The Wolf Of All Streets - Massive Bitcoin & Crypto Crash | SEC Issues Meme Coins Policy 🐶🚨

Episode Date: February 28, 2025

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There is blood in the streets. The question is, are you buying? We have a massive Bitcoin and crypto correction underway with questions about the macro hacks and more. This has been an insane week in crypto. NLW and I will unpack everything happening with the market and the news here on the Friday five. 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 and hit that like button. You can like the show, but you don't have to like the market. Going to bring on NLW right now. The one thing I do like, as I said to you right before the show, is that I am not at ETH Denver because that seems like the worst place on Earth you could possibly be right now. Yeah. Yeah. I mean, I guess there's probably a lot of places that have open bars and stuff at night. So

there's some some upside. But beyond that, I don't know, man. Drink away those sorrows, man. First, listen, we it's the Friday five review the biggest stories of the week. But there's one that just hit that's an honorable mention that has nothing to do with crypto that just had me laughing. So I got to bring it up. Citigroup mistakenly credits customer account 81 trillion in near miss. So they're supposed to this person just supposed to get $280 bucks.

And City Group just small rounding error through $81 trillion into this person's account, which begs the question, how do you make a mistake like that? But be like, how does a bank just have $81 trillion to credit to someone's account? I think there needs to be like a finder's keepers rule where if a bank makes a mistake that egregious, you get something out of it. I mean, that's just an absurd number, 81 trillion. You should get to at least keep like 800 bucks or something, you know, like a fraction.

Rather than the nearest point, 0.00001. Here we are looking at the market, Bitcoin at 82,000, actually looking kind of decent at the moment. Would you know that it went as low as 78 to 29, obviously all coins getting shattered alongside it, which leads everyone to wonder what happened to the Golden Age of crypto. What happened to the world's most pro crypto president? Is that what's going to happen here? Obviously, I saw on Bloomberg today that 80% of the gains

in legacy markets have been erased since the election. Over 50% of the stocks in the S&P 500 are down more than 50%. Obviously, all coins largely trading below where they were at the election, but Bitcoin is still holding up a bit. Bitcoin set for worst month since June, 2022, crazy. Worst week since November that year. We had the worst three day slide since FTX and that wasn't even counting yesterday.

This is pretty savage. Obviously the headlines just keep on coming. What's going on here, man? I mean, I think that everyone's trying to figure that out. The obvious proximate cause of all of this is volatility following Trump policies and the shaking fear that maybe the man doesn't care about the stock market in the way

that we thought he was going to, right? I mean, that's really what it feels like. It feels like the markets are, one, nervous about the idea that their assumptions around how much the stock market was gonna be used as the metric of administrative performance is actually true. But two, it also kind of feels to me like they're putting this new administration to the test,

right, that the market is trying to you know Scream and holler and make their opinions known By virtue of this, you know, they're they're basically saying there's gonna be a cost You know a political cost for these policies and and you know, you're gonna have to decide what to do with it I it feels very much You know crypto in this situation feels very wrapped up with the rest of the risk asset world versus something that's sort of independent. Now, of course, to the extent that it is about Trump and Trump policies, crypto is highly associated with those

things. So it's, you know, perhaps a little bit more than even its normal kind of leading edge indicator type of approach. But that's what feels like it's going on to me. But, you know, I'm sure there's lots of lots of other analyses and interpretations out there as well. Yeah, it's certainly a huge part of it. Obviously all of these stories about tariffs and I think marketate uncertainty and one day it's a tariff on one day to

tear off one day it's 25% one day it's 10%. So I think there's a lot of confusion. But listen, when you add up Doge and tariffs and all these things, we're effectively in a low liquidity environment with Austerity yeah of sorts, right? And I don't think that people kind of had that mentally as their framework when they approached the Trump market to be fair I think

Rip the band-aid off if this is what you intend to do and get it over with now Probably the best time politically for them to allow the market to fall, get what they need done, and then attempt to pump it, I guess, into midterms. But this is not what people signed up for, certainly in crypto when they were thinking about the Trump presidency. But how much do you play in, which we'll get into the hack? Obviously, I mean, there's been just a few kind of things unique to

crypto, I guess, that have been bad, the hack being one of them and the tariffs here. Do you think that any of those kind of crypto native narratives have much to do with it? Because the market's down, but it's not down. I mean, we're getting, you know, all coins are down 60, 70% a month. I think that so we had already identified, I mean, we've been tracking for the last couple of weeks, the the broader, you know, shift and the imbalance between, you know, not just retail attitudes and institutional attitudes, although that was part of it, but also the vagaries of

retail, right, the difference in Robin Hood retail versus, you know, by bit retail, for lack of a better term, right? Meme coin retail. And so there already had been that split. I think that the, where we were even before all of this was significant narrative exhaustion around everything that wasn't Bitcoin. You know, Solana was being dragged by the rest of the sort of meme coin come down. So crypto had more, sort of farther to fall it felt like because of it was running up against those walls already. But I don't know, I think that everything is about sort of the bands of what would be, it feels to me like the macro is driving the overall, but there's all these reasons to

be not that enthusiastic about the absolute dog but there's all these reasons to be, you know, not that enthusiastic about the absolute dog shit that's available in the crypto markets already that just makes it in this context, you know, it just, it just hurt even more. So you know, look, I think that if you're trying to understand the, the, the, the side of it or the part of it that's connected to macro, Bitcoin is going to just continue to be your best most interesting barometer for that. Everything else shows the crypto native pieces surrounding it. Yeah. My take is once again,

short-term pain for long-term gain. We'll get into a lot of it, but the tailwinds for Bitcoin are still astounding. All the things Trump largely said he would do for the industry he is doing. So these are very short term things as the market absorbs it. But the fact that we have the SEC that will get into what's happening there, all of the pro crypto appointments across the board, all exceptionally bullish to me long term. Yeah. No, I mean, listen, I think that the other thing about this is that this bull market, the sort of straight line bull market, since it looked like Trump, you know, since basically, the crypto markets determined that that Trump was going to win this thing, hasn't had any sort of big term correction. Now, I don't really think that this sell off is, you know, the standard or kind of historic 30% bull market, you know, shed that we've seen in the past.

However, you know, it it one thing that's bullish, I guess, for for Bitcoin is that because we do have that patternicity, even if the circumstances are totally different, it creates a kind of a narrative floor, I think, that as we start to turn, you know, once we kind of like hit wherever the bottom is gonna be now, there's gonna be, there's this natural narrative that people are gonna be able to draw from that says, hey, look, you know,

we always experience these 30% draw downs, you know, on our way back to the top. So don't stress about it, you know, we'll keep going. And a lot of this, you know, a lot of these things are psychological games we play with ourselves along the way. So I think that there's, I certainly am not waking up in cold sweats or anything because of this.

It's just the most dramatic one of these we've had since the full bullishness of a change in guard in Washington taking over really started to get digested by the market at this point nine months ago now. Yeah, I mean, just to wrap the price action conversation for transparency, I bought Bitcoin at 82,000 and 79,000 here, I bought Ethereum at 2,100, I bought Solana at 1,2,650.

When I take a look at the fear and greed index at 10, which is multi-year low when I see everything massively oversold. For me as a chart guy, I see bullish divergences with RSI on every single chart. It just seems like we hit that irrationally oversold and are looking for a big bounce. I think the bottom is close. And so I'm confident in buying here. Even if the bottom isn't close, obviously, none of this is financial advice. But even if the bottom isn't in, we're clearly discounted relative to where people were. You don't see these big multi-day 25% sell-offs.

And I think that one of the most common mistakes is people thinking they have to perfectly time things rather than just generally time things. This is a discount opportunity. It may not be the biggest discount opportunity we have this whole cycle, but it's a good one, you know, so Yeah, I mean, I have pretty high conviction that some price that will trade multiples higher and not many multiples lower. That's

all I need to know to be a buyer. The next story obviously is the buy bit hack, which sort of dropped after we did the show on Friday last week. Obviously, that has now been attributed to North Korea and the Lazarus group. For those who missed it, and I know you didn't, because we've been talking about it all week $1.5 billion, largest hack in history, Ethereum hack, but now we're starting to get some actual clarity onto what happened here, whose fault it

was, how they were able to exploit cold wallets and multisig. And I think one of the bigger stories here is how successful Lazarus has actually been in laundering this Ethereum with the entire world watching. To me, that's been one of the shockers that they've still been able to cash out hundreds of millions of dollars here,

which is obviously being chased. Here's that forensics report. Maybe you can dig into what happens here with this hack. It is so beyond my pay grade to really dig into this hack. I think that the key takeaways, though, from kind of a layperson standpoint is that it was extremely sophisticated. It was not like some bybit sitting there twiddling their thumbs like idiots or anything like that. I think that the takeaway is that Lazarus has gotten extraordinarily more sophisticated when it comes to these things. Security gets more, not less challenging. We cannot operate as though we just

think we have these things solved. We kind of need to expect more from exchanges, more from, you know, from sort of the existing custody infrastructure. I think it's another great reminder of the challenges of keeping your crypto on exchanges. Although even that's sort of less clear than it was. I think that one of the positive pieces of this is that rather than the Spider-Man finger pointing, the industry is doing a lot of trying to rally and collaborate to, the industry is doing a lot of trying to rally and collaborate to,

you know, it's basically crypto versus Lazarus right now is sort of the vibe out there. And I think that that's very positive. I think that crypto is an extremely, you know, when it marshals its power together, it can do very, very powerful things. We've seen this with policy. I think that, you know, it's a lot of credit to Bybit for the way that they've sort of rallied the world behind them. You know, I don't, my impression is that they haven't shirked responsibility where they've needed to have responsibility. But you know, I think that it's, Lazarus is a fact of the world that we live in. And they just rose up and showed that they are, you know, really, really good at this. And to fight, we're going to have to be really good as well. Yeah, it seems like the wallet infrastructure from safe was actually where the major exploit

was that bybit followed their normal protocols. But listen, we all know that any system that's built online, hackers are going to be one step ahead and you're just trying to catch up and figure out what they can do. And they showed exactly what they can do and they showed exactly what they can do here. It's pretty terrifying to be honest because you know you're told don't keep your wallet in exchanges, self-custody, but a lot of these same sort of exploits and phishing and mistakes are made in self-custody as well. It's pretty amazing to me. I'm not surprised but it's It's pretty amazing to me. I'm not surprised, but it's eye opening that custody is still such a massive problem in crypto at every level.

Yep. I mean, look, nothing is a silver bullet. This is why it's sort of imperative for everyone to take it seriously, right? To figure out the systems and risks that they're willing to take. It's not as clean and clear. You know, I think that to your point, for a long time it's just been a, just use a hardware wallet and you're good. And it's not even that clear, or not even that obvious as well.

Obviously these systems are getting more and more sophisticated. The good news is that there's a lot more incentive for, you know, especially as institutions come in to have sort of different levels of custody and different approaches to custody. But it's a real challenge out there and it's one that's not going away. I don't anticipate that we will ever in crypto have a time where we just feel comfortable with this. The incentives are too high. The incentives are too high.

The opportunities are too immense. It's just going to be a fact of life forever. There will probably be a time in the future when we're talking about Bitcoin being stolen from Bank of New York, Mellon or State Street. Almost for sure. Yeah, so it's coming. Just be an issue of how well you're insured

and how well they cover customer assets and what systems they have in place for that. The next story, obviously, Coinbase case dropped by US SEC as agency reverses crypto stance. This was dropped with prejudice. You can see Brian Armstrong simply case dismissed and of course, Paul Gray, while their head counsel goodbye and good riddance. But this really isn't the only story right now from the SEC, it's almost hard to keep up. I mean, in the last week or 10 days roughly,

Coinbase, Robinhood, Uniswap, OpenSea, Consensus, did I miss any? I mean, they have just unwound Gary Gensler's entire legacy in a matter of weeks. Yeah, I mean, this is what I think a lot of folks were waiting for. We had all of these indications that things were turning around and that this SEC was going to handle things differently. The big outstanding question had been the court cases,

the actual legal actions, the enforcement actions against companies. That has now clearly started to shift. The last question for some had been, is there any logic or reason to which ones are outstanding versus not? It seemed as though it was literally just a matter of the sequence of upcoming court dates

from a prioritization standpoint, and that continues to look like the case. So, you know, not everything has been closed out at this point, but it certainly appears that the trajectory is all of those enforcement actions getting closed or resolved in some way Yeah, it feels like if you're left in a week or two Maybe there's some actual fraud there that they're investigating because clearly the sec's new mandate with the way They're setting up their systems and organization is to go after actual fraud and leave anybody who's trying to innovate alone

Yeah, how about that? That's crazy, crazy that they actually would follow their mandate and the law. But I think that this goes back to the conversation at the beginning, which is that the things that are happening under this administration are long term, exceptionally bullish for crypto like these tariffs and the macro and all the things we discussed at the beginning, even a hack here and there or the Trump token should be nothing in the face of this turnaround from our biggest enemies. Yeah, I look, I think that the one agree with all of that to the, to me, the big thing to start watching for, we're still in policy cleanup phase, Where it gets really exciting is when we get to actual

policy making phase, particularly, I think, with the SEC and the potential for safe harbor type stuff. I think that the most deterministic impact that this SEC could have on the shape of crypto is creating regulated, safe, legal space for experimentation with security like things around tokens. That's where the floodgates get open. That's where people actually start to do really interesting things that they've wanted to do for a decade now. That's where people have an incentive to stay inside the regulated market instead of go outside of it. So and we're still not even there yet. We're getting, you know, kind of nudging towards that. But basically the point being that even as

bullish as all this stuff is, there's more bullishness to come, I think, when it comes to the likely trajectory of policy in the US. Yeah, they've used the eraser to get rid of everything that's bad, but still need to flip that thing around and start writing actual regulation and legislation that will give us clarity. But I think we're going to get a safe harbor type proposal and things are going to move forward nicely. We're talking about getting rid of our worst enemies. Well, speaking of worst enemies, we've got Circle and Tether trade views on US regulation as stable coin war heats up.

Jeremy Allaire firing some public shots across the bow of Tether basically saying that anyone who's going to operate in the United States should be heavily regulated here, maybe have a banking relationship in the United States. This is sort of him saying the quiet parts for many months out loud. And then Paolo Arduino quickly firing back from tether and basically saying that USDT is the most successful tool

for US dollar hegemony and distribution across emerging markets. These guys are going to, you know, obviously fight for their own companies and the future of their stable coins in the United States in the broader sort of, you know, context of stable coins being the lowest hanging fruit and probably the first thing to be legislated on in the United States. Yeah, I mean, this battle of this clash of the Titans was completely inevitable. It's been playing out behind closed doors

in Washington forever. It's now breaking out into the mainstream. There's clearly narrative jockeying going on, circle taking advantage of the fact that everything right now is bring it back to America, do it in America. That's sort of all the rhetoric that we're getting from this administration. I think that they're playing off of that. You know, there's huge financial stakes here. I think that Circle has for a very long time been positioning

itself as the sort of de facto US digital dollar. That's what they want to be that. And so this, you know, makes sense in that context. However, I also think that there are fairly serious consequences for many in the crypto industry who do not like this sort of approach to business competition. Nick Carter's real loud about this right now and he's hardly alone. I have a feeling that the bigger narrative

in stable coins as we approach actual legislation is going to be the crypto incumbents like tether and usdc first the big banks that are coming in. Yeah, there's, there's absolutely a lot this could backfire very aggressively to sort of be you know squabbling amongst ourselves when you know, Bank of America is determining that they're gonna you know, Yeah, let me show you guys a video. Here's the CEO of Bank of America for anybody who may're gonna launch a stable. Let me show you guys a video. Here's the CEO of Bank of America for anybody who may have missed his comments this week.

Let's just show the video. ... which is gonna be a full dollar backed type of thing, which is no different than a money market fund with check access is no different than a bank account really. And so if they make that legal, we'll go into that business. So you'll have a bank of America coin in a US dollar deposit and we'll go into that business. So you'll have a B.A., a Bank of America coin and a U.S. dollar deposit, and we'll be able to move them back and forth because now it hasn't been legal for us to do it,

but it's just then like another foreign currency. The question of what it's useful for is gonna be interesting. I mean, this is pretty clear here that we're gonna have JPMorgan coin and Goldman coin and Bank of America coin and everyone else coin. If we're looking for institutional adoption of Tether or Circle, where do you think the institutions are going to go when we have

our trusted Wall Street banks here saving the day with their own stablecoins? I like to think that everyone knows that Bank of America is a piece of crap, and they're super lame, and so maybe they won't get a lot of traction. But Jamie Dimoncoin is definitely going to be a hard competitor is when push comes to shove. Yeah, so I really think that Circle and Tether are going to sort of have to get on sides with one another and fight for the industry and the private stable coins that they have

before the big banks take over everything. And finally, this is back to the SEC and Commissioner Hester Peirce, hard to keep up with everything they've been doing, but SEC publishes meme coin stance, reinforcing Hester Peirce's comments that meme coins are not securities. Here's that staff memo. This also echoes what David Sachs has been saying largely in defense of Trump token, that these are more akin to collectibles

than they are to securities. I mean, you know, this is just a lot more clarity on a nonsensical market. This is kind of what we assumed, but still good to have it on paper. Yeah, you know, I read an early version of the memo that was titled, Stupid, but not Securities. Just kidding, that's not true.

But yeah, no, look, I like the Hester has been pushing, I think, the most middle of the line, common sense argument about this, which is basically, it's not the SEC's job to tell you what you can, what stupid thing you can or can't invest in. It's also not our job to fix it when it goes bad. But the great thing about Liberty is you get to make those decisions and this sort of is the legal instantiation of that approach, which is good.

Look, meme coins should live or die on the basis of their own merits, not based on some sort of weird regulatory treatment. Yeah, I mean, we didn't have this story queued up, but obviously as we have Hester Perce talking about meme coins not being securities, we also have the House Democrats floating legislation that's taking aim at Trump

crypto meme coin, but basically saying that no federal, uh, agent or politician should be able to launch their own token. I have no idea whether this will make it through or not. I wish I had the video of the guy pointing at a thing, explaining what a rug pole was. I don't know if you saw it, but he's on that floor of Congress with like a poster board that says rug pull is, but explaining this. So listen, I mean, we're gonna get more clarity, I guess. I would say that they should be focusing on insider trading from politicians as well.

But maybe politicians also shouldn't be firing off meme points. There are a lot of things to be annoyed at Democrats about extending the sort of, you know traditional understanding of the types of ways that you can benefit from your office to not being able to pump a meme coin seems fairly reasonable to me.

If we're gonna be trying to give trying to give any side credit at any time. I do think that there's always a prioritization question anything, you know, look, you know, any anything that has the word Trump associated with it to give any side credit at any time. I do think that there's always a prioritization question. Anything that has the word Trump associated with it is a political fire, either good or bad. So it gets messy when those things get connected. But look, it feels completely inevitable to me that all of these crypto interactions will just be treated like normal financial stuff where you kind of can't do that while you're in, you know, in office. I also think that in general, look, Americans don't like it that Nancy Pelosi, you know,

has made a boatload of money trading stocks while in office. I don't think they're going to like it, you know, if they make money off of crypto either. I think that it's just that this is, you know, we're so divided in so many ways that when you can find common sense things, like people shouldn't profit off their political office, at least while they're in their office, you know, you gotta jump on those things.

Nancy's just a really good trader, you know? See why she gets so much heat. Excuse me, her Paul, that's her husband's name, right? Yeah, anyways, yeah, I don't think that politicians in general should be financially capitalizing off of their constituents, call me crazy. So I'm on board for any of that. I think we covered it all actually pretty quickly there.

Is there anything we might've missed today? I think everyone's just licking their $82,000 wounds right now, but you know, look, we'll be back next week. I think it'll be interesting to see how much has changed. And then we are in a we're in a very volatile moment. And look, I think what crypto people need to remember is that we are constitutionally more suited for volatility than

any of these normies out there. Like, why are we the ones stressing? It's ridiculous. Like, we're the ones who ride ride these waves, like it's, you know, like it's like it's a beach in summer, man. I just hope we're not talking about swastikoi next week. We almost definitely will be. Oh, God, kill me. The Kanye token. If you want something to put in the ceiling, if we get a rally, that can be your biggest

culprit. I'm not going to fully commit to this yet, but I've spent seven years or eight years in this industry not not really like calling out people and being loud about how much awful they are. If this thing happens, I might reverse some policy and go in on some folks. So we'll see. It could be an interesting episode to watch. I joined, I had to actually look back.

I joined Twitter, I think in like November 2008, and among my first 10 tweets were my hatred for Kanye. and it's been consistent for literally decades. So this is one that I will get right. All right. So everybody's on board with hating Kanye. Now it's great to tune in next week for for fireworks on Friday five. All right, guys, that's all we got for you. Check out the breakdown. Follow nlw and we'll see you next week

thanks man bye guys Let's go.