

Going from I was wrong to now I'm the big bull. These are people who are throwing their arms up, shrugging and saying it's here. And it's not going away. This is Gensler approving the Bitcoin spot ETF and saying I kind of had to. It's more of that. Exactly. It's more that, yeah. Yeah.

Yeah, I totally agree. And listen, we haven't heard Jamie Diamond yet. You know, maybe he'll eventually come around. I don't know, maybe we'll get Peter Schiff. But Ken Griffin, I mean, talking about the CEO of Citadel. This is a guy on par with Larry Fink as far as financial power and respect. And Jerome Powell, I have clips from both of them. Let's see what Jerome Powell just had to say about Bitcoin. This is the chairman of the Fed. in the Federal Reserve itself, in terms of the system, what do you think of that idea? I don't think that's how people think about it. I mean, it's so, you know, people use Bitcoin as a speculative asset, right?

It's like gold. It's just like gold only. It's virtual. It's digital. People are not using it as a form of payment or as a store of value. It's highly volatile. It's not a competitor for the dollar. It's really a competitor for gold.

You know, it's, that's really how I think of it. kind of a lot there to be honest because those things don't necessarily square with one another he sort of talked about it like but he's saying gold's not a store of value which i think a lot of people would take issue with basically but yeah he's i think he's wrong this to me is an example of when you've lost your first narrative battle so you try to claim a secondary victory by trying to like nudge people towards the well yeah it is more than maybe what I said it was before, but it's not fully the thing that you think it is. I mean, that's the feel and the flavor to me.

He seemed more confused about gold than Bitcoin in that clip, to be quite honest. But I think the story there is that Jerome Powell is sitting on stage answering questions about Bitcoin, right? When you zoom out regardless of what he says, and here's Ken Griffin, the CEO of Citadel. Therefore, do you say this whole thing is some crazy speculative bubble that ends badly the way Warren Buffett says, or do you say it could just live up in these numbers and it makes a lot of sense? So the question is, is how much has this structurally captured the zeitgeist of the world?

What do you think? I don't know. I don't know. I think part of this is, going back to why do people vote for Trump? They want to get away from the yoke of government. So therefore, maybe it has a future. It may have a future.

You have to remember that an asset like this, an intent tangible asset like this, its value derives from intangible aspects. Right. Part of being a community, part of having this sense of like, I stand opposed to the power of the state. Right. Right. People take joy in that.

And I think that one of the things that we did see over the course of this election cycle is the American people saying, I want to have agency in my life. And crypto is part of that. That's the kicker. That wasn't the best high quality video. But people want agency in their lives and they view this as kind of a hedge against the government. Yeah, I think this is a much more interesting. Of all the three, this is the analysis that I think is the most interesting because I think it most comes to the conclusion that has been obvious to a lot of

folks for some time that there is this deep wellspring of dissatisfaction about where things are. I mean, look, if the Democrats understood that discontent better, they would have done better in the elections, right? The fact that we're unable to understand or appreciate that, how people feel. So much of politics in the last 10 years has been trying to convince people that they're wrong about how good things are or how bad things feel. And it just hasn't worked. There's been this deep underlying discontent. We're looking for exits. Bitcoin represents a very empowering exit path. And I think it's smart that Ken Griffin is finally appreciating what it is. you know, this is this idea of it being an intangible asset that's valued based on intangibles

is something that in general, when it's been presented in the past, has been presented as pejorative. And I think what's interesting about this particular set of comments is that finally, it's being presented as fact, not as pejorative, right? The fact that a community believes in it and has value, look, the dollar is the full faith in confidence of the U.S. government. You know what I mean? Like, these things have a community behind them. They have narrative.

They have belief. They're not just tangible. And I think that the fact that the mainstream financial world is finally coming to appreciate the particulars of this, I think is a very telling, telling change. Yeah, I 100% agree with that sentiment. And it's going to be very hard to find people who don't have at least a favorable or measured opinion on Bitcoin in the coming years. regardless of their statute because they're just going to have to.

Dude, F.T. Alphaville is going to a loan holdout. Do you see the seething, frothing at the side of the mouth apology that they wrote? Yeah, it's exciting. Yeah, they are, I mean, look, it's a bold move to be the last bastion of hate. And they're clearly staking their territory. For anyone who hasn't seen, F.T. Alphaville, the Financial Times, has long been the biggest, one of the biggest and loudest and most annoying critics of all things, crypto. And they willfully will not, can't or turn back on them.

Vanguard. Yeah. Yeah. Well, I think we're in the then they fight you, then you win phase. So it's nice to be in the then you win phase after being laughed at and dismissed for so long. We have sort of an honorable mentioned story here at the end. That was five.

But we do have French Hill saying he's going to plan to fully investigate Operation Choke Point 2.0. as you can see here, listen, I think everybody is now aware because of Andresing going on Rogan and Musk tweeting about it that tech and crypto were debanked or not offered banking services in the first place. Nice to see that maybe we'll get some clarity on that and get to the bottom of it in this next administration. Yeah, you know what we need. I don't know if anyone's made it yet, but we really need the meme of the dominoes going from tiny to giant with the first one being Nick Carter writing a really, really long essay about Operation Shokepoint 2.0 leading to, you know,

where we are now in congressional investigations. Great reminder that, you know, we sometimes are annoying, admittedly, but screaming loud is almost always better than keeping your mouth shut when it comes to things that you see in the world that shouldn't be the way that they are. Bitcoiners have been right about a lot of things. Well, here we are. I mean, prices 99,400 yesterday. Depending on your exchange, when speaking about this insane price action, I believe there was about a $12,000 to $14,000 candle spread. I mean, as high as high as 904, as low as roughly 904, depending on the exchange, I think over $2.5 billion in liquidations, obviously, mostly longs, this insane candle. And we're going to see more of this as leverage builds up. And that's going to be the story about these huge moves that we've seen in the past and we'll see in the future.

It's going to be jackasses getting liquidated, highly leverage on exchanges. But here we are right back at $99,400 after going almost as low as 90 on some exchanges. The volatility remain, it's going to get interesting. For now, I think it's fair that we celebrate that $100,000 mark, even if we're not sitting above it at this current moment and just take a minute to be excited and, that we're still here. Absolutely. Couldn't agree more. All right, guys, well, we will see you next Friday for the next Friday five. Bitcoin will be at $1 million. We'll be thinking about laser pies or what we're going to do next. Who knows? It's hard to predict even what will happen a week into the future with the velocity of this news. Guys, follow NLW. Check out the breakdown, of course,

where it gets into most of these exact topics in much more depth throughout the week. And until next Friday, thank you guys. Cheers, guys.