The Wolf Of All Streets - Monster Week For Crypto - Here’s Everything You Need To Know

Starting point is 00:00:00 It's been an absolute monster week for the crypto news cycle once again. Hard to keep up with everything that's going on. Luckily, we have NLW with us to unpack it all for the Friday Five and let you guys know everything that you need to know that happened in crypto this week. 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. Man, what a week. I know we missed last week. The week before was insane as well.

Starting point is 00:00:46 Really? Governments are keeping us in business this summer, man. Usually this is the time. We had a glimpse of it. And I don't remember if it was then in April, beginning of May, where it started to feel like summer, right? Where it's like everything had kind of cooled off and everyone was getting frustrated because there wasn't much happening. But then the insane political process in the US just decided to kick the doors in and keep us talking throughout these summer months. So it's wild.

Starting point is 00:01:12 Yeah, I mean, I'm old enough to remember when the political environment in the United States for crypto was bad. It was contentious. Donald Trump was the successor of Bitcoin. Your kids are old enough to remember. You know, three months ago before donald trump made the pivot and we've gone from you know that interesting moment when a kid

Starting point is 00:01:33 asked donald trump a question about crypto and he came out in favor to all of a sudden him being the pro-bitcoin candidate to even speaking at the bitcoin conference, which is going to be like headlining Coachella in front of that crowd. I think we're going to just have like a full on MAGA rally in Nashville. And then literally the protection of crypto being added to the official Republican platform. Right. This this has gone beyond, hey, Donald Trump thinks he can get some votes. Ha ha. This is now on the official platform of their party for the election. Yeah. I mean, listen, so one of the big questions when all of this started, when we started to get the first nibbles of, hey, maybe I'll soften, maybe I'll

Starting point is 00:02:17 see this as a political opportunity, right? A few months ago was how far is he and by extension, the party, the Republican Party going to take this, right? Would it be a little bit of lift service, try to convert them? And it's been nothing but a steady increase in the drumbeat of sort of taking on this issue, which means one of two things, depending on whether you're cynical, realistic, or some combination of both. It either means that as thought, these people don't care about this, but it's polling really well, or not even polling, but just their perception is that this is a winning issue, that it gets louder.

Starting point is 00:02:49 And there's certainly evidence of that, right? I remember when Trump first started talking about this, he was vocally surprised at how much people seem to care about CBDCs. I don't think that he would have pegged that as an issue that people would have given a crap about, but they did, right? So there's been a little bit of that sort of just coming to realize that this is a bigger, louder block than perhaps they thought. But then secondly, you know, you have to sort of take off your cynical hat for a moment and remember, hold aside Trump himself, when it when it comes to just the Republicans in general,

Starting point is 00:03:16 there has been a loud group of people in that party, you know, elected officials in that party, who have been champions of crypto for quite some time, and Bitcoin specifically. I remember Patrick McHenry when the Libra hearings were happening back five years ago now at this point, and he kicked off with that incredible statement about the world that Satoshi created. And it was a pretty blazing banner that there were folks in Congress who were paying attention to this, particularly on the Republican side of the aisle, though not exclusively. And, you know, the fact that it has now made its way into the actual party platform means that it basically doesn't matter what combination of

Starting point is 00:03:56 sort of, you know, latent interest from existing elected officials has combined with the sort of, you know, the political calculus that this is a good issue. We have officially entered the political mainstream in a way that did not look possible even six months ago. I didn't think this would be possible in four, eight or 12 years that it would officially be on a party platform. Sure, having it mentioned and having a bit of legislation on stable coins or all the potential low-hanging fruit that we saw, but this is as main stage as it gets. And I mean, as we were discussing right before the show, Trump is going to eat it up when he gets in front of that audience.

Starting point is 00:04:38 This is going to just start the train rolling, I think, even faster. Yeah. So one thing we were talking about this and I was talking about this with my researcher, other Scott as well, that hold aside any sort of, you know, this is good because it allows him face time. It gives, you know, people in crypto the chance to get a little bit closer with the president and the people, you know, the former president and the people that surround him from a sheer calculus standpoint around what this particular politician responds to, I can't think of something more likely to endear him to us than the insanity that he will experience when he gets up on stage in front of the Bitcoiners in Nashville. Yeah, I really think it's going to

Starting point is 00:05:20 be absolutely wild. Interestingly, it was, I think, just last year at the Bitcoin conference that RFK was the crypto candidate and actually announced his candidacy. Right? So pretty wild. I've seen a number of different people, and this is very natural, I think, who get frustrated when something that RFK has sort of put on the map becomes adopted by the political parties. The thing that's important to remember is that this historically is the, that's what success looks like for an insurgent third party candidate. At least so far, we haven't broken through to the period where independents are actually independent enough to sort of break free fully. Instead, what success looks like for a third party candidate is, is placing their agenda firmly and squarely in, you know, either one of the two parties

Starting point is 00:06:05 or hopefully both. And to the extent that RFK was early on this, I think he should be given credit for helping pave that path that got us to where we are. I believe he'll be speaking as well, or at least that's the rumor. But there was a lot of conjecture as to what it was taking to get Trump to actually confirm. So it was announced two weeks ago or three weeks ago that they were already in talks. People were saying that maybe he would keynote, but obviously, as we know with any politician, if you're going to show up to an event,

Starting point is 00:06:31 you need to have a fundraiser, right? And what would a ticket look like and what would be the minimum? And I had heard conjecture, it would be about a million bucks as he would come for. I saw yesterday I was invited. The fundraiser is $60,000 a ticket. So at $60,000 a ticket, if he gets 100 people to show up, that's 6 million bucks right there. And they're expecting many hundreds, if not thousands.

Starting point is 00:06:53 So beyond even him getting on stage in front of this audience, he's probably going to raise $10 million plus. It's about $60,000 a ticket to a tech event. So I hadn't heard this, but you know what I hear when I see what I hear that is it's one Bitcoin. That's basically what he's saying. The price of this meeting is one Bitcoin. So people will make that connection. It is a broad strategy, clearly, get more people in at that level. I guarantee you there will be a lot of people for whom this would be the first sort of like big political donation, quote unquote, that they've ever made. It's very smart.

Starting point is 00:07:32 It's a smart strategy. I mean, I think a whale pass to the Bitcoin conference itself, which just gets you like an extra day and a party or something, it's like 12 grand. We know that the people who show up to this thing, even the retail that show up, have money and it's just, I mean, it's wild. It's like 12 grand. We know that the people who show up to this thing, even the retail that show up, have money. I mean, it's wild. It's wild. Do you have the actual statement from the Republican Party platform that we can pull up?

Starting point is 00:07:55 I do not have it in front of me, but I will look it up as you talk. We'll sign it down while we talk about it. So I think what's relevant about this too is like, obviously, we're talking about the political implications of it. I think that's natural, right? It's sort of, you know, the big story in some ways is just its presence at all. However, it's worth noting that this wasn't just sort of a lip service-y type statement. This was something that if you had asked the crypto community to come together to kind of write this, it would come out something like this, right? It was three sentences. I don't think it's in these 20 sort of overview bullets. I think it's deeper down in it. And it's in the innovation

Starting point is 00:08:36 section that includes AI and nuclear as well. Or maybe it doesn't include nuclear, but whatever. It's the technology section. But it enumerates a goal of a right to mine, of a right to mine Bitcoin, of a right to self-custody. It articulates an anti-CBDC position. It is a crisp, clear... It's a statement that I think hold aside the origins of it. If you removed American partisan politics from it, I think that you'd probably have something like 90% agreement among crypto holders around all of these principles, which is a pretty fascinating thing. I think that also reflects the fact that we sort of learned this week that in addition to the stuff that we've seen, that's been very public, right? The Ryan

Starting point is 00:09:22 Selkis, you know, being loud and sort of like leading the charge for this, you know, in front of the cameras, so to speak, that behind the scenes, there has also been a lot of engagement, right? Preston Byrne talked about how I think back in February, he was reached out to by a Trump surrogate and asked to really discuss this stuff, right? What would it look like to actually embrace crypto beyond just making statements about it in campaign speeches? What would it look like as part of a platform? And he said that he was sure that it wasn't just him

Starting point is 00:09:54 and there were others that had sort of been pulled in. But a lot of the things that he discussed were the things that ended up in this final statement. Yeah, it's wild as you read it that crypto is even mentioned there. And obviously, it brings us to the other side. We've had a clearly contentious relationship with the Democratic Party and crypto through the Biden administration. And they've been forced to, to some degree, back down, I would say, or at least chill their rhetoric. Now we'll get into SAB 121 later, but we know that we just had the round table, I believe now two days ago,

Starting point is 00:10:32 where Biden advisor, crypto leaders, and lawmakers discuss industry's future exclusive DC roundtable. I was actually supposed to interview Ro Khanna yesterday. It fell through, but I've had him on the podcast before. He's been actually trying to do this roundtable for two years. Forever, yeah. For forever. So this wasn't new to his defense. He's been pro-innovation, pro-Bitcoin, Democrat from Silicon Valley from the very beginning. But it took, obviously, fear of Trump's position for the Biden administration to actually let this happen. industry celebrities like Brad Garlinghouse and Anthony Scaramucci and all the big names,

Starting point is 00:11:08 obviously, there to discuss this. Brad Garlinghouse said it was a good start. Sheila Warren saying it was a productive step forward. We heard recently, I believe it was Pantera that said that Biden's interest in crypto now was genuine. I'm not buying it, right? We just saw the SEC had some action. Actually, there's news coming at 10 about the SEC dropping an enforcement action in a Wells notice from a few years ago that's going to be huge that I'm not allowed to share, but the SEC is chilling off. We saw them back off of others as well in the past few weeks, including Paxos. So a couple of things that I think are worth noting about this particular meeting. So to your point, Roe is not, you know,

Starting point is 00:11:52 Ro Khanna is not new to this conversation. He's not sort of just diving in to try to like, you know, unfumble the ball after it's been fumbled from a political process standpoint. And I think that it's worth remembering or digging into for those who weren't paying attention back then, that up until Luna a little bit, but especially FTX and the collapse of FTX specifically, it was remarkable the degree to which crypto had not fallen into strict partisan lines. During the infrastructure bill fight in 2021, yes, it was the sort of democratic leadership that snuck that provision in. There was clearly animus towards crypto in the treasury department. But when it came to trying to resolve it, trying to figure out

Starting point is 00:12:35 compromise language around the way that brokers would be defined and trying to protect developers and things like that, you had Republicans and Democrats lining up to try to fix the language. And you had Republicans and Democrats lining up to try to, you know, keep the language as strict as it was, right? It was not a clear line, you know, back in 2020, 2021. What's more, you had loud and vocal supporters of crypto on both sides of the aisle and watching any number of hearings would show you that. I think it is also fair to say that perhaps the Republicans who were louder back then had a little bit more esteem or just place in their party, right? You're talking about the head of the House Financial Services Committee. You're talking about someone who'd become the minority whip, right? These are folks who are a little bit higher ranked relative to their party than others. But it wasn't like

Starting point is 00:13:21 there was, even just on a numbers perspective, there was not just one party who was owning this issue. It was really only FTX that it started to get more stark. And my interpretation was always around that time, that it wasn't that all of a sudden the pro-crypto Democrats had gone away. It's that there had always been a competition in that party between the pro-crypto Democrats and the Elizabeth Warren and what would become the anti-crypto army. And in the wake of the FTX collapse, there was no one who wanted to stand in the way of the anti-crypto army anymore. There weren't people who were willing to expend their political capital to check that. And it didn't even really seem to me, and this is also the confirmation that I got from people who were behind the scenes in discussions, that FTX bred some big new set of political antagonists. It's just that the existing political antagonists had more of a free reign to go after it. And so inversely, what I think is happening now and what I think this meeting that Ro Khanna set up reflects is a shift where, again, I don't really believe that anyone's politics around this issue have changed. It's all just a balance of power question about who's able to lead the agenda.

Starting point is 00:14:33 The anti-crypto army had their chance. This has now become a political issue where the anti-crypto army's wing of the Democratic Party's ideas have been revealed to be a liability. And so the pro-crypto side of the Democratic party is once again getting a leadership seat on this issue. And that's the sort of shift that you're seeing. I think it would be way premature to think that anyone has actually shifted their opinion in the Biden administration. But the fact that the political calculus around it has changed is a meaningful signal. Listen, I think all those people were hushed and they're allowed to talk again. I think that's the reality, right? SBF crushed the perception of crypto with politicians of the Democrat Party because of Maxine Waters and Gary Gensler. And those who were pro-crypto had

Starting point is 00:15:15 to be quiet and get in line because of Elizabeth Warren's anti-crypto army. And now they're allowed to talk again. They never stopped being pro-crypto. They just stopped talking about it because it was politically unpalatable for their party. 100%. I mean, that's really it. But, you know, to watch what we say, watch what we do, not what we say situation. Biden can say whatever he wants, but he vetoed SAB 121,

Starting point is 00:15:38 which was obviously a bipartisan bill that came through the Senate and Congress. We've talked about it here before. Chuck Schumer, nine other Democrats flipped against Elizabeth Warren, literally right in her face as she was talking on the Senate floor, urging them not to. Went to Congress, I think 70 Democrats flipped. It went to Biden's desk, and as he had promised, he vetoed it. This would have allowed legacy institutions, banks, State Street, BNY Mellon, to custody, Bitcoin seems like the biggest layup for the government to say that we would want

Starting point is 00:16:08 these assets protected. And now it went back to the House for them to try to override the veto and they failed. So this remains in place. Watch what I do, not what I say. Biden can say whatever he wants. They vetoed this. Yeah.

Starting point is 00:16:22 I mean, listen, this is completely expected. The seriousness, I mean, listen, this is completely expected. The seriousness, I mean, listen, overturning your party's policy is a big step already, right? And that's why that was such a notable moment when it happened. Overturning a veto is such an incredible act of, you know, a declaration of, you know, war in some ways that I don't think that anyone realistically expected this in spite of it being frustrating. And, you know, listen, there are a lot of folks in the sort of political, you were focused on the political side of crypto who are, I guarantee you having conversations behind the scenes to figure out which of those Democrats who flipped only did so because they knew it was going to get vetoed. So it was safe space to do it versus who were seriously changing their opinions.

Starting point is 00:17:08 But from our standpoint, this was always going to be this way. It just sort of confirms that for whatever thawing there might be, it is at best a thawing. It's one of those moments where you want to put on shorts and go outside, but it's still freezing. Yeah. Now we can finally move beyond politics, at least slightly, to the German government and their selling of Bitcoin. Seems like they're almost done, right? We know they had over $2 billion in Bitcoin. They have less than 5,000 tokens left. It's just interesting, especially in this story, because Arkham and others can track these wallets, see this movement exactly. There's no conjecture

Starting point is 00:17:45 as to what's happening. The German government has literally no idea how to efficiently sell Bitcoin. They're dumping it on the open market on Coinbase and Tracted and other exchanges, and they should probably just hold it. I mean, listen, this turned out goddamn great, is how I would put this, right? If we had been here a couple of weeks ago or right when this is going down, over the July 4th holiday, we had the lowest liquidity period of the entire year meet Mount Gox unlocks plus German selling FUD. And we saw big dips in price because of that. I remember as I was paying attention to it, the first narratives as the Germans started

Starting point is 00:18:24 selling was, damn, they have enough that they could be doing this through the beginning of the fall, right? You know, there was this sort of worry that this would be this constant low-grade selling pressure. And instead, they just decided to fire sale this stuff. Like, I mean, literally hurl it out the window, you know, without any consideration of how to actually do it. Look, there's been numerous German politicians who are basically shaking their heads in disbelief at this whole strategy for numerous levels. But for us who are sitting here in the industry, I'm sure you've had this conversation numerous times with numerous guests over the past couple of weeks. This is one of those, it doesn't change any fundamentals.

Starting point is 00:19:03 You just get through. It's a single sort of moment of selling pressure. The fact that they decided to hyper compress it into whatever a small number of days is nothing but good for us from the standpoint of moving past it. Yeah. It'll be like the GBTC sell-off, right? Just this immediate knee-jerk reaction, and then it's out of the market and things probably float right back up when they're supposed to. I mean, in the same vein as this, we do have to give an honorable mention. We may have discussed it two weeks ago. I can't remember if it was last week to Coinbase, who got a 30 million plus deal with the US Marshals, which is a part of the DOJ to sell seized Bitcoin on Coinbase and other tokens and to custody it

Starting point is 00:19:41 while the SEC is deeming Coinbase an illegal exchange that doesn't have a proper broker license. And those very assets that they're allowing the government to sell there, they have deemed unregistered securities that Coinbase isn't allowed to sell. Just the insanity of this government and the right hand not talking to the left is unbelievable. Listen, if you're a person who thinks that one of the reasons that democracy is, for its faults, the best form of government we've yet invented, a big part of that is that the messy inertia of the system creates its own stop on things shifting too radically, right? From flying from one side to another.

Starting point is 00:20:24 And I think that anyone who's lived through crypto policy for the last couple of years has seen a firsthand example of that with fits and starts in one direction and one party, even one department going in two different directions at once. And so if you think that it's generally a good thing that things don't happen all that fast from a kind of a governmental risk standpoint,

Starting point is 00:20:44 there are worse things that could have happened. But it is pretty wild to see the blatant hypocrisy when it comes to these enforcement actions. And now we get to pivot slightly from crypto to crypto adjacent, but still sort of the United States government. And it's, of course, our friend here, Jerome Powell, king of the soft landing, earning himself a legacy as the greatest Fed chairman of all time. Slight sarcasm, but people seem to be very happy with what's happening. Inflation cooled for the first time in four years, month to month, only a 0.1% drop, but at least it was a drop month to month. And of course, we had expectations of 3.1% with inflation overall

Starting point is 00:21:22 year over year, 3% coming in, meaning more fuel to the fire that we might actually see rate cuts this time. I think we're at over 85% now on predictive markets of cuts in September. Jerome Powell may be getting what he needed here to give people what they're expecting, which is rate cuts? Should this even matter to Bitcoin? Is this priced in? I mean, what are your thoughts on this generally? I mean, it shouldn't really matter, but it does, right? The more that we intersect with traditional markets, the more that these things will matter, at least for a portion of the Bitcoin buying base, right? I think, look, my guess is that the way that history will view Jerome Powell

Starting point is 00:22:05 is that he was really great when the answer was staying the course, and he was really bad when the answer wasn't staying the course, right? A big part of our inflation was that we went too long staying the course. However, on the flip side, at least so far, his sort of firm or, you know, disconnected even hand in terms of, you know, being unwilling to entertain and even indulge in these sort of rate cut fantasies has paid off so far, right? Or at least it's made it so it hasn't contributed to a resurgence of inflation. To the extent that there's anything interesting about the testimony this week, it's that there are verbal indications that they are clearly shifting over in Fedland from the inflation part of their mandate to the employment part of their mandate.

Starting point is 00:22:50 The whole conversation was around that. It was paving the groundwork for that to become a greater concern. There's more softness being acknowledged in the employment numbers that we're seeing. There's an acknowledgement that they don't want to hold things for too long and potentially cause an unnecessary recession on the other side. But his default is still going to be to slow play it. And as we've discussed before, I think Powell is very aware of the fact that the second he gives an inch on turning around this narrative, the markets are going to race so aggressively into, we're now in the post-compression paradigm and headed back towards rate cuts that we'll never look back.

Starting point is 00:23:31 So his only control, I think, is when this thing starts. It's not how fast it goes. He literally is on the very, very last embers of his control. And once that gig is up, it's up for good, I think. Yeah. It's been interesting to see the market reaction. A lot of people were pointing to the fact that yesterday on this news, we saw tech sell off the first 2% down day, I think, in like a year or six months, whatever it was. I don't want to quote it. So we saw Nvidia selling off and tech selling off en masse, the S&P dropping, and people were scratching their heads saying,

Starting point is 00:24:09 isn't this good news? The cuts are coming soon. But if you looked, IWM and the Russell, which is obviously small cap companies, pumped massively. So this is a rotation actually into more risk on the news of what happened because those were the companies that were beat down because higher for longer was going to hurt them for so long. Now people are literally going, well, I guess we got the tech trade. It's great. Let's go into the riskier stuff. So just as an interpretation of the market, I think there was a lot of confusion, but people are really expecting this cut is coming. Listen, I think the best move for Powell right now, probably politically and for the actual market would be just do one 25-bit cut and then just do nothing for another

Starting point is 00:24:49 year. But like you said, I don't think that happens. I think the pressure once he turns to keep going is going to be too massive. Yep, absolutely. And the final story that we have today, CFTC Chair Rustin Benham says 70% to 80% of cryptos are not securities. To be clear, it was an Illinois court and he said Bitcoin ETH, definitely digital commodities under the Commodity Exchange Act. But then he did go on to say 70 to 80% of cryptos are not securities.

Starting point is 00:25:18 Gary Gensler is having just a rough, rough run here. Doesn't mean that this is true, but it means that the CFTC and SEC is still not giving an inch on who's going to eventually regulate this market and how these things should be qualifying. Yeah. I mean, I think the biggest thing to take away from this is the Overton window shift on this discussion, right? Six months ago, it would have been 80% plus our securities. And certainly the CFTC has a vested stake in this. Rostam Bedham has a vested stake in this. But the fact that this sort of passed without challenge and is, you know, this is now part of that discourse, I think, is extremely notable as just a further reflection of where we are and how things are shifted. Do you think it actually means anything as far as policy? Or do you think that this is

Starting point is 00:26:06 just jawboning from regulators looking for, you know, soundbites, clickbait, and jockeying for position maybe into the next administration? From him, absolutely jawboning and jockeying for position. The question is whether, as again, politicians are forced to actually deal with these issues, right? There's, you know, upcoming comprehensive legislation being debated. Does this sort of figure stick out as a reference point to begin the conversation? You know, if you're going into a conversation around, you know, where one of the key questions is how to deal with these things, are they securities? Are they commodities? Are they some in between? Then if everyone's, you know, from positions of authority, like Gary Gensler are saying, there are certainly securities, you know, from positions of authority, like Gary Gensler are

Starting point is 00:26:45 saying, there are certainly securities, you know, a politician who's assuming good faith is going to go in with that sort of perception. The fact that this is now a competing narrative means that I think a lot more people who still, for whatever reason, haven't been paying that much attention are going to go in with a broader and wider sort of sense of what the possibilities might be. And while they talk and discuss, we launched like 500,000 new coins a month on Solana. So good luck keeping up with that and trying to determine what those are from a regulatory perspective, right? Absolutely. No chance. I think we covered it all. Nailed it. 30 minutes. Perfect. Done at 9.30. Guys,

Starting point is 00:27:21 follow NLW, The Breakdown. Of course, you should be listening to it every single day, just like I do. Great coverage there. Man, it's just going to get crazier. So we knew that the election was going to get crazy and we thought it was going to because of AI and deep fakes and stuff. And now it's crazy for us. Now every day is going to be, how else will crypto be played into this? So it's going to be entertaining regardless. It is funny. As someone who does a daily AI show and a daily crypto show, I would not have anticipated that numerous days in the summer, there'd be more going on in crypto than AI just based

Starting point is 00:27:55 on the past couple of years. But politics trumps everything right now. No pun intended. Pun intended. I think we've got nothing but tailwinds for the next few months, but man, I guess I'll put on my, uh, my hat with my beers in it and my straw and wear an American flag and head

Starting point is 00:28:11 to the Bitcoin conference. Now, I don't know how that works, but you're going to be there. Uh, I will not be there, but I'll be watching for sure. Oh,

Starting point is 00:28:19 come on. Everybody. All right, man. That's all. That's all we got for you guys today. Thank you. Have a good one,

Starting point is 00:28:23 man. Bye. all right man that's all it's all we got for you guys today thank you have a good one guys

The Wolf Of All Streets - Monster Week For Crypto - Here’s Everything You Need To Know

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