The Wolf Of All Streets - Chainlink Rally, FTX Repayments & Jupiter Airdrop | Friday Five

Starting point is 00:00:00 Chain link is rallying, making a new high for the year. Everybody talking about real world assets and how chain link may be the way to capture that value, but has been one of the most bullish tokens of late. FTX is going to repay their creditors in full. We're going to talk about why I just put that in air quotes. And the Jupiter airdrop has the Solana world and the crypto world in general on fire. It's Friday, which means it's the Friday 5. NLW and I review the biggest stories of the week. Let's go.

Starting point is 00:01:08 Let's go. here. We were going to try to not say ETF, but I have a feeling we're going to say ETF. Only a little though. Only a little today. Just a nice little baby check-in. We're going to do the Salt Bay thing. Just a little sprinkle of ETF today. Well, this wasn't necessarily my intention, but I think we should actually start with a bit of the macro because today's job numbers dropped. The US economy added 353,000 jobs in January as markets mull a slower pace of rate cuts. If you guys weren't paying attention, I believe it was about 175,000, 180,000 that was predicted. And they revised this time the December number up, meaning that they added more jobs. We've kind of been seeing these revisions where it looks like jobs are great, and then they revise them down. In this case, it seems things are only getting stronger. And if you guys don't know why that matters, we live in the upside down where a lot the first FOMC meeting of the year and traders have basically been pricing in and betting on rate cuts for this year. Everyone knows that that's where we're headed. The Fed has indicated that that's where we're

Starting point is 00:02:12 headed. It's a question of when it begins, right? So we're now over the hump into a new phase of the cycle from a monetary policy standpoint. However, what we have is a situation where the Fed, because basically they're seeing inflation continue to go down in the way that they want without any sort of negative consequences of overtightening, it gives them leeway to just not do anything for longer. And basically what Powell said on Wednesday was that it was unlikely, basically from where they were sitting, it was looking pretty unlikely that March was going to be when rate cuts started. So I think between the beginning and the end of that conference, the market had been pricing in a 60% chance or something like that of rate cuts before the meeting, 35% chance coming

Starting point is 00:02:58 out of it. Now with this, with these sort of numbers really reinforcing the thing that Powell was saying was giving them a longer leash basically to do nothing. The market is even sort of now wondering if May is going to be when these rate cuts start or whether they're going to be pushed out farther. My money is on pushed out farther, right? And predictive markets have been wrong this entire time for anyone who's paying attention. And about a year ago at this time, we were supposed to get, I think, three or four rate cuts in 2023, right? And that was being priced at 85, 90, 95% chance that we would see cuts. There's literally just no reason for them to do anything right now, unless there's something under the hood that we don't know about that's already broken.

Starting point is 00:03:42 Also, for anyone not paying attention, when they pivot is usually when the stock market crashes. Yeah. Well, the other interesting thing, which obviously they, you know, Powell didn't get into this dimension, but the countervailing force of big tech and particularly AI enthusiasm as a sort of risk on factor in a sea of things that might be risk off for the last year, also has created a weird dynamic where it's almost like the market is behaving in two separate ways. It is sort of less slavishly devoted to monetary policy than normal because there's this other factor that keeps it sort of its animal spirits alive. And so it even doesn't feel really like it's been totally kind of risk off and waiting. It's just an interesting dynamic right now that all of it definitely

Starting point is 00:04:32 points to Powell just sitting on his hands and the Fed having to do nothing. It's incredible to me that markets have remained this high for this long, that jobs have remained this strong for this long, that jobs have remained this strong for this long, that inflation has come down. I can't possibly even wrap my head around the idea that Powell pulled this off. There's really a soft landing. I can't. I don't know why. Maybe my bias was just so wrong. Who knows, man? It's interesting. I mean, listen, the good news is it's probably good for us, even if it's bad for the commentators. But as things go, better than some catastrophic crash because they overtightened or something like that.

Starting point is 00:05:17 Yeah, well, let's do the SaltPay thing. We've got a little bit of an ETF update. And the only update we're going to give you here is that BlackRock finally had more trading volume than GBTC in a single day, which is a big deal because that means that the GBT selling is slowing, but also that the BlackRock buying is increasing or staying high enough that it is bigger. This is what we all want to see. We want to see GBTC marginalized. Yep, absolutely. I mean, listen, this is actually two separate trends, which are both positive. One, as you pointed out, is sort of we want to see the sort of, you know, the GBTC trade declining and that it has been, you know, not as fast as perhaps everyone would like, but, you know, slow and steadily decreasing as a factor.

Starting point is 00:05:59 But then at the same time, in addition to just BlackRock trading more as an indicator that GPTC is showing less of an impact on the space, it's also positive just entirely in its own terms from the standpoint of there being these continued volumes weeks now after the initial launch. One of the things that would have been a question or was going to be a question was how much enthusiasm would there be after the initial pop? Was this going to be the type of thing where there's a ton of hype, race to a billion, a couple billion in assets under management, and then a real decline, but the volumes have remained really healthy and really strong relative to other ETF trading going

Starting point is 00:06:39 on. Yeah, it's been really impressive. And I think we're going to continue to see sustained demand outweighing sort of the supply side, which just to me is huge. Exactly, again, what we want to see. We don't need to talk about the ETF anymore. I think at this point, that's the kind of last, I'm sure we'll find a way. That was sort of the last straw and the last thing we needed to talk about to finally see gbtc losing the race there i really wonder if there's any buying in those gbtc flows or if it's literally all still selling but i think yeah who knows interesting to parse in the future the next one sort of uh the title here chain link rally we don't talk about uh altcoins in these projects very much but chain links link token taps 22 month high of 18 ending three month Now, A, it's interesting to see even amongst all this Bitcoin ETF hype that we can have all coins still booming and having these sort of select ones going up massively. But pretty big deal that this is making a 22-month high after sort of sitting at these prices for a while and after already having such a big run. And this really is, in my mind,

Starting point is 00:07:49 and if you read this article, because of the real world asset narrative, and maybe that's what's worth discussing here. Maybe that will be the king of the next cycle. Yeah, absolutely. I mean, there's a couple things going on. So one is, I think it absolutely does have to do with the real world assets narrative. This has been sort of the second place narrative throughout this entire sort of recent buildup where, you know, I mean, listen, it was even the second place narrative for Larry Fink, right? When he was sort of getting into the Bitcoin spot ETF, obviously, that's what they were leading with.

Starting point is 00:08:15 That's what they were going with. But he brought this up in every interview as well, tokenization of all assets. And now that's a big, exciting opportunity. We talked about how, you know, how he refused to make it an either or, right? Now, the other side of making an either or is not just sort of a boost for Bitcoin, it's a boost for this theme. Chainlink is sort of intersection of traditional finance and crypto finance in a way that is not predicated on this hype cycle, right? If you watch what Chainlink has done over the last couple of years during the bear market, it's been entirely focused on that. There's been a series of partnerships and launches and announcements that, of course, not really enough to make it through the din of Sam Bankman-free trials and things announcements that, of course, are not, you know, not really enough to make it through the din of, you know, Sam Bankman free trials and things like that. But they've been quietly

Starting point is 00:09:09 building towards this in a pretty kind of inexorable march. And I think that, you know, maybe now the market is catching up as that narrative catches up a little bit. Yeah, I agree. And just interesting to see that some of these monsters from previous cycles actually have a lot more left in the tank and can, I think, sort of rebrand and get a new narrative and move forward. So interested to see what happens with Chainlink. Now, something brand new, the opposite of Chainlink, I would say, is Jupiter rallies on with Solana supporters leading the charge, one of the most anticipated airdrops-based social media ire over its novel distribution plan. So nothing can go off without controversy, obviously, in the crypto space. You can drop millions, 700 million or so in helicopter money all over

Starting point is 00:09:54 people's heads and people are going to somehow find a way to complain about that. But this was huge, obviously a big fundamental event on Solana, but way out of my pay grade to understand and discuss. Yeah. I mean, listen, if Chainlink's potential ascension into the ranks of big, legitimate infrastructure for a new era between that intersects crypto and traditional finance. This is the straight up classic beginning of a bull market, we're so back baby kind of story. It's a hypey new thing on a chain, which to be fair to the Solana community is legitimately celebrating its continued survival and a return to excitement. But it's giving away free money in the form of tokens. It's all those dynamics. If you're watching from the outside and you don't particularly care or aren't invested too

Starting point is 00:10:51 much in the specifics, it just looks like a signal that we are really moving into a new kind of bullish time in crypto. And new bullish times are always going to look like the old bullish times in some ways. And this is that. Some people say that this time will be different. But I think, as you said, we have a clear signal that this time will be exactly the same. In your opinion, is this helicopter money and money printing, or is it a distribution of value? This is an argument that I've been having with people. Maybe it's somewhere in the middle but apparently the team sold a whole lot when yeah i mean listen i think you saw it but yeah that's what that's where the criticism comes from and then you dig into the tokenomics which i don't think are necessarily horrible but it's sort of like they re-skinned the old ido ICO technique and disguised it as an airdrop that was good for the community.

Starting point is 00:11:47 Yeah. A couple hundred million out. Yeah. Taking a couple hundred million out at this stage, I think is sort of self-evidently problematic. When it comes to, I mean, listen, when it comes to the question of whether it's a helicopter money drop or like actually a distribution of value, that'll be almost totally based on how things evolve over the remaining period. I mean, Jupiter's tried to signal in certain ways in terms of the lockups and when team distribution happens and all this sort of stuff that they're in it for the long term. But when you have that contradicted by the behavior at the very beginning, it gets a little dicey. But ultimately, if the market decides that it doesn't care that much, crazier things have happened than something becoming a legitimate play later on. But it's certainly not necessarily the portrait of a fair

Starting point is 00:12:40 distribution or a fair launch, at least as it appears currently. Yeah. And that's what it was obviously intended to be. Now we have to look at this guy, Sam Bankman Freed, FTF, FTX expects to fully repay customers, but won't restart defunct crypto exchange. A, I'll say that I'm pretty happy that we're not going to see FTX 2.0,

Starting point is 00:12:59 because I'm not sure that I can deal with seeing that in my sort of inbox and newsfeed every single day of the rest of my life. We can move on from those three letters finally. But what a misleading, utterly nonsensical headline to say they're getting fully repaid. For those who don't understand, they're getting fully repaid based on the account balance that they had when they went bankrupt, which is effectively $16,000 Bitcoin. I think it's like $15 or $16 Solana. Still better than other scenarios and bankruptcies like Voyager, but still, you're not getting repaid in full what your account is worth today. Yeah. No, this is... So the FTX basically decided very early on in the bankruptcy process that they were not going to even try to return people their crypto assets, because they didn't

Starting point is 00:13:52 have any right that the whole point the way that the fraud was perpetrated is that as soon as you know, your Bitcoin was purchased, it was shipped on over to Alameda's accounts. Actually, it just started there, basically. And they were betting with it, right? So they decided from a practical standpoint that they were never going to be able to sort of match crypto balances. So instead, they abstracted it all to cash. And your cash value at the time is what they're talking about repaying. So to Scott's point, if you had one Bitcoin, you got $16,000 or whatever, because it was

Starting point is 00:14:24 already low at the time of the bankruptcy. And really, that last week of when we were waiting for the bankruptcy to happen, really took it down its final peg. So it is totally misleading. You know, the FTX 2.0 thing is interesting. I'm certainly more in in your camp on this one than than I am in the disappointed camp, watching sort of ex-FTXer reactions, I think it's a little mixed for them because there are a lot of people who wanted to see this sort of like, you know, build back on the work that they actually did and have a chance to sort of like make it right and do good things. But I think for the industry as a whole, being able to fully put this, you know, behind us is a net benefit. It's some other exchange's turn to be

Starting point is 00:15:08 good. This is not a phoenix that we need to see rising from the ashes. There's no triumphant comeback because there was no triumph in the first place when you actually dig into it. When the phoenix was a fraud in the first place, I don't think you needed to rise again from the ashes. Some interesting nuance here, though. If you remember, people were buying other people's claims sort of at the beginning and throughout this process for $0.09, $0.10 on the dollar, even towards the end, $0.30, $0.40. Those kind of hedge funds and people taking large bets on this distribution are going to actually be the ones who make a ton of money. And there's a lot of people who sold their claims for pennies on the dollar. Yeah. And even up until recently, it was still, I can't remember exactly the number was, but I think Travis Kling from Ikigai was transparent with what they sold their claim for.

Starting point is 00:15:59 Or maybe he said, maybe you didn't give the exact number, but, you know, I think that even as of, you know, a month or two ago, it was, you know, 60, 65, 70 kind of cents. So there's still a big opportunity to make money on that. So, you know, good for them for taking that risk because it was not guaranteed, especially given the fact that it seems to be in large part based on the, you know, increase in value of a single venture investment that they're able to actually return this. So, you know, even riskier than it, I think, appeared at first glance to buy those stakes at those prices. They got super lucky. But to be honest, man, I'm really happy for FTX creditors that they did get super lucky. As bad as this is, it's a much better outcome than was anticipated, much better outcome than I think a lot of others had seen.

Starting point is 00:16:45 But at the end of the day, the real winners here are the bankruptcy lawyers who have charged hundreds and hundreds and hundreds of millions of dollars and the creditors who get paid on the value of the day of the bankruptcy with zero upside as these assets rise. It's just sickening, but glad that it worked out the way that it did. We have a little more FTX news. FTX is missing 400 million were stolen in SIM swap, SIM swapping hack. DOJ says they've actually charged three people over the SIM swap scheme that targeted FTX. A lot of people saw this right when this was all happening. I'm kind of hazy on the details,

Starting point is 00:17:25 but I remember that all of a sudden there was a 400 million went missing as the exchange was closing down, as there was the bankruptcy, tinfoil hats were that Sam and the team were running away with $400 million. And this was an inside job, but really this was yet another crypto SIM swap, which we've seen over and over and over again. Three friends from the Midwest having a $400 million party. Yeah. What a party that must have been for them. Well, now they'll get to a party with Sam. So maybe they won the sweepstakes, right? Because these guys are going to jail. And we have another bankruptcy closing. I mean, all of it in one week. Celsius to distribute

Starting point is 00:18:02 3 billion crypto to creditors. As F firm emerges from bankruptcy. The distribution will be made through PayPal and Coinbase. I still find it amazing that Celsius and FTX creditors who had literal frauds and Ponzi schemes at the top did better than Voyager creditors. What a system. But here we are. I mean, is this a are we tying a bow on this one? Is this closing yet another chapter? I mean, we haven't seen what's going to happen to Mashinsky, but at least Celsius creditors now know their path. Yeah. I mean, listen, the, in some ways the, the, the creditor outcome matters a lot more, you know, our, our sense of schadenfreude and justice and all those things, you know, sort of demands that there be some accountability on Mashinsky's side, but you have to think that

Starting point is 00:18:45 that's coming, right? His trial is set for September, could be pushed back, but, you know, it's unlikely that he escapes, you know, justice entirely. I think, you know, it matters more how much people get back, how whole they're made, how much they're sort of, you know, able to continue engaging, you know, as they wish with the space. So I think it's a, you know, as good an outcome as it can be. Um, I do think that the prosecutions are sort of an important step in, uh, in kind of the moving on, but I, you know, it feels to me likely that even that that one's going to be more of a sideshow than, uh, than for example, the Sam trial was last October. I think, you know, seeing SAM held to account was the thing that was the most sort of emotional, psychological scar for the crypto industry to heal. And now that

Starting point is 00:19:32 that's passed, you know, I mean, we'll see what the sentencing holds. But I think that the Machinsky trial will kind of, you know, probably be going off right at the same time as, you know, the markets are going off, because we'll be six months post halving, and everyone will be excited. And that's the way it should be. Let him get punished. Let him be held to account and let us move on and enjoy our lives, not facing down the prospect of jail. Yeah. Don't even give him the spotlight or the time of day. Let it die and just accept that he's the last vestige of another time, hopefully, in crypto, and we can all move on with higher prices and a lot more fun. We have an honorable mention story here, which is that layoffs are happening across the crypto industry and beyond. I don't have the whole list of layoffs in tech and all that, but

Starting point is 00:20:19 one of the lead stories, Polygon Labs cuts 19% of staff, 60 roles for enhanced performance. The Block is cutting jobs to achieve cap of 12,000 staffers. This one's a bit older. Near Foundation to cut staff by 40% says treasury remains strong. This is kind of echoing what's happening in the actual economy and markets, right? It's interesting. We have these huge job numbers, but then you see layoffs across tech and across these companies. I mean, are all these companies just getting leaner and meaner and kind of cutting off the excess? Or is there any sort of canary in a coal mine, do you think here with this job situation? I think it's more the fallout of things we've already experienced than a presage of what's

Starting point is 00:20:58 to come. I mean, listen, specifically with Block, for example, which is the biggest set of cuts, these were cuts that were announced last year, right? And they're just sort of following through on them. The total amount of cuts that they made, they're not intending. But the logic from Dorsey is that they just hired faster than they grew. And they have to address that balance. And I think that every company in tech, especially, has had to go through some amount of that reconfiguration as it thinks about, you know, what the sort of the right, you know, headcount actually is. As we've shifted from the growth at all costs world of the entire 2010s and the beginning of the 2020s into a very different world that's still emerging when it comes to efficiencies and revenue and profit and all those things. So I think that to some extent, you're seeing the sort of just recalibration going on. Now, bigger topic, maybe not for us for today, but some of the tech layoffs,

Starting point is 00:22:00 the big tech layoffs that I do think are presaging something else coming are more, if you look at Google and Meta, the layoffs that are happening there, those are actually pretty clearly driven by them implementing AI on their own teams, particularly around advertising products, right? You got Google and Meta both sort of pushing all of their advertisers to use self-serve AI-created collateral now, and that's reducing the need for real humans to create that collateral on behalf of clients. So that's a little bit of a different story. I think these ones in crypto are really more just sort of people shoring up their staffs in advance of a new cycle.

Starting point is 00:22:42 Yeah, it's different, but dare I say that's actually bullish firing. Yeah. Right. I mean, that's good for those companies. They're cutting staff, finding a cheaper and better way to do it. Sucks for the people who are losing their jobs, obviously, but that does tell you what the future holds for a lot of these companies, a lot of people who have sort of marginal jobs at those companies. That's it, dude. We did it in like 20 minutes, 25 minutes today. We absolutely nailed it. I love a quick recap of the week. And I think we got all of it done. I'm not sure if we missed anything, but if we did, it's always next week, right, man? So guys, you can follow NLW, check out the breakdown, everything that he's got going on. Of course, you can listen to this on his channels and on

Starting point is 00:23:24 his audio channels over the weekend. Other than that, man, thank you so much, guys. We will see you on Monday. Cheers, all. Bye.

The Wolf Of All Streets - Chainlink Rally, FTX Repayments & Jupiter Airdrop | Friday Five

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