The Wolf Of All Streets - Bitcoin At $90K By End Of The Year | Is Ethereum In Danger?

Starting point is 00:00:00 The Bitcoin and crypto markets have been correcting, but that's not stopping institutions from raising their targets by the end of the year. Bernstein saying that Bitcoin will go to $90,000. We've obviously seen Standard Chartered up their targets as well in the past weeks. I guess they're not too concerned about this recent price action. Of course, this is the Friday Five. The stories we'll be talking about, of course, Bitcoin price action, the SEC debt box debacle, Ethereum Foundation under scrutiny, Powell staying the course on inflation at the FOMC, ETF flows being flat and down, and BlackRock coming on chain in a major way. NLW and I present to you the Friday Five. Let's go.

Starting point is 00:00:55 Let's go. What is up, everybody? I'm Scott Malcrawlstone as the Wolf of Wall Street. Before we get started, please subscribe to the channel, hit that like button. And apparently there's a little bell that you can touch so that you'll know when we are showing up on any given day. So do whatever you do with bells. Going to go ahead and bring on NLW. Been an interesting week in price action. As I promised, we'd look at coin market cap first. I mean, Bitcoin's down again 5% today, right? It's been sort of this, I guess, rangy correction. Are we going to zero? Are we going back to 100,000? Lots of panic. What do you make of the price action this week?

Starting point is 00:01:33 I think that the folks who are sort of obsessively following it have a very different perception of it than people who are sort of like living their lives and coming and checking in every couple of days. For the folks who are coming in and checking every couple of days, it feels like there's just some range now between, I don't know, 60 and 75 or whatever that seems to be where we are. And it seems to be correlated with what's going on in the ETF. And when you take a step back, none of those numbers seem real scary given where we were a month ago or a little bit before that. And I think that to some extent,

Starting point is 00:02:07 what it's done is make people kind of like, it's let the wind out of the sails in a comfortable way of the, it's going to be up only, the ETF flows are never going to stop kind of feeling, which is very easy to get caught up in, you know, over the last few weeks. And what that's created is space for a more sort of rational conversation around what might happen over time, where these interest

Starting point is 00:02:32 flows are actually coming from, who are the investors right now, you know, all these sort of questions, which will have a pretty deterministic impact on on the rest of the year and what happens, I think that we're having a more rational version of those conversations. So, you know, it's obviously it's a lot more fun when we're just kind of screaming to the moon. But it also feels like, you know, nothing goes up for forever. And it's hard to even really call this a drawdown relative to other sort of bull market corrections in the past. Yeah, it's pretty nice to be sitting at $64,000 Bitcoin before the halving, if you asked my humble opinion. And of course, as I said in the intro, just sort of to wrap up the Bitcoin part, Bitcoin year-end price target rates 90K at

Starting point is 00:03:10 Bernstein. They're expecting a 7% reduction hash rate post-halving from shutdowns versus 15% earlier. This is basically raising it from 80 to 90 to the end of the year. But JP Morgan's saying that we still could correct here based on effectively futures flow and what they're seeing in the futures market. Really not that much leverage rinsed out yet. Basically, the degens are still degenning on this, both in TradFi and within the crypto world. And there's still a little bit more to go. Doesn't really matter, in my opinion, but it's good to see, I think, the larger institutions still raising their targets. Yeah. I think the real question,

Starting point is 00:03:46 one of the questions that I'm watching most closely is, it seems pretty clear that a lot of the folks that came in are sort of the trad five version of DGENs. And what we don't have yet is a sense of how they're going to behave, like under what circumstances they flee entirely versus they just play the same game that crypto DGENs play, same game that crypto degens play,

Starting point is 00:04:05 right? Because crypto degens can handle a lot of volatility without, you know, sort of taking their chips off the table to the extent that they have any chips left. I think one of the big questions is going to be how, how sort of, you know, strong are the stomachs of the of the tradfied degens that have clearly come to the to the table since, since the ETFs were launched? Well, it sounds like the crypto DJs have somewhat lost interest in Bitcoin or too busy trading racist and sexist memes on Solana, which is apparently the new trend that I'll mention, but we clearly don't need to talk about. So moving on to our first official story of the day, the SEC gross abuse of power in crypto case

Starting point is 00:04:41 is a new low for Chairman Gensler. Love to see headlines like that. This, of course, in the debt box scandal. Maybe you can give us the brief overview of what happened there, and then we can dig into it a bit further. So the simplest thing to know, the most basic way to understand it is that the SEC asked for effectively emergency powers to shut down not just the corporate accounts, but the personal accounts of the people involved with this debt box project a couple of years ago. And they basically said, hey, courts, trust us. We have a record of using this appropriately when we really need to. And we're telling you we really

Starting point is 00:05:22 need to. Usually when government agencies make that sort of appeal, the judicial system is inclined to give them the benefit of the doubt, right? Because they understand it's not sort of a private actor who's just trying to get away with something. It's a governmental organization whose highest obligation theoretically is to uphold the law, right? And so if they're saying that we need to do this to uphold the law and protect people, the courts are going to say, OK. Now, what happened or what transpired is that basically almost all of the evidence that they were sort of pointing to was either exaggerated or fabricated or just, you know, basically the SEC was playing real fast and loose with their justification for these powers. And the courts are very unhappy about this.

Starting point is 00:06:05 This was called out initially a few months ago by the government accountability office. And then they were sort of actually sanctioned in this recent court decision. Now, this is separate from whatever happens in the actual debt box case. That case could still go against debt box. But what this has done is significantly eroded even further the credibility of the SEC. It puts future SECs in a very difficult position. It limits the applicability of this type of extra processed style power. But for the crypto industry, it's sort of a moment for us all to say, see, this is what we've been talking about. And I think even more, what we're starting to see is that the burbling conversation from DC is that debt box is hardly unusual when it comes to these sorts of tactics for this particular SEC.

Starting point is 00:06:57 I'm old enough to remember when that was a criminal offense called perjury. Yeah. And these ex parte orders are somewhat rare because they're one-sided and they don't require any evidence from basically the side that would be the defendant. And as you said, this causes tremendous harm because they shut down all their accounts, basically froze them. I haven't dug into this, but do you know what sanctions against the lawyers for a federal agency actually means? What are those sanctions? I don't. I don't know how much it's symbolic versus problematic versus... Well, it's clearly symbolic at least, right? It's clearly sort of a narrative issue. I don't know whether there's actual ramifications that come with it.

Starting point is 00:07:37 I've certainly seen a lot of takes from different institutions and companies saying, we would no longer hire any of these ex-SEC crypto lawyers who used to have a revolving door into basically crypto companies or larger institutions. There's real pushback now that anyone who's basically a part of this is part of the scam and overreach that is the agency, right? Yeah. That's certainly new. Yeah. Yeah. That's definitely the first time I've seen that as well. Yeah. And so this was, by the way, guys, this was an 80 page, 80 page decision by the lawyer scathing all the way across. And I just want to go through a few quick takes from metal law, man, one of the favorite lawyers we have here just to wrap this

Starting point is 00:08:20 up. Will anybody actually be held accountable for the travesty that is the debt box scandal? Here are seven things that he thinks should happen. A criminal investigation is warranted. State bars need to investigate. The House Subcommittee on the Weaponization of the Federal Government should investigate. Congress should pause funding for the SEC's crypto enforcement program, right? Because we've seen repeated offenses effectively, and why would they continue to give them money for this overreach? SEC leadership should resign. This would happen at any company or agency, by the way, where something like this happened. It's a huge black mark. The SEC should pay for the damage. They absolutely destroyed this company and the people who are running it, and Operation Chokepoint 2.0 should be terminated. Clearly, guys, this isn't a small deal. It's a

Starting point is 00:09:04 small blip in the news cycle, but if you actually dig into it, there should be terminated. So clearly, guys, this isn't a small deal. It's a small blip in the news cycle. But if you actually dig into it, there should be a hell of a lot more accountability for all of these bad actors in this case. I mean, they literally lied to make their case in federal court. Yep. I mean, it feels to me like the type of thing that will, you know, had its media bump, and then it'll feel like it goes away, but it actually is probably going to be simmering in terms of its implication for quite some time. Absolutely. So the next story, Ethereum Foundation faces inquiry from a government. Fortune says SEC investigating ETH. Here's that Fortune story. SEC probing crypto companies' investigation as hopes for ETF dim. Seems like they're conflating a lot of stories here. There's

Starting point is 00:09:44 a lot of confusion as to when this actually started and what it's about. And it's extremely vague. Basically, they said a state authority without naming what authority or what state. This could be the SEC of Djibouti, for all we know. It was very unclear and went on to basically say that that's a reason that the ETH ETF would be denied. And this has to do with the SEC. It seems like we're putting together a bunch of thin strings here to have a coordinated sort of salvo of ETH FUD. Yeah, it's very thin. So what actually happened is that, you know, basically firms like the Ethereum Foundation or just organizations like the Ethereum Foundation tend to have, you know, in their terms or

Starting point is 00:10:30 on their websites, these canaries basically that sort of indicate that they've never been contacted by an agency in a way that requires them to not disclose that information, right? It's this little line that's sort of somewhere buried in legal terms. And the reason that it exists is so that they can take it away when that's happened. And so this happened to the Ethereum Foundation, it seems like a couple months ago at this point, it wasn't a new thing, we just discovered it recently, where that part of the terms or the website or whatever was removed. And so people started digging in and trying to figure it out. There really was very little information about this. There was just a little bit of a note attached with the GitHub commit, which was an unusual thing that basically

Starting point is 00:11:14 sort of got this whole train rolling. Fortune Peace tried to sort of try to dig in deeper, but it's still very unclear what's going on. I think what it reflects or the nature of the conversation reflects is this assumption, this growing sense that not only is the SEC unlikely to approve an Ethereum ETF, I think there is a concern that as a final middle fingers blazing on the way out the door kind of moment, they're going to try to actually label ETH as security unilaterally, perhaps even knowing that it's not a case that they'll win, but they can just screw up the crypto industry by dragging it into this thing. I mean, it is about as dramatic a move as they could make. I mean, they have a history of doing this, right? We saw a number of altcoins, I believe it was 60 by the time they were done, passively named in lawsuits against Coinbase and Binance and others that were effectively

Starting point is 00:12:10 deemed securities. The prices dumped because everybody feared it and the government never had to prove anything. It wouldn't be a surprise, as you said, for them to just do this, put that mark on the record for however many years it takes to sort it out. And there would be uncertainty around Ethereum for a very long time. I mean, you read this article, though, it's so hyperbolic. The Securities and Exchange Commission is waging an energetic legal campaign to classify Ethereum, the second most popular cryptocurrency as a security. According to US companies that received subpoenas related to an investigate, it's so, like I said, the evidence is so vague, but they're making this very strong assertion

Starting point is 00:12:45 that what's happening is that the SEC is trying to label a security. I've seen no evidence of that. Paul Graywall, of course, from Coinbase, you guys should just check the thread. I'm not going to read it. But he laid out very clearly all the reasons that there's no way that Ethereum is a security. And we're reaching the statute of limitations here 10 years from when it was actually launched. So this seems extremely weak, but nothing with this SEC I think would surprise us at all. The next story that we have here is the Fed.

Starting point is 00:13:12 Fed stays on track for rate cuts with one eye on bumpy inflation. What many people viewed as a dovish meeting with Powell indicating that we would get another 0.75 bps, three rate cuts potentially of 0.25 this year, to me was just a reiteration of the same thing he's always said while people do mental gymnastics to figure out what's coming. Yeah, I think people were hyped up to and assuming that we'd get a much more sort of all guns blazing Powell, in part because, you know, at the peak of the inflation cycle, he was so strenuous in his wanting to cool the jets of markets. I think that if you look more at the last six months as a timeframe and read Powell's remarks in the context of his remarks during that period,

Starting point is 00:14:00 it makes a lot more sense. Basically, you had the end of last year when things were looking really good, perhaps unexpectedly good. He basically said, we're not sure that we totally buy it being unexpectedly good. And effectively, what this meeting said was him saying, we're not sure we buy it being unexpectedly bad. And so it's really just a smoothing out or averaging of those two marks. And I think that they feel pretty confident of the course that they're on. And perhaps, if nothing else, they're hoping that this is a context for the market to understand that the last leg of this thing down from 3% to 2% could take even longer than it took

Starting point is 00:14:42 to get from 8% down to 3%. Yeah, I think that's an accurate take. But we do have some sort of precedents in other countries at the moment. Mexico cuts key interest rate for first time since 2021. Switzerland, this surprised people a lot. Switzerland surprises with rate cut moving ahead of ECB and Fed. Paraguay, I know not exactly the beacon of predictability for the Fed, but Paraguay cuts key rates by 25 points, signals more easing ahead. I mean, there's cracks in the foundation here, right? I don't think that any of these countries have seen inflation come down to

Starting point is 00:15:16 what the Fed would view as a viable target, but they're still cutting anyways. It makes me wonder why they're trying to get ahead of this. But this could put more pressure on the Fed if the entire world starts cutting. Yeah, I don't know, man. America is pretty good at ignoring the rest of the world. Yeah. I think that's a fair assessment. And like I said, I mean, Powell just has not ever changed course. If you remember last year, we actually used to have quite a bit of confusion from Fed governors, you would have six of them speaking in any given week, and one would be extremely dovish, and then you'd have the hawk come in. And one would say raising rates, one would say cutting

Starting point is 00:15:50 rates, it seems they've actually gotten in line and been a lot quieter of late. It seems there's a lot more consensus in the Fed as to what they're going to do. Yeah, I mean, on that front, one of the things that the market was most encouraged by was that there were still, you know, sort of the dot plot still expected three rate cuts this year. I think that people were, you know, girding themselves for that to shift meaningfully. And it really didn't. I think there was only two governors that put it at any less than that three. So, you know, it's basically a stay the course moment. Yeah, I agree. The next obvious story that we have to talk about is the Bitcoin ETFs, because for the first time, we're seeing some outflows. But there's something to dig into here.

Starting point is 00:16:29 Obviously, we may have net outflows. But as Eric Balchunas and James Safer said when they came on Wednesday, it's just outflows from GBTC. We actually haven't seen any outflows from the other nine. They've seen reduced inflows to some degree, but even with price correcting, each of them has seen inflows every single day. We're just seeing massive outflows again from GBTC, a huge uptick. There was a time at the beginning when we'd see 600, 700, 800 million a day from GBTC, which was predictable when the ETFs were first approved because for various reasons, people were trying to get out of GBTC and into others or close that trade. But it was a bit surprising this week to start seeing 600 million outflow days again. Now, maybe there's a reason for that. I said this to Eric Balchunas on Wednesday now, and it's kind of become his base case since. I basically said that it's almost over because there's probably something happening behind the scenes, an FTX unlock, a Genesis unlock,

Starting point is 00:17:24 something like that. To me, seeing those huge numbers makes me expect that in two weeks we hear some news from a bankruptcy authority that someone was approved to sell a lot of GBTC. And that's sort of what he's saying here now. But, I mean, what do you make of the slowed inflows, which we cannot argue that's true, and the massive outflows again from GBTC here? The slowed inflows feel like that was inevitable. So that doesn't concern. I think that what's a little bit jarring about it, reasonably for people, is that we had this sort of period of increased inflows over the last couple of weeks, which didn't necessarily

Starting point is 00:17:59 make it like there wasn't any really clear explanation for that. Right. Like, look, if what had happened was sort of high inflows, and then, you know, they all kind of tapered off over time, you know, they were steady for a while and tapered off. And then grayscale, same thing, you know, high outflows all tapering off, like, that's kind of like what you would expect just at a natural state without any of these outside outside forces. What we saw was, you know, big inflows to the other, to the other products, you know, with a natural decline for a little while, but then a really righteous uptick where, you know, the last couple of weeks were set records for the biggest inflow weeks, which didn't really have a good explanation either.

Starting point is 00:18:36 That's, I think, what got people so up only forever kind of feeling. It's like, you know, maybe it was a price driven thing where people just had to get in. And it could have been right. It could have just been that there's some number of actors who are going to allocate some portion to the ETF. And some of them were laggards and they didn't get in in the first six or seven weeks. And then when shit got to 70, they were like, all right, I got to do this now in case it keeps going up. Right. Totally possible. But but I think that the the you know, so it's not strange necessarily that after that we'd see a period of decreased inflows. I do think that the biggest question is certainly why the uptick in grayscale outflows and easily the Occam's razor simplest explanation is the one that you just gave,

Starting point is 00:19:14 that someone was approved to do some big chunks. And, you know, especially if we see that, you know, discontinue over the next few days or at some point, you know, if it's a steady block and then all of a sudden it goes right back down, I think that'll be further evidence of that. Yeah, I can't really speak to the validity of this, but on-chain analysts, Genesis is back from the dead, taking down more than 16.8K Bitcoin, 1.1 billion in the last few weeks to two new addresses. Likely these coins are primarily sourced from GBTC outflow. So yeah, we do have a little bit of evidence at least that this could be happening and it could be regarding Genesis. As to your point about the inflows, I think because of the sort of jagged trickle of unlocks for RIAs and different

Starting point is 00:19:55 platforms, we're probably going to see massive spikes and then reductions on any given week. The same way that GBTC may have a fundamental reason for three or four days to have a major sell-off, maybe when Carson Group comes online with $30 billion and starts talking about 3.5% allocations, you have a really good week. And then maybe the next week, no new RIAs come online and nobody has access and you're just seeing the average retail person chugging along buying their $10,000 worth of one of the Bitcoin spot ETFs and that doesn't move the needle for a massive spike because that's consistent buying demand. That's really what I think. I think you're right. I think to me,

Starting point is 00:20:30 it seems like the easy, most important question that we will learn at some point is at what point and for what reasons this new set of buyers actually leaves the product? Is it because we get to, is there a certain price threshold at which they're just out? I mean, that's what we don't know. And that's going to have the sort of biggest shape in, I think, determining how the ETF impacts things in the long run. Right. Well, when you exclude GBTC, it's encouraging to see that Bitcoin can drop 15.5% and we're still getting net inflows. So it indicates that those new buyers didn't immediately paper lettuce or spaghetti hand, whichever analogy you like the best, their holdings, right? Most of these are probably putting them in an IRA and don't even know the price corrected. It goes back to your

Starting point is 00:21:17 initial point, actually, which is that we're all deep in this and we're checking price every day, but someone who bought two weeks ago, probably on average, if they bought in their IRA, doesn't even know that Bitcoin corrected. Yeah. I mean, humans are unbelievably good at adapting to new circumstances, both good and bad, which means that we get bored at every price level incredibly fast, right? We forget the 18 months that things could have died and we're just like, ah, I've been at 69 before. I don't want to be at 69 again. Whereas if you're not paying attention, you're just floating in vaguely impressionistic territory where Bitcoin's about as high as it's ever been. And the difference between 64 and 74 is totally irrelevant because you didn't buy it to do a short-term trade if you put it in your portfolio. And all these things are

Starting point is 00:22:01 still pretty great. Yeah. You say, last time I checked this thing, it was 17. Wasn't this a scam? Oh my gosh, it's 64. I got to get in. Don't even know it was 74 last week. I totally agree. And the final story, which to me, I think everybody should be talking about screaming from the mountaintop. BlackRock enters asset tokenization race with new fund on the Ethereum network. So A, obviously bullish for Ethereum. They seeded it with $100 million. So this is real. It's not some small change project, maybe small change for BlackRock. But Larry Fink has been on the roadshow talking about the tokenization of all assets now for well over a year, and they're actually doing it. And this is really interesting. It's called Biddle, which I love, B-U-I-D-L, because they're becoming crypto degens and using memes as their tickers,

Starting point is 00:22:52 which I think is pretty encouraging. But basically, this is backed by cash, US treasury bills and repurchase agreements and will provide yield paid out via blockchain rails every day to token holders. I mean, this is BlackRock creating a yield generating product on Ethereum that pays out daily and price didn't move. Yeah. Well, I mean, the price didn't move because everyone who's in the crypto space who would know what this means is already allocated to the hilt, I think at this point. No one's got any dry powder left to pour into anything. But listen, it is always felt... I don't know about you, but it's always seemed surprising that Wall Street wasn't more, to find different ways to put on different types of yield. God, what people were doing in DeFi for the last four years must have just made your mouth water if you were actually paying attention. So it's not surprising that finally, they're actually trying to figure out a sort of a sanctioned version of this thing that complies with, you know, sort of existing regulatory structures. But I think that it would be very easy to understate how landslide significant

Starting point is 00:24:12 this will look in the future as the first of what's going to be everything. You know, it just at some point, nothing is not tokenized because it would be insane to interact with things in a different structure. You know, it just offers so many benefits in terms of the opportunities that it creates. You know, I think the big question that, you know, people have been skeptical for a couple of years is like, what the actual impact on the price of the tokens on the chains that are used as infrastructure for these things is. That I don't think is, there's a clear answer. I think that, you know that people got perhaps a little

Starting point is 00:24:45 bit excited. It's like, if you use Ethereum for these things, then Ethereum's price goes up. There's reason that you would sort of draw those things, but it's not going to be as straight, clear as people allocating to Ethereum, for example. It was exactly my next point. This has always been the promise of blockchain technology, Bitcoin, but even beyond the tokenize everything ethos. But how you invest in that from an underlying layer one perspective, I don't know where that value ends up accruing or by buying some token, but this will be the future. This will likely disrupt systems and BlackRock's getting ahead of it. They just know, as you said before, that if you tokenize things, you can move them faster, you can collateralize them, you can earn this yield

Starting point is 00:25:29 in a quote unquote, safer manner. And I'm assuming that BlackRock probably has some form of insurance unlike many other things in DeFi. So whether we like it or not, Wall Street is coming and they're going to be using this technology into the future. Absolutely. No, it's a really interesting thing to watch. And it feels like the start of something. Let's put it that way. Absolutely. Guys, that's all we got. We nailed it.

Starting point is 00:25:53 30 minutes. Boom. Quick show summarizing everything. Follow NLW, of course. Listen to the breakdown on a daily basis for another taste of what he's doing every single day. I think things are just continuing to get interesting. I'm really waiting to see what those inflows and outflows look like next week if we don't see another price rise and get some more FOMO. My instinct, though, is that the

Starting point is 00:26:16 degens will keep degenning over in the meme coin market without us. That's almost a guarantee. Way over my head, man. All right, guys right guys thank you we'll see you next week bye let's go

The Wolf Of All Streets - Bitcoin At $90K By End Of The Year | Is Ethereum In Danger?

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