The Wolf Of All Streets - Bitcoin Stuck In the $70s | Here Is Why Next Week Will Be Pivotal For Crypto

Starting point is 00:00:00 Bitcoin broke out almost making a new all-time high this week, but is now stuck right around $70,000. Now, we all know that next week could be one of the biggest weeks in history for the crypto industry in the United States, the election setting the tone for what's likely to come. There was also a lot that happened this week. Luckily, we have NLW here to unpack it all for Friday 5. Let's go. What is up, everybody? I'm Scott Melker, also known as the Wolf of All Streets. Before we get started, please subscribe to the channel. Hit that like button. Another week where it seems like a thousand things happened.

Starting point is 00:00:52 We're no longer in the boring stages of the cycle. Good morning, man. How are you? Great. How are you? I'm doing well. I'm a Clarence. You are a Mercedes. Again, we didn't plan it. We didn't plan it, but it's happening. So listen, we got to give an honorable mention really quick just because it happened this morning. We obviously got non-farm payroll job numbers, and I had to check four times to see if this was correct. U.S. economy adds 12,000 jobs in October. The

Starting point is 00:01:21 expectation was 106,000. This is the lowest print since July 2021. Now, unemployment was in line, but these are exceptionally low job numbers. And surprise, guys, I know you're not going to believe this, but they revised the last two strong months down 81,000 in August from 159 to 78. And September, that huge print we had, down 31 to 250, from 254 to 223. And just days before the election here. You can't believe these numbers anymore, man. We haven't been able to forever. I mean, it's like, when haven't we had a revision downward at this point?

Starting point is 00:02:02 I mean, it's interesting. It'll be fascinating to see if this really moves the needle at all, like had a revision downward at this point, you know? I mean, it's interesting, you know, it'll be fascinating to see if this really moves the needle at all, or if it's sort of just so incidental relative to kind of, you know, pre-election, just hold on and see what happens next. That's kind of my base case of how it plays out in practice. Yeah, I tend to agree with you. And I think this just gives the Fed the cover they need for another cut. Yeah. I mean, honestly, that's to me, the story is like, maybe they weren't going to cut again, and now they're going to cut again. To be honest, it does feel like the type of thing where, so we're seeing an immediate market reaction down, but it kind of feels like pretty inevitably

Starting point is 00:02:39 when the market sort of like takes a step back, I think that they're going to come to that exact same conclusion that you are, that any question of whether there is going to be sort of like takes a step back, I think that they're going to come to that exact same conclusion that you are that, you know, any question of whether there is going to be sort of like a pause might be out for the cycle, you know, so I don't know. I mean, I guess that the, you know, part of part of what the market had been trying to figure out is if rate cuts were, you know, sort of bullish, because things were normalizing or bearish, because things were going bad. And so this is sort of, you know, in the bad column. But I tend to think that, you know, there's sort of an initial reaction where the market is trying to figure that out. And then they remember they're getting a rate cut either way,

Starting point is 00:03:09 and then they get happy again. So it should be fine. I think futures dumped and then pumped kind of immediately the usual knee-jerk reactions in both directions. So I think our first story here is kind of Bitcoin price action, obviously, because I think, you know, technical analysts have been watching that 69-70 level. Let's finally get back above that. Well, we did. And we've been relatively good at staying there for the moment. We've got Bitcoin price takes breather as Bitcoin ETFs record another day of monster inflows. We've got BlackRock Bitcoin ETF getting record inflow ahead of U.S. election.

Starting point is 00:03:44 And then, of course, Bitcoin price drop leads to 250 million bullish liquidations. Crypto sentiment indicator singles top. That's the extreme greed that we've been having. And then we need narratives for why we barely made it back to 70,000. Bitcoin's run toward record high falters as Trump election odds dip. So much going on here. All I see is Bitcoin went up really far, really fast, and then all the leverage got flushed,

Starting point is 00:04:09 and here we are right back at an amazing level of 70,000. Yeah. I think that the bummer for me, which is a very silly bummer to have, but this is sort of like the closest we've ever had to being able to make a new all-time high on Bitcoin White Paper Day. And we just couldn't get it done.

Starting point is 00:04:27 I mean, I feel like some whale should have taken one for the team, you know, just sort of mass smash the bid button and gotten it done. But, you know, we are now officially ahead of or the longest period of time at which, has been above 70,000, which is, you know, it's kind of the type of moment where you so anticipate, you know, wanting to get above that, that it's that consolation prize of this sort of being in totally uncharted territory kind of goes out the window. It is weird, though. I mean, plenty of people have commented on the divergence between the price and the sort of sentiment. Yeah, I agree. And you sort of mentioned Bitcoin, Satoshi White Paper Day. I mean, we've got a tweet from Donald Trump. I would like to wish our great Bitcoiners a happy 16th anniversary of Satoshi's White Paper.

Starting point is 00:05:18 We will end Kamala's war on crypto and Bitcoin will be made in the USA. Vote Trump. And then, of course, Hunter Horsley from Bitwise. Would you have imagined this from a U.S. presidential candidate a year ago? We're entering the mainstream era. I mean, I think that's just incredible that something like that could be tweeted from a presidential candidate. We would have imagined it from Donald Trump four years ago because he was screaming about how he was no fan of Bitcoin. Although, you know, if we're being honest, he was never screaming about that. He was letting Steve Mnuchin. Mnuchin was tweeting.

Starting point is 00:05:50 Mnuchin stole his phone in the morning and fired off some tweets about his hatred for Bitcoin. But still, this really does show you how much things have changed in the past years when we had such bearish sentiment and such fears about the United States government to some degree on both sides. And here we are right where the cycle should be back in the 70,000s waiting to break an all time high with the election. I mean, you know, the title here, here's why next week will be pivotal for crypto. Well, that shows you, right? I mean, it's going to matter who's the president for the next four years. Yeah, I mean, it absolutely will. And, you know, I think that, you know,

Starting point is 00:06:31 there's a there's sort of an interesting nuance to the political conversation where it matters both, I think, as much as people feel, but also sort of not as much in the sense that it will be highly consequential. We've seen with this administration how much sort of, you know, a White House's disposition towards the asset, whether it's direct or whether it's by verge of allowing someone else to control their disposition towards it can impact policy. At the same time, I think that post-election, we will sort of, you know, remember that it's going to be fine in either case. It's just how fine it is and how much we have to deal with on the, you know, along the way. I agree with that. Well, there's one person that we're definitely not surprised is very

Starting point is 00:07:13 bullish on Bitcoin right now, but maybe we can finally be surprised at just how bullish he is. Michael Saylor. MicroStrategy's 21 billion equity plan tops Tesla for record. So that is absolutely nuts. And then when you consider that 21 is actually 42, and we have a story here, MicroStrategy's seller pitches volatile share price as sign of healthy capital. But this guy has always been all in. We've still been surprised at just how all in he is every single time. He raises a little more debt to buy a little

Starting point is 00:07:45 more bitcoin 42 billion more dollars in three years can he pull this off i i i am not in the business of betting against saylor when it comes to his appetite for acquisition um you know look at some point the eyes get so large that even the free marketers go like, do we really want him buying all that much? But for now, you know, I think that if you're really looking at it, you're looking at price support for as far as the eye can see at this stage. So, you know, it's super ambitious. I think, you know, he is abundantly clear about it is what was really interesting about

Starting point is 00:08:23 this earnings call where they were discussing the strategy is Saylor threw down the gauntlet. It was very clear that it was no longer a sort of justifying how they think about things. It was about challenge, basically a sort of denial that anyone could catch up to them without going all in, right? He basically said at one point during the call, like, you know, other people are going to get interested in this. There's no way they can actually copy us without going all in. And no one can go as all in as we can go right now because we didn't start here. We had to grow this. And it was very interesting just how different the conversation was. In fact, more broadly, one of the things that I noticed doing shows this week is I had a full ass show about earnings calls related to crypto. There was Robinhood, Coinbase, Micro Strategy, you know, and a couple of others. And, you know, obviously, we kind of know all these

Starting point is 00:09:15 things in the abstract, but the fact that there was a full, you know, kind of days, full shows worth of news about earnings calls from the public markets that relate specifically to crypto as sort of just a reminder of just how different things are. Well, Robinhood did poorly, as you mentioned them. And I think it's interesting to talk about Coinbase very briefly here, but their shares tumbled the most since 2022 after results lagged. Estimates, they had total revenue of 1.21 billion. Of course, that's very good, but it's how you do versus expectations and expectations are 1.25 and their net income was 75 million, which was below the 112.2 million expected. But important note, I think that during this period last year, they lost 2 million bucks, right? So Coinbase is healthy, doing exceptionally well,

Starting point is 00:09:59 but looking at these two, which pre-ETF were sort of the biggest proxies for the crypto market or Bitcoin in general, MicroStrategy is wildly outperforming Coinbase now and the other. Yeah. So the thing that's different is that MicroStrategy, all you have to be, your calculus is entirely around what you think Bitcoin's going to do to some extent, right? Plus what MicroStrategy is signaling. I think the other thing that's interesting about MicroStrategy telegraphing this strategy in a way that they perhaps haven't before in terms of getting specific is that it gives analysts a chance to kind of actually start to put models around how they think MicroStrategy is going to behave relative to the price of

Starting point is 00:10:36 Bitcoin, right? It gives it a chance to kind of catch up to the premium of MicroStrategy stock versus the underlying Bitcoin. Whereas with Coinbase, Coinbase has always been a tale of two revenue streams. One is trading and the other is everything else. And so Coinbase's trading revenue was down over the last quarter because it was just quiet, right? We all felt it. We had to make up a bunch of stuff. Luckily, Trump and Kamala were here for us, making sure that we had something to talk about every week this summer. But it just quiet, right? We all felt it. We had to make up a bunch of stuff. Luckily, Trump and Kamala were here for us, making sure that we had something to talk about every

Starting point is 00:11:08 week this summer, but it was quiet, right? This year, I think, has felt disproportionately quiet, even relative to price. And so Coinbase has, for years now, been really clear that everything in that company, the long-term, is about diversifying those revenue streams. That's what they focus on. It's base, it's custody, it's all of these things. And they're showing, if you kind of take a step out from quarterly results, they're absolutely showing progress on those things. But trading is still king. It's still driving a big portion of the revenue.

Starting point is 00:11:39 So I think that your assessment is right, that this is still an extremely sort of healthy performance, just didn't quite get at expectations. But I think expectations were, I don't know, one of the things that just it's interesting about expectations is, I think crypto companies are in for, we're still in a period where Wall Street analysts aren't that good at understanding what's going on in markets. And so it makes it hard for them to get expectations right when it comes to trading because they're not familiar with those dynamics. And my guess is that that will get better over time. Yeah, they throw a dart to get an expectation and the stock moves based on how the actual numbers come in relative to those expectations. Wall Street doesn't understand how to value base, right? They don't understand that if we get a raging altcoin bull market in the next three months, that Coinbase's revenues are going to absolutely skyrocket.

Starting point is 00:12:40 But hey, I see that as an opportunity more than a enlightenment, certainly for Coinbase. And listen, so we had a Bitcoin move, obviously, to the upside. And I can tell you exactly why it happened. It's because we had TetherFUD. And if you get TetherFUD, it's always some sort of bottom or precede some sort of major Bitcoin move to the upside. We have this story here. The crypto is too big to fail. Token Tether faces new threat from US and Tether usage shifting largely out of the United States as US scrutiny of 120 billion stablecoin grows. First of all, this thing is 120 billion. I don't know where it was this time last year, but it wasn't close to that. Tether, absolutely one of the most profitable, incredibly growing, fast companies in the world. And seemingly, even this FUD is dated and kind of nonsensical,

Starting point is 00:13:35 and the DOJ is sort of always looking at Tether, right? It just seems like there was nothing new here. Yeah. I mean, listen, so one, I think you're right. Like at this size and at every size that it hits from now on the scrutiny, there will always be scrutiny on tether. It is simply too big to not be constantly scrutinized, right? Every, every office in every potential, you know, regulator and enforcement division is going to be constantly looking at this company. You know, it's just, it's just massive and it's so getting to be, you know, more and more systemically important. So that's sort of inevitable. What's just massive. And it's so getting to be more and more systemically important. So that's sort of inevitable. What's interesting about this story is sort of the

Starting point is 00:14:10 question of, there's a few different scenarios that this could be. One is, there is a pipeline between the DOJ and sort of major news outlets that we've seen before that use press leaks effectively as tactics to try to kind of exert pressure. I think the place that we saw this most, and this kind of resembled to me, was in the months leading up to Binance's settlement. We saw a lot of these types of leaks, leaks from privileged sources in the enforcement divisions, well-sourced, that sort of felt like they existed to put pressure on the company in question to maybe come to the settlement table. Now, we've got tons of those with Binance. I mean, there was a series of four or five of them that happened. So this is not that same pattern. It's just a single story, but it is reminiscent of that to me. At the same time, this story could be a single

Starting point is 00:15:11 person inside the DOJ who has an ax to grind, who wants to throw a tomahawk on their way out the office. There's a lot of reasons to also not take it all that seriously. I think that the the tinfoil hat, not that tinfoily, not that hatty kind of look at this is Howard Lutnick has been getting larger and larger in the media. It's Trump's transition team co-chair, and he's a huge tetherball because his company is custodying it. And maybe there's some lawfare or the sort of pre-lawfare politicking going on. Who knows? I think ultimately, we should assume that with where Tether sits, and I have to assume that Tether knows this, and they've given all the indications that they are operating as such, they are now officially

Starting point is 00:16:01 too big to operate fully outside the system. They're clearly still focused on providing services for outside the US and the global South, but they've also spent the last three years not seeding the official US stable coin story to USDC. There could have been a moment where in 2021, 2022, Tether kind of just said like, you know what, Circle, you get the US, we'll take everything else. But they haven't't they talk all the time about how much they work with the fbi and you know like so i i i would assume that whatever amount of scrutiny there is tether is taking it head-on and using their considerable war chest to make sure that they are out ahead of it yeah and this is one of the guys they fear, Gary Gensler. Interesting here that he's gone

Starting point is 00:16:45 mainstream, right? I love the beginning of this article and you can unpack it a bit for us. It's my personal belief that no normal person should know the name of the Securities and Exchange Commission's chair. And yet here I am about to explain why he's been an issue in the 2024 presidential election. Good job, Gary. What do you think? Yeah. This is an interesting article in the sense that journalists, not pro-crypto bull, not necessarily even, she kind of provided some amount of logic, not like sort of that you're supposed to believe, but at least an explanation for why the SEC would use its sort of regulation by enforcement strategy. Basically,

Starting point is 00:17:24 the argument of the piece is that regulation by enforcement strategy. Basically the argument of the piece is that regulation by enforcement is what's available to them because judges keep letting them do it. So that's, you know, they're incentivized to kind of take that path. She kind of lays the blame at the feet of Congress for not giving the sec more resources, but at the same time, uh, it's pretty clear that there's not a lot of, um, uh, compassion for the idea that the SEC says, come in and register, and then doesn't allow people to come in and work with them. So I think if you were a totally objective outsider just reading this, probably what you'd come away with is thinking, boy, all that looks messy. There's clearly not a hero on the Gensler side. Maybe

Starting point is 00:18:06 I understand where they're coming from, but I don't think it's a particularly positive look for Gensler or this SEC in their approach. This guy's got to go no matter what happens. And the reason that he's got to go for this administration is that we have a few surveys here that are saying that crypto really matters. This is from Paradigm. Crypto will matter at the ballot box this November, which of course is now. And then we had one from the digital chamber. I spoke with Perry and Boring actually yesterday about this. Another major polling piece that basically said that 16% of voters care deeply about crypto and would consider voting for a candidate based almost solely on their belief about crypto.

Starting point is 00:18:46 It actually went into a lot of other interesting findings, especially that the people who were voting Democrat and believed in crypto largely thought that the Democrats were more pro crypto. And those voting Republican thought that the Republicans were more pro crypto. So it's important sometimes to step out of our echo chamber and realize that things are very bipartisan and most people are just going to assume that their team is better for their thing. Yeah. I mean, there's something nice about that, honestly. People have this sort of faith and confidence. But I don't know, man, it's still hard for me to wrap my head around these statistics. I think a lot of them are, you know, what is clear from the aggregate of all of these polls is that this is a meaningful issue to a meaningful portion of people, you know, where they tend to lose me is when they kind of try to construct questions that like,

Starting point is 00:19:35 you know, that are about single issue-ness, you know, it's very hard for me to believe that actually 5% of Americans are single issue crypto voters. I think, I don't think there's, there's very few issues that, that, that have 5% of Americans as single issue crypto voters. I don't think there's very few issues that have 5% of Americans as single issue voters around that thing. But it almost doesn't matter because that's so incidental to the fact that there is no way to read these polls and what has happened in this election cycle and not see crypto having emerged fully as a meaningful political force, an issue that speaks specifically to a lot of people as well as being resonant with a lot of other related issues. Crypto is here on the ballot box, on the agenda, whether people are voting

Starting point is 00:20:18 exclusively on their crypto beliefs or just as a part of a thing, it's not ignorable in any meaningful way. And more than any polling, the candidate posture has demonstrated that. Yeah. So that wraps the major stories we were going to talk about. It was such a big week that we had a lot of honorable mentions. We had a new fake Satoshi, which was supposed to be announced in a press release in London. We had obviously the treasurer was advising on tokenization, basically said that stable coins helped the US dollar, which was interesting, but then completely left crypto out of their financial inclusion report. We had Emory University buying Bitcoin ETFs, Hong Kong preparing for crypto markets, Kraken restructuring and

Starting point is 00:21:00 firing people, ConsenSys laying off people, DYDX. When I tell you guys it was another big week, there was a lot there. Yeah. I mean, listen, I think that this is our last Friday Five before the election. Next week, we're going to be able to actually kind of like sift through, well, presuming that we know who the new president is at that time, which is anyone's bet, we're going to have a lot to sift through. But I think where we kind of just ended is a pretty good reflection of what the last three to six months have taught us in terms of the crypto story. Here we are in an election cycle where crypto has absolutely and undeniably become a major issue, where we had a candidate from one

Starting point is 00:21:45 of the major parties, you know, lauding Bitcoiners in the Satoshi white paper, you know, Bitcoin white paper day yesterday on Halloween, where, you know, the crypto political forces have meaningfully swayed, you know, primary elections up and down the ballot. And where Bitcoin is sitting at, you know, above 70,000 for the longest period that it has, as it's seeing record inflows for an ETF that's largely driven by institutional buyers. So if you need a picture of where things are right now and how different it is, it's a pretty good snapshot. Absolutely agree. I'm not sure if I'm looking forward to or dreading next Friday, but I guess we'll see how the next seven days of our

Starting point is 00:22:25 lives go. It's important to remember guys that if the person that you support loses, the world's going to be over next Friday. So half of that, I don't know if I'll even be here. Yeah. We'll see about, well, it's crypto. So we'll see about like, I don't know, like somewhere between 30 and 70% of you, I guess. Yeah, that's exactly right. All right, guys, that's all we got. Nathaniel unpacked a lot of this on the breakdown, this week so if you want more in depth go back and listen to those and listen to them in the future to get a preview of what you might hear on the next friday five go ahead give him a follow and always listen man thank you so much see you next week bye guys See you guys.

The Wolf Of All Streets - Bitcoin Stuck In the $70s | Here Is Why Next Week Will Be Pivotal For Crypto

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.