The Breakdown - Who Cares What Jamie Dimon Thinks of 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 Nidig and produced and distributed by CoinDesk. What's going on, guys? It is Tuesday, October 12th, and today we are talking about what the entire Bitcoin Twitter community has been talking about for the last 24 hours. And that, of course, is who cares what Jamie Diamond. thinks of Bitcoin. This is almost too easy to dunk on in some ways, but there is a long, illustrious history of Jamie Diamond not liking Bitcoin, and I think that that saga creates its own sort of historical context, and so I feel as though for posterity, we have to incorporate

Starting point is 00:00:57 what the community thinks about the latest comments from Jamie Diamond on Bitcoin into the historical record. For a little bit of context, Jamie Diamond has been one of the most consistent, long-duration detractors of Bitcoin in the traditional finance world. Rather than give you the full recap, which is just so long, I'll give you the Ryan Selkis Twitter summary version. These are all quotes, so keep that in mind. 2014, terrible store of value. 2015, will not survive, will be stopped. 2016, going nowhere. 2017. A fraud.

Starting point is 00:01:39 2018. Don't really give a shit. 2019? Well, in 2019, J.P. Morgan launched something called JPM coin. In 2020, not my cup of tea. 2021. I have no interest in it. Fools gold.

Starting point is 00:01:54 And now worthless. Now, some of you may be confused because in January, didn't J.P. Morgan's strategists say that Bitcoin could rally as high as $146,000 per BTC as it competes with gold. This math was their estimate of the then-current price, a little under $30,000, times the total market supply, times the 4.6x it would need to do to grow to reach gold's $2.7 trillion of private sector gold investment. This was a pretty bullish statement for J.P. Morgan, so of course they had to have a caveat,

Starting point is 00:02:29 and that caveat was that volatility would have to come down. They wrote, This long-term upside based on an equalization of the market cap of Bitcoin to that of gold for investment purposes is conditional on the volatility of Bitcoin converging to that of gold over the long term. The reason is that for most institutional investors, the volatility of each asset class matters in terms of portfolio risk management, and the higher the volatility of an asset class, the higher the risk capital consumed by this asset class.

Starting point is 00:02:58 Still, as they wrote then, quote, little doubt that the institutional flow impulse into Bitcoin is what distinguishes 2020 from 2017. So that was January. But wait, just last week, J.P. Morgan's strategist put out another note that said, quote, institutional investors appear to be returning to Bitcoin, perhaps seeing it as a better inflation hedge than gold. The reemergence of inflation concerns among investors has renewed interest in the usage of Bitcoin as an inflation hedge.

Starting point is 00:03:29 It is perhaps for these reasons that Jamie Diamond feels. like he has to comment now and reestablish his own bona fides when it comes to his dislike of this asset. So here's what he had to say. I personally think that Bitcoin is worthless, but I don't want to be as both of them. I don't care. It makes no difference to me. Our clients are adults. They disagree.

Starting point is 00:03:51 That's what makes markets. So if they want to have access to buy or sell Bitcoin, we can't custody it, but we can give them legitimate as clean as possible access. That was from yesterday during a video conference with the Institutional of International Finance's Annual Members Meeting. And he said one other thing about Bitcoin that's worth noting. He said, I'll just challenge the group to one other thing. How do you know that it ends at 21 million? You all read the algorithms? You guys all believe that? I don't know. I've always been a skeptic of stuff like that. Twitter lit up for that one. Jameson Lop, the CTO of Kasa, tweeted, It's like five lines of code and then actually shared the lines of code where the halving cycle and

Starting point is 00:04:37 supply cap is enforced. Coinbase's Brian Armstrong tweeted, yes, I read it. And then I wrote it, coding up our own Bitcoin node to make sure I understood it. CEOs without a science and engineering background are going to be at a disadvantage in the coming decades, I think. Honestly, probably politicians, journalists in many roles too. Software is eating the world, changing every industry. Luckily, the tools to learn it are available online for free and are getting better and better.

Starting point is 00:05:02 It's accessible to almost anyone if they're willing to power through it and at least learn the basics. Numeri founder Richard Crabe continued this theme saying this is our ruling class. Zero purchase on code, algorithms, or the difference between them, but reliably skeptical of the new. Lee Drogan of Star Killer Capital almost couldn't believe it, tweeting, The vast majority of the time you should assume incompetence, as opposed to some more complex explanation for why someone acts or says something stupid. I can't get there on this, though. Jamie is too smart. He's got to have too many smart people in his ear to be this dumb.

Starting point is 00:05:39 Galaxy Digital's Mike Novogratz almost laments this, saying, so strange. For a man who has done a brilliant job running a giant bank, his answers around Bitcoin are sophomoric, and he keeps doubling down on them. I pray I stay open-minded my whole life. This podcast is sponsored by Nidig, an institutional Bitcoin firm that sees Bitcoin has a gateway to financial security. for people around the world. Find out more at nidig.com slash nLW. That's nydig forward slash nLW. Another line of discussion on Twitter is how much someone like Jamie Diamond, the arch sion of the legacy

Starting point is 00:06:25 financial system not liking Bitcoin, reinforces why so many of us like Bitcoin. Alex Edelman, the CEO of Lolly, wrote, Jamie Diamond had the audacity to say Bitcoin is worthless on a day where J.P. Morgan was literally closed. I'm sorry, but Jamie isn't not going to make it. Bittstein writes, Bitcoin is up nearly 7,000% since Jamie Diamond began calling it worthless. Zach Vol wrote, fail at Mobile FinTech. CEO thinks Bitcoin is worthless. Jamie Diamond and J.P. Morgan perfectly personify finance dinosaurs.

Starting point is 00:06:57 Blue-collar Bitcoin tweets, asking bankers to talk about Bitcoin is like asking Blockbuster and Hollywood video what they think of this new Netflix. Well, no shit your bankers. government, your financial advisor, and anyone else that takes a percentage of your wealth on every transaction won't want Bitcoin to succeed. One concerning take came from Judica, the head of OTC Options Trading at Cracken, who writes, if this is the kind of stuff Jamie Diamond is saying about Bitcoin in public, just imagine what he's saying behind closed doors in private lobbying meetings

Starting point is 00:07:26 with regulators. I think my favorite quote joke about the whole thing came from Breckyvon Bitcoin over at Swan, who wrote, Jamie Diamond walks into a bar and orders a drink. The bartender says, be paying in dollars or Bitcoin? Do you want to hear my opinion of Bitcoin? Sure, the bartender says. It's worthless, says Jamie. I know, the bartender replies, but let's hear it anyway. Now, there are also a couple takes on this, like I said, it really was all of crypto Twitter chatting yesterday, that point to what it suggests about where we are in the cycle. First, a little throwback from Macroscope, who writes, two things helped convince me to buy Bitcoin under $1,000 in 2015 and 2016. One, China hated it. Two,

Starting point is 00:08:07 Jamie Diamond hated it. For a long time now, these have been pretty good investment guidelines to follow. Bitcoin Kaz tweets, Michael Burry rage quitting and Jamie Diamond admitting to being skeptical of math, tells me we are nearing new Bitcoin all-time highs. Send it to 100K. Suu from Three Arrows challenges Jamie saying, I personally think Jamie should put on a short on Bitcoin on CME to provide liquidity into contango and then leave it to the people to decide. Put up or shut up, sir. Finally, Joseph Young nails it. It's not a Bitcoin bull market without Jamie Diamond saying it's worthless. Of course, all of this hit different and was so accentuated yesterday because Bitcoin was

Starting point is 00:08:47 absolutely screaming. We rallied to about 57,000 where we've now been for a day, and everyone is simultaneously asking why, as well as what's going to push us to a new all-time high. We're currently up 90% from the July low and now glimpsing that mid-60,000 all-time high. So let's see what Bloomberg thinks. Quote, as in past rallies, many reasons have been cited for the latest surge. They include easing concerns about regulatory efforts in the U.S. and China and signs of a rebound in the computing power devoted to mining Bitcoin. Optimism is also growing about possible U.S. securities and exchange commission approval of a Bitcoin exchange traded fund. Summing up what Bloomberg is saying, they're talking about how Lindy the Bitcoin asset is, i.e., a thing that was supposed to kill it, actually just made it stronger. the great hash rate migration out of China, and they're talking about institutions and institutions

Starting point is 00:09:38 coming in through something like an ETF. Now, one thing that many are suggesting, however, is that this rally isn't being driven by retail. The block story today was trading data suggests retail traders aren't behind Bitcoin's latest rally. The block story follows data from B2C2, and here's the really important line. Quote, more interesting, however, is the fact that crypto exchanges continue to be the notable outlier as the only category net selling overall, implying that this move may be driven primarily by institutional money with retail on the sidelines. So what they're looking at is how much different categories of traders are either buying or selling. Obviously, if there's more selling going on, it's more bearish versus more buying going on. It's more bullish. The only category that

Starting point is 00:10:22 was net selling last week was crypto exchange users, 57.4% of whom were selling. Meanwhile, only 45.2% of OTC brokers were selling, meaning 55% or so of over-the-counter transactions were buying. That certainly suggests institutional movement. A Coin desk piece seems to tell a similar story, saying crypto-focused funds took in more than double the amount of new money last week that it did the prior week as bullish sentiment returned to the Bitcoin market. Digital asset investment product saw a total of $226 million in inflows during the week ended last Friday, up from $90 million the week before. Separately, coin shares reported that the biggest jump was in Bitcoin-focused funds where inflows rose by $156 million to $225 million, which is the highest those flows into Bitcoin

Starting point is 00:11:08 funds have been in five months. The last time we saw inflows like this was May, and it was at a similar price, $58,500 then. On-chain analyst Dylan LeClair suggests this rally is different than that previous one, however, in that it's not really leveraged traders that are driving Bitcoin towards 60,000. He says, it's this simple. Early in 2021, excess leverage and derivatives drove Bitcoin past 60,000. Now we're right below that mark, and it's almost all driven by spot market accumulation. By the way, currently 96% of all Bitcoin out there is in profit, meaning it's worth more than when it was bought, which creates, again, another sort of strength in the market. Now, I've explained previously why it has felt to me that autumn was so primed to be a Bitcoin season. So instead of just

Starting point is 00:11:56 doing the too long didn't listen of myself, you can go back and listen to that episode from a couple weeks ago, I'll instead excerpt a thread from the Uber popular Twitter threader Crescent Eath. They write, are you ready for these next few months in crypto? There have been so many things leading up to this exact point in time that it's very hard for me not to be extremely bullish. Let's take a deeper look. On the one hand, we have Bitcoin starting to see levels of attention it hasn't since May. Lightning Network adoption is going parabolic with El Salvador's recent initiatives. This trend will only continue as more nation states join in, and the game theory ensues. Then we have the highly anticipated taproot upgrade coming for Bitcoin in November.

Starting point is 00:12:33 Bitcoin doesn't have upgrades a lot, so when it does, you probably want to pay attention. The major upgrade is set to increase smart contract capability, privacy, and security on the blockchain. We have all these catalysts for Bitcoin while rumors of an ETF are running rampant. While previous attempts at an ETF have failed, we are getting a whole lot closer. You didn't think we would put Bitcoin on an ETF with Chinese mining centralization and environmental flood, right? Lastly, Q4 is historically bullish for Bitcoin, and we have the macro landscape working for us at the same time with monetary policy disassociated from reality.

Starting point is 00:13:04 I would say things are looking particularly fantastic for Bitcoin at this moment in time. Indeed, this whole sentiment is really the theme of Bitcoin Twitter and thus this show right now. Travis Kling talking about the market says you can say whatever you want to about TA, but from a purely technical perspective, it would be very odd to have a 55% pullback consolidation and expansion back to all-time highs over a six-plus month period and only have price go a little higher. Dylan LeClair, one of the current MVP's of Twitter, it's got to be said, writes, there will be a scramble for Bitcoin exposure on Wall Street before the end of the year. Every institution that doesn't have exposure will have to explain to their clients why they ignored the best. performing asset of the year and decade. Inexcusable, supply squeeze underway. The career risk around Bitcoin has flipped. Plan accordingly. So who knows, there's a lot of other things going on. We still have regulatory questions to come, but I continue to be extremely bullish on Bitcoin right now.

Starting point is 00:14:04 And I think that you can see how the community is reacting to the comments of someone like Jamie Diamond reinforces that strength that we're feeling. So a lot more exciting fall to be seen. And you know, I'll be covering it day after day. So anyways, guys, I appreciate you listening. And until tomorrow, be safe and take care of each other. Peace.

The Breakdown - Who Cares What Jamie Dimon Thinks of Bitcoin?

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