The Wolf Of All Streets - Bitcoin's Big Break: New All-Time High Ahead!

Starting point is 00:00:00 After a record streak of inflows into the Bitcoin spot ETF and record days in the actual amount going into them, Bitcoin is trading just below its all time high. Is it going to break? And if it does, where is it headed? We got all kinds of hyperbolic price predictions based on that assumption. It is the Friday five. I have been absent for the last few. Glad to finally be back with NLW. Let's get this going. Let's go. What is up, everybody? I'm Scott Let's go. of the week and man we've got quite a few of them today as i said man i've been uh been absent sorry about that hope you're doing well on this friday yeah well i came back from consensus with covid pretty standard so you know i'm like uh i have like a 50 percent uh covid hit rate at crypto conferences sorry to hear that uh that happened but that happened to me in singapore

Starting point is 00:01:22 it happened to me in bitcoin miami the first time I got COVID and one other, I think. It's pretty much a guarantee. Par for the course. Yeah. What are you going to do? Yeah, definitely par for the course. I mean, listen, before we get into the stories, obviously, we got Bitcoin trading around 71,000, which is great, flat on the 24-hour.

Starting point is 00:01:38 But I think the story, as an honorable mention, is that it was 72,000 right before the job report hit this morning. A smashing job report on the first numbers, which when you're living in the upside down, means less chance of rate cuts and sell everything, right? So we have an immediate sell-off in Bitcoin and other assets down $1,000 in a matter of seconds because they had estimated 185,000 jobs and they added 272. But then really quickly, people actually read the report and saw that unemployment had ticked up from 3.9% to 4%, which was Powell's line. So they immediately said, holy crap, maybe rate cuts are back on the table in their minds and started buying Bitcoin back.

Starting point is 00:02:18 And full-time workers were down 625,000 and part-time were up 286K. So knee-jerk reaction, then people read the report, and now I guess we'll see what happens. Yeah. Well, and then there's on top of all that, obviously the only listening to headlines is one problem. But then we also keep getting these reports revised months later that actually suggest that far fewer jobs than we thought were added. So it's like the market's been making these decisions every month on the basis of stronger revised months later that actually suggest that far fewer jobs than we thought were added, right? So it's like the market's been making these decisions every month on the basis of like stronger than expected job growth. And then the next month they're like, oops, actually it was about half of what we thought. It's wild. And I read a report earlier this week that thinks that the estimates from sort of the first quarter of this year were wildly overestimating. So I don't know. It's

Starting point is 00:03:06 very hard to see how much signal there really is in this particular set of data right now. I'm old enough to remember when that was just called lies and manipulation. Yeah. So our first story of the day, actual story is obviously the Biden veto of SAB 121. Him saying that a standard is necessary for crypto innovation. I love that we keep crediting Biden. I think we just need to start saying the White House. Yeah. Right. Because I think we know that this isn't actually Biden. But if you dug into the message on why he vetoed this bipartisan supported bill that was passed with Schumer and nine other Democrats going against party lines,

Starting point is 00:03:45 over 70 Democrats flipping party lines in the House. He says, my administration is eager to work with the Congress to ensure a comprehensive and balanced regulatory framework for digital assets, building on existing authorities, which will promote the responsible development of digital assets and payment innovation and help reinforce United States leadership in the global financial system. Therefore, I'm vetoing this resolution. What? I think it's, you know, to me, this reads like political calculus outside above and beyond crypto. So I think they box themselves into a corner with the veto threat. And I think that right now, when it comes to American electoral politics, the biggest problem for Biden is the perception that he's a walking corpse, which is, if you extract that, is that he's weak, right? It's sort of a variety of weakness. And my guess is that

Starting point is 00:04:37 they were concerned that at this stage, them going back on saying they were going to veto just shows them to be impotent in a way that they weren't willing to do, even though it's obviously a terrible calculus from the crypto vote. But it feels to me like something where they were sort of thinking about the broader political perception implications more than the crypto vote. But either way, it's a weird move. But it was a weird move to threaten a veto on something like this in the first place. Why would you get the president involved on a thing like this, especially when the GAO has already weighed in? You know what I mean? It's such a strange thing

Starting point is 00:05:15 to wade into. Also, I haven't dug in deeply, but I believe there's a way that this can still effectively pass even with the veto from something that I read. And that, I mean, clearly he's just trying to say, listen, I'm vetoing this because I want something bigger and better. But we know that that's not the case when you preemptively stated that you would veto this regardless of what happened. It's just a wildly confusing political move, wildly confusing rational move. It just makes no sense. It shows a White House that is really out of sync with itself when it comes to strategy. This is not a White House that's firing on all cylinders with a consistent message. This is a White House where I think there is blood in the water for Democrats right now in the US. And there is, you know,

Starting point is 00:06:01 you're seeing it start to tear itself apart in a way that is unpleasant, I think, even if you're on the other side. You know, it's not a good look. It certainly isn't helping the industry. Yeah, I mean, it's just quite remarkable to see that crypto has become the issue that has exposed these cracks, right, on a broader scale. It's really, I mean, you zoom out and think about the fact that this is on the docket is such an issue of focus right now. It's just really astounding. I didn't think that crypto would be this big of an issue coming into the election or that they would even be trying

Starting point is 00:06:37 to pass things in advance of it. Not to get too deep into the politics of it, and there's no sort of political preference here, but I think that when we maybe analyze it in in retrospect you know trump is coming in uh he has a very strong base right his mega base is an incredibly strong block that was never going to be pulled off of him the question was the middle right like there was a set of people who will never vote for trump in america there's a set of people who will never vote for biden in america the battle is for the middle and the sort of extreme positions or the, you know, the sort of, you know, whatever,

Starting point is 00:07:11 Trump had a lot of things going against him when it comes to the middle. The fact that, you know, women's rights issues have been set back in this country is a huge issue for a lot of those middle voters. He kind of needed something that was a middle issue that's not exactly partisan, that sort of made it not fall along the same lines. And, you know, crypto isn't about crypto in this campaign. It's about, you know, states. It's about sort of like the size of the government. It's about the control of the government.

Starting point is 00:07:38 It's about a thing that I think is more resonant with a lot of those middle voters. So in a weird way, it kind of makes sense that there was this, of makes sense that it's resonating and that they're leaning into it. I totally agree. And yeah, as you said, not to get too deeply into politics, but you said something interesting. I think Trump has a huge base of voters. And as you said, there's a huge base of people that won't vote for Trump. But I don't think that Biden at this point has a huge base of actual supporters. Yes. And so I think he's losing a lot of those in a situation like this. Yeah.

Starting point is 00:08:10 And I mean, you know, the unfortunately for them, they sort of had, you know, in both Bernie and Elizabeth Warren last cycle, a version of the person who is just really focused on rallying the base. And it just wasn't enough, you know. So I think, you know, whatever happens with this election, the Democrats are poised for, you know, there's some serious reevaluation to be done around what the party stands for and what they have to do. But again, that's for another show. Right. So listen, let's dig in more, I guess, to the economic side and the macro. We talked about the job numbers, which sort of just

Starting point is 00:08:43 came in this morning, so worth mentioning. But the bigger story, obviously, is that the ECB, Bank of Canada, both cutting already, whether this puts pressure on the Fed or is irrelevant to them, I have no idea, but the world is starting to cut. Yeah. So there are two interesting signals here, potential signals. One is what the rest of the world is doing. And then the two, the second is the question about whether it will influence the U.S. at all. On the first part, it's very clear that the world is starting to be more concerned about economic weakness than they are about inflation or the return of inflation. You know, that calculus has shifted.

Starting point is 00:09:19 It's official. And they're sort of on that path. The U.S. is comparatively a lot stronger, economically speaking. And this has been a big point of conversation. In fact, even officials in Canada were saying this, that there is a divergence in the strength of the economies right now, and that the US has a potentially different set of calculations as relates to this. So the US already isn't in the business of caring at all what other central banks do at this stage.

Starting point is 00:09:49 And I don't anticipate them to start carrying anytime soon. But I also think that just structurally, there are some differences. And I think it would be premature for markets to get excited about this as a signal that Powell is going to do anything different. I mean, we've been wrong about cuts the entire way. Not we, but the greater we being predictive markets and the assumption that this was inevitably coming and it just hasn't happened. And every time one of these numbers drops, whether you dig in or not, the headline is always economy strong, job strong, no reason to cut. Yep. Yeah. And so my assumption is that we see yet some more pauses, but never know. Could always be wrong. The third story we have today, huge one. Robinhood to buy crypto exchange Bitstamp,

Starting point is 00:10:30 an effort to expand outside the US. So this is a $200 million cash deal. That's the part that truly struck me. Seems exceptionally low. I was talking to Simon Dixon actually on Spaces yesterday. His company, Bank to the Future, was an early investor in Bitstamp and actually exited two or three years ago at a $400 million valuation. So it's half right now of what it even was a couple of years ago in the bear market when other investors were able to exit. Yeah. I mean, I don't know any of the dynamics of the specific deal. Bitstamp has been around forever. They've been around since 2011. I think that their oldest European exchange.

Starting point is 00:11:08 You know, I think there's a bunch of interesting pieces of the story. I think that just the positive side is obviously Robinhood trying to get into the European market and bringing crypto services there. I think that's an exciting thing. I think that, you know, Bitstamp's infrastructure plus a new infusion of capital and energy that can come from Robinhood is a good thing for European crypto investors. And that should be sort of celebrated and excited. I think that a lot of people's commentary has been focused around, you know, Bitstamp and Coinbase didn't start too far away from each other. And, you know, one's worth $200 million right now and one's worth 63

Starting point is 00:11:38 billion or something like that. And a lot of people pointed to the difference in the sort of, you know, landscape of the US from a financial markets perspective in Europe as a testament to that. I don't know if it's quite that simplistic, but it is a low number ultimately. But listen, a lot of businesses have lived for a long time in crypto and then sort of faded into nothing. And the fact that they're having an exit, they're going to a great new home, they're going to a place where everything that they've built is going to get bigger and better, not go away, is a win, I think, on a fundamental level. Yeah, I mean, I know from behind the scenes that Robinhood is on an attempted buying spree, both in TradFi and in crypto, to basically expand themselves into the full suite of financial services. I think eventually they want to be your bank, your broker, your exchange, your everything. And while this deal isn't that huge in a financial 200 million cash, it's pretty huge for them to gain access to EU customers and certainly to EU institutions because this is the exchange that they have largely been trading on

Starting point is 00:12:41 for so long. Just seems like a very, very savvy move. Definitely good for Robinhood. I'm assuming good for those who sold Bitstamp and chose to take that $200 million, even if they could have gotten more. And I just think that this wraps a nice bow on quite a few things. I mean, people I don't think realize, you know, SBF was invested in Robinhood. Ripple was invested in Bitstamp. Galaxy did the deal. Galaxy just did this deal. There's a lot of players here actually in the Robinhood Bitstamp saga who have been investors in all of these. And this just kind of brings everything to one home. Yep, exactly.

Starting point is 00:13:15 So the next story obviously has to be the inflows into the spot ETFs. They're posting their longest run of inflows right now. We're still under an all-time high. And on top of that, we had one of the biggest days in history, $887 million. That was the second highest so far. So Bitcoin spot ETFs getting sort of a second wave here, absolutely ripping. And now it's just becoming, I think, progressively less of a story because it's not the launch and we're not at the beginning. But this is still happening. It's growing. We're getting more institutions unlocked. And now, of course, we have an Ethereum spot ETF to look forward to. Yeah. It's so funny. No one really knows exactly how to account for this.

Starting point is 00:14:00 What's notable is just Bitcoin doing what Bitcoin does, which is totally confound expectations all the time and sort of force you to not view it in the same patterns that you viewed everything else. You know, it's funny watching the ETF observers just have no precedent for, you know, 155 days in having the second best day ever with no explicit catalyst. But it's going to continue to confound expectations because there are so many pools of capital that could get unlocked at any time. So you have the normal cyclicality of the asset plus the macro cyclicality that's influencing it, plus random things that are institutions coming online. It's never going to behave exactly, I think, as predicted. And if nothing else, we're making ETFs more interesting. Right. If we don't have necessarily a catalyst or reason for this, how do you explain this sort of record run here that's so quietly happening? I would have to imagine that it's

Starting point is 00:15:01 just that same slow unlocks of different platforms and more RAs looking at it and the Wisconsin board. And, you know, next quarter, we'll just get a whole bunch of reports about all these institutions that have been buying these coming onto the market, plus subtly shifting dynamics in terms of attitudes, right? So let's imagine that you're an institution that got the green light sometime over the last three months, right? And so you're able to start allocating, but you weren't exactly sure when you're going to do it. Well, then all of a sudden, we've got a surprise ETH ETF approval, which really puts the sort of cherry on top of the shifting say on Sunday over here. Well, that sounds like a good time to start deploying. And that kind of lines up roughly time-wise as this has been happening. So I don't think it takes some huge catalyst like some dramatic event. It's much more likely to be, we were down a little bit, people were kind of probably waiting to see if we were going to go down some more, but then all of a sudden, it looks like the government's getting more favorable.

Starting point is 00:16:13 There's the FIT21 is passing. That seems like a time to get in because you have to assume that once sensible regulation comes online, it's going to unlock a huge amount of additional inflows. So it could be as simple as that. Yeah. And simple supply and demand. Any uptick in this sort of low volatility, low volume environment, obviously, is going to push price higher. I mean, if you're literally talking about $800 million, $900 million in a day, that's $800 million or

Starting point is 00:16:40 $900 million of extra buying from ETFs on top of the normal spot market. So price should naturally rise if that continues. I think it could be just as simple as that. I think sort of as a corollary to this story, we need to talk about the hyperbolic huge price predictions as we always do, because a lot of them are based on this ETF buying. This one from Standard Chartered, 150K by the end of 2024, more based on the sort of new positive crypto rhetoric from Donald Trump, and then the thawing, of course, of the Democratic Party as a result of that. Them saying 150K, we got Novogratz saying 100K if it breaks 74K, basically a new all-time high, blue skies go to 100. But then we have the wild predictions from VanEck, 22K by 2030 for Ethereum.

Starting point is 00:17:24 That's not particularly wild. But if you read the report, what was actually notable and exceptionally interesting about how they came to these numbers, they're basically valuing Ethereum like a tech stock and not like a cryptocurrency or a digital gold or any of the things they've given to Bitcoin. They literally went in and dug into cashflow, projected cash flow over the years, plus the Ethereum spot ETF. And their bull case was 154,000 by 2030. So we got like 150, 100 to 150 by the end of the year for Bitcoin and then jumping to 2030, 22K, maybe even 154K on Ethereum, I think there's two categories of number predictions at this stage. There's the far outs, right? Call that the 2030 style predictions. ARK and Cathie Wood always do

Starting point is 00:18:13 these too. It's sort of grounding. And I think that what those are useful as is less price predictions and more, to your point, Scott, methodology experiments. They're ways of thinking about how the world might choose to look at this asset, right? They're sort of intellectual exercises that could ultimately influence, you know, sort of the shape of the real world, but they're mostly intellectual exercises. You know, what would it look like if we treated Ethereum, you know, if we valued it like a stock because of the dynamics of, you know, staking and cashflow, et cetera, et cetera. Then you have the second set of predictions, which are, you notice that these 100, the 150, those are actually more restrained than we were getting earlier in the year before the Bitcoin spot ETF, because they are now pegged

Starting point is 00:18:54 against more evidence of what we've seen this year, right? So Novogratz talking about 100, that's different than him predicting 100 six months ago, because obviously we have a much better sense of information. Same with that 150. It's a lot closer to where we are now. Obviously, that would still be a very exciting number to hit. But, you know, I think these are two pretty separate categories of types of guesses and, you know, good for different things. Yeah, absolutely agree. And to me, it's just really important that they're actually taking a look at how Wall Street might view these things. And when you start to frame Ethereum like an NVIDIA or another platform, it becomes very, very different.

Starting point is 00:19:31 The sort of prices that you could see down the road. But I guess we'll have to revisit this on a Friday 5 in 2030. Yeah, I mean, listen, these things are also acts of they're sort of trying to will self-fulfilling prophecy into existence, right? Like part of the reason that you publish these things is to try to get to people to think about it in such a way you know yeah so i think the other uh huge story which is a crypto adjacent is obviously roaring kitty coming back game stop everything happening there and you look at this game stop chart since it came back pumped up to 64 bucks way back down to 17 up down up down up yesterday massively now trading ten dollars down pre-market which will open in about two minutes absolutely absurd price action all in the back originally

Starting point is 00:20:18 a roaring kitty just tweeting a few memes uh but then he disclosed a massive options call position on gamestop which now i believe uh was worth roughly 586 million dollars yesterday guy half a billion bucks uh position on gamestop it's absolutely astounding and now he's back on youtube in about two hours. Yeah. The stream. Look at the comments going right now on a stream that's happening in two hours. Holy crap. I mean, it is unbelievable the amount of attention around this. I mean, the whole thing was kicked off with just a meme, literally, of a guy sitting up in his chair.

Starting point is 00:21:04 This ignited this whole frenzy. You know, there are some interesting things that are a little bit different about this time around. One is that it appears that, you know, the apes are a little bit more willing to kind of just watch him do his thing versus all sort of pile in behind him. You know, but it's almost like performance art at this point

Starting point is 00:21:23 that's trying to trigger or sort of force the government to figure out, you know, what, what market manipulation actually looks like, you know, he hasn't said anything about GameStop. There's never been a GM, you know, like it's, it's, and you're allowed to share your positions publicly. There's, I mean, there's nothing wrong with saying I have a huge options position. Exactly. And a million people have pointed out like, how different is this than, you know, Bill Ackman going on CNBC and, you know, and making his case about why he thinks things are the way that they are, you know, it's, it's all part of the game. It's just people are uncomfortable or the traditional financial system is uncomfortable with an outsider doing it and an outsider doing it with the full power of the internet. You know, the, the, the big magic number that everyone is sort of, you know is rotating around is, I think, $67 per share, and he gets to a billion. Yeah. And he almost touched it last night in aftermarket. It's just absolutely wild. I mean, we'll see what this stream says. I think one of the big questions

Starting point is 00:22:19 is, where did this huge bankroll come from initially? People have been trying to figure out, was it even possible? Did he have that money himself? I had read that in his testimony a few years ago, he had said that he had made out to the tune of $50 billion. That's not enough for this position. No, but if he went all in, GME, 3ME, like, you know, three X earlier this year, maybe that, you know, people have been trying to sort of stretch it out and figure it out, but there's, there's a lot of mystery and intrigue on this one. So I think this is going to be, let's put it this way. I would be very surprised if more people weren't watching this YouTube stream, then we'll watch Powell's, uh, FOMC speech next week.

Starting point is 00:23:01 By a hundred X. Yeah. By a hundred X. I think it it's it's just absolutely astounding exceptionally fun to watch at the very least even if you're not participating in it to see what the markets have truly become and then of course as i said sort of crypto adjacent this has sparked a major run in meme coins because obviously gme is viewed as a meme stock and there's even a gamestop inspired meme coin that went up thousands of percent

Starting point is 00:23:27 when Roaring Kitty first came back. Now up another 80% here. I mean, it's just bananas. And the honorable mention obviously goes to Jim Cramer, who once called GameStop arguably the worst company in America, says it now has enough cash to become something other than a meme stop. Congrats.

Starting point is 00:23:42 Uh-oh. Well, I guess it's going to be over soon. No, Roaring Kitty is literally going to be homeless by the end of that stream. Exactly. Exactly. Listen, if you can't have some fun with your financial nihilism, what are we even doing here? Financial nihilism it is. Did Travis Kling coin that or did he borrow it? His thread about it was amazing. I think it was Dimitri Kofinas from hidden forces who's the first to at least popularize that term there you go see you're a wealth of historical knowledge absolutely love it all right man that's all we got friday

Starting point is 00:24:14 five back glad to be back i will we will definitely be back next week assuming you can make it i can i will be here next week awesome we're gonna get we're gonna get consistent again these uh the conference schedule uh with a sprinkle of COVID makes it a little tough sometimes to get these done. Yeah. It's funny. Cause you mentioned to me, we should have done this live in, uh, in Austin. I'm glad we didn't because I would. Yeah, exactly. Yeah. COVIDing myself. Awesome. Exactly. All right, guys. Thank you so much for listening. Follow NLW. Listen to the breakdown every day. I know I do. I see all the comments and say, wow, he's a knowledgeable guest. Well, he does this every day about all the key stories.

Starting point is 00:24:49 So he's always on top of everything happening in this market. That's all we got for you today. See you guys next week. Peace. Cheers. Let's go.

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The Wolf Of All Streets - Bitcoin's Big Break: New All-Time High Ahead!

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