The Wolf Of All Streets - The Bull Market Will Continue | Friday Five

Starting point is 00:00:00 We went from the bull market is over. It's all going to zero to we are so back in just a matter of days. It's like gladiator. Are you not entertained? What a week for Bitcoin price action. And of course, for the news. Luckily, we have NLW here to unpack all of it with me for 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 go ahead and hit that like button. Good morning, sir. Another wild week in the crypto sphere. Truly, truly. This has been the least quiet summer that I can remember, I think. Yeah, and a couple of weeks ago, we were sort of lamenting that maybe we weren't going to have much to talk about. Oops. No, no. Presidential election cycle. So to that one.

Starting point is 00:01:13 Yeah. Presidential election cycle. And then somehow all of them finding a way to involve themselves in some manner in crypto. Not on my bingo card, but here we go. Just looking at prices. Bitcoin back over 60,000. I think over a 10% candle just yesterday. It was one of the biggest candles literally in Bitcoin history, apparently. I mean, just an absolute wild week. Interestingly though, Bitcoin was kind of on a downswing before the Monday global market crash, I forget to call that. I think now we get to like Mark safe from the yen carry trade t-shirts. But on Monday, it seemed like we were going to go full black Monday, everything was going to die. But Bitcoin had sort of been trending down the entire week. So what do you make of sort of that big Bitcoin drop of one from 70,000 to sub 50,000? It's no joke. Yeah. I mean, so I think it's,

Starting point is 00:02:06 it seems pretty clear that it was kind of a couple of things going on, right? It was just the confluence of factors. There was certainly Bitcoin front running a little bit of what was going to come, you know, because it's the only market that trades, you know, perpetually, but then it also was just sort of, you know, dealing with whatever we would have been analyzing basically had it, had the, the had the yen not happened and had the macro factors not come in the way that they had. We were just in another period of down sideways consolidation. What made it feel notable was the peak move that Sunday that really kind of ramped up into what was going to be this sort of big Monday cross-market collapse. Otherwise, I don't think it would have been all that notable other than

Starting point is 00:02:49 we're just trending in a certain way during the laconic months of the summer. Yeah, I think it was sort of the Bitcoin Nashville hangover price rose massively into the potential Trump announcement, a lot of excitement. And then you wake up on Monday and you're like, it's still here. There's I mean, there's also speaking of that, I mean, it also has clearly become correlated, you know, or at least more correlated with people's perceptions of how the US election is going to play out, you know, and that was that that week that that was happening was, you know, sort of, you sort of excitement around the Democratic ticket coming

Starting point is 00:03:25 back to the fore. So I don't think that any one of those factors alone explains everything, but they all kind of add up to something that, I don't know, just makes it look pretty coherent, at least, let's say. Yeah, we've unpacked the carry trade and the entire situation here. But just, I mean, for the quick recap, it was a bad day on Monday. $6.4 trillion was wiped out from the stock market alone. I mean, now, luckily, J.P. Morgan is saying that three quarters of that global carry trade is unwound. I guess the question with markets in general now is, was it just the carry trade? And if this unwound, was there more contagion that we're going to hear about later? Is there going to be a bank that failed or a credit event or something that's a result of it?

Starting point is 00:04:08 Or is this simply like these people got wrecked? We've seen the carry trade wreck entire markets before, guys. I mean, this was like the GBTC widowmaker that kind of destroyed crypto for an entire cycle. So you have to at least have your eyes open. Yeah. I mean, it's interesting. I feel like in some ways we are, I mean, this happens in crypto, but it happens in traditional markets as well. We're so focused on narrative explanations that we tend to just sort of, you know, gloss over just market structure issues, right? And it's always some combination of the two. But with this one, you know, this was a very crypto-like crash just sort of across risk markets in general, where everyone was racing for all of the narrative explanations, right? It was about the job performance. It was about sort of the Fed not cutting fast enough. It was about this and that and the other thing. And really, it seems to have been largely structural based on this, you know, this specific factor, not entirely, of course, like, you know, you see kind of the legacy, there is link, there remain lingering questions, let's say, around some of the things that were,

Starting point is 00:05:14 you know, the behaviors that were normalized in advance, right, like the AI conversation has continued to be sort of this hanging chat, people asking whether that's, you know, the market has gotten ahead of its keys on that particular trade. And so even though that was structural largely rather than, I think, narrative driven in terms of this specific crash, it creates more of a context to have sort of self-fulfilling prophecies in the narrative explanation. But ultimately, it was not what people thought it was going to be just based on that narrative explanation alone.

Starting point is 00:05:45 Yeah. But of course, now that we're so back, baby, as I said before, we have to already start talking about the fact that Bitcoin's back to 100,000 by the end of the year. Nothing has changed. It's amazing. And by the way, this is how I feel because as we've unpacked this, still summer doldrums, sideways price action. There's going to be these spikes down. There's going to be these moves up, a ton of liquidations, classic. But now, nothing's changed and we're still seeing the 100K year end target. So has anything changed for you on any of this? No, in fact, nothing changed even during it. This was, I think, actually representative of a thing that we're likely to see more and more of. Bitcoin will be correlated more in the short term with the rest of sort of the risk asset market as it gets, you know, as the sort of ETFs propagate, and it just

Starting point is 00:06:37 becomes sort of normalized across more people's portfolios. It's inevitable. What's more, it's likely to be a leading indicator in the exact same way that we saw because it moves faster and, you moves faster and constantly. And in many cases, it's going to be more violent in the short term just because of the nature of sort of the community who's trading it. But at the same time, this was, I think, the first time where there wasn't a single person, no rogue commenter trying to blame this one on Bitcoin or crypto, right? It really was just part of a larger story. It was notable for its lack of notoriety in this case. And I think that we're just going to see more of that, right? So if you take that view, then what happened looks just completely normalized, right? There were things going on in Bitcoin, as we were just discussing, that were maybe sort of, making it weaker coming into this thing. This macro thing happened. Bitcoin led the charge because it always does because it's trading constantly. And yeah, and then it recovered right on back because people, you know, got up, dusted themselves off and realized that actually nothing had changed even more than like, we always

Starting point is 00:07:38 say nothing has changed. But in this case, there really was nothing about Bitcoin that was driving this. Yeah, the only thing worth commenting on, I agree with 99% of that. There were a couple Bloomberg and such articles saying Bitcoin has failed as a store of value. Bitcoin is not digital gold, but they quickly disappeared into the ether and got no traction. So they still try to throw those narratives out there. It'd be funny to see them comment now that we're back in the 60,000s right yeah it's just a short-sighted view everything all correlations go to one and a risk off event and you get the biggest bounce from this it's been it's this this this is just twitter farming i mean it really is it's been this way forever it's always joe weisenthal god bless him you know like he just

Starting point is 00:08:22 knows how to get tweets. It's just the same commentary every single time. And it never makes any more sense than the last time. So I think that this might actually be quietly the biggest story of the week, which is Morgan Stanley tells wealth advisors they can pitch Bitcoin ETFs in a first for a big bank. I've been interviewing Matt Hogan and the Bitwise guys very regularly. He kept saying, listen, Q3, Q4, the wire houses are going to come online. Only 30% of the people out there even have access to these products. Guys, just be patient. It's all coming. And then soon after, Morgan Stanley made this announcement. Now, to be clear, this is for Morgan Stanley's

Starting point is 00:09:02 wealthier clients, $1.5 million in assets. But now, a Morgan Stanley advisor, they have 15,000, can call you if you have chosen a higher risk profile and say, I want to add this to your portfolio. And at the same time, we had BlackRock last week, their ETF expert saying these are going to be part of constructed portfolios. You're going to be passively having these added to funds, and you're not even going to know it. I mean, this is really happening. Yeah. So I think that this is, at the same time, as big a deal as everyone is trying to make it, and also radically less so when it comes to expectations of what it's going to do for

Starting point is 00:09:43 demand in not just the short term, but the medium term. I think that people are, they're looking for a new narrative juice, which I understand, but like, I don't believe that this is going to show up meaningfully in this quarter or next quarter, maybe in the quarter after. I think that the people who are in sort of, you know, the category of wealth advisors who are now online for this to show up for, by and large, have at least thought about consider Bitcoin before and haven't jumped. Now, the fact that this is being more normalized will have an impact on them over the long term. But the reality is we're now getting back into the territory where retail's continued antipathy towards this sector

Starting point is 00:10:24 is going to start to merge with this sort of wealth management clients, right? The part of the market that has not come back online post FTX is individual people who are outside of the crypto sector actually buying into this space, right? It just has not. They are still the most hostile kind of off on the sidelines, completely disinterested. I mean, this is one of the biggest reasons that I think that the market cycle is so screwy right now and it doesn't really reflect things. There have been no catalysts that have brought people who weren't in before into this space right now, I don't believe.

Starting point is 00:10:56 And I think that this is sort of yet another factor that on its own, the availability of Bitcoin is not going to create new demand for it. Now, where that gets a little blurry is if people, if these products start to just passively include Bitcoin in their composition. I mean, that's a totally different thing because you're not relying on the end investor to make that decision. You're relying on them to trust their intermediaries. So, you know, over the long run, absolutely huge deal. I just think that if we think that it's going to be a huge driver and, you know, Q3, Q4 of price appreciation, I think we're bound to be disappointed. A hundred percent agree with that take. I think it's plumbing, right? The ability to do it is what is important, but it can't speak to the fact that they're actually going to.

Starting point is 00:11:41 And I think you're absolutely right. But people should understand, we obviously see these narratives all the time. BlackRock owns 15% of MicroStrategy, whatever it is. BlackRock owns 20% of the Bitcoin miners. No, they don't really. That implies that it's active investment that BlackRock is believing in these industries. No, what they do is they index and they put things into models and you buy them and you don't know it. And that's what, to your point, would be the huge unlock here. They have to add those because they're rebalancing portfolios and products that they've created in the past. It always makes me laugh.

Starting point is 00:12:17 You know, you have these people who just emotionally despise an Elon Musk or Mark Zuckerberg. I would never own Meta. I would never own Tesla. And then if you took a deep peek into their 401k or their IRA and all the index funds they add, they're probably 10, 15% of their portfolio is the companies that they hate the most that they would say they would never buy the stock of. That's going to be Bitcoin. That's the unlock. 100%. Yeah. And I'm here for it because it does improve your Sharpe ratio. And that's the pitch, whether you like the asset or not. Now we have to, though, talk politics and man just keeps going. Right. And we now have this Politico here. Harris triggers crypto tug of war between democrats it's very obviously that we now

Starting point is 00:13:05 have the rocana soto torres type democratic politicians who are pushing harris very very hard to include crypto on the platform to come up with at least a reasonable uh response to sort of trump's pivot and then you still have the bradmans and Elizabeth Warrens very aggressively on the other side. And it's causing a bit of a fracture in the party over crypto specifically, not a fracture in the party generally. And we now have, this was punted, but White House officials meet with crypto leaders. This is another round table with the Mark Cubans and the Rojanas of the world trying to convince the Harris campaign that they need to have a platform here. But to Cameron's point, Kamala, she's not showing up, right? This is like a couple of low-level aides going to meet with a few Congress people who are just begging, begging,

Starting point is 00:13:56 begging to get this on the platform to save them from voters. And if you guys want a great take on it, Balaji kind of breaks it down here. But it is true. The Democrats right now, even though she is not president herself, are in a position for better or for worse to actually do something, right? Like Donald Trump has the luxury, as always,

Starting point is 00:14:19 when you're not the one in power, you can say anything, right? You can make all kinds of products much harder to govern. The Democrats, for better or for worse, as I said, right now, would need to do something for anyone to believe that. Fire a Gary Gensler or put up better people for the jobs that are available, not the Crenshaw's, and stop the SEC. And it's just not happening. Yeah. I mean, look, the conversation around this that we're having, let me be frank,

Starting point is 00:14:45 is fucking stupid. And crypto should stop having a dumb conversation. There are people in crypto who are always going to be for Trump because they are Republicans, they're conservative, and that's the way they were going to vote. There are people in crypto who are progressive, who are never going to vote for Trump, no matter what. And then there is a second tier of division, which is people who are single issue voters and people who are not. And in the category of people who are not single issue voters and who are Democrats, it does not matter that Trump is so much better and Republicans are so much better on these issues. What this group, who is a meaningful group, is trying to figure out

Starting point is 00:15:21 is whether there is any room for them to work with the leaders they have. They're not looking for some like held hostage, prove it like Balaji or Selkis is trying to get them to do. Like it's, it's absurd. And they don't, they don't care. Those people who are not going to vote for Trump under any circumstances do not care ultimately in terms of whether they're going to allocate their vote to the Democrats or not around this list of demands that people have. And to act like somehow it's surprising that the Democrats... Here's the other thing. Republicans have decided that this is a meaningful issue for them. The Democrats have decided that it's not. Now, the Democrats can be punished for that at the polls, but it's like the conversation, we keep having this conversation as though like the Democrats agree that it's an important issue. It's just not

Starting point is 00:16:07 to them, you know, it's, it's not the same issue. And so I don't know, I'm getting kind of frustrated with the discourse that we're having here clearly, because it's just, we're rounding this circle of, uh, of people not understanding what's going on in terms of, you know, where people are. And, and by the way, the group that is progressive and will not vote for Trump under any circumstance are just being screamed at so loudly, which is fine. It's a prerogative of everyone else to say, you're turning your back on the industry. We live in a society where you're allowed to say everything. That's what makes it great.

Starting point is 00:16:37 But I don't know, to think that that group is somehow going to change. I guess that my point is that when you look at these sessions, the goal of them, I do not believe is to convert the democratic party and sort of win all these people who are going to vote against them. Anyways, it is simply to ensure that base, that one fourth of the pie that we just talked about, the progressive Democrats in crypto who are also not single issue voters, that there is room to be worked with in a future administration that they're going to make their bet on. That's it. It's not even a conversation.

Starting point is 00:17:10 It's a tourniquet, right? It's like, stop the bleeding and- Yes. Great, great, great frame of reference. It's like, we're going to hold our nose and vote for you when it comes to my crypto side. So please, God, let me have some semblance of an idea that there might be room to work. Now, that said, I do think that that's why the people that look like they're going to be in positions to be appointed are the most important signals even for that group, right? Hold aside the like, it's unrealistic at this stage that the Democrats are all of a sudden going to use their power in the last two months that they're in power to do anything different. I do think that it is a meaningful signal around who

Starting point is 00:17:47 they're discussing for appointments into those key positions. That does tell you where the next likelihood of a campaign is going to be. Yeah. I mean, a lot of people pointed to this crypto-friendly bank ordered by Fed to limit risks from digital asset clients. This was viewed as another Operation Chokepoint 2.0 situation that a lot of people looked at, saying every bank, the Paris campaign should be talking about this and stopping. To your point, this is not within their power. This is the FDIC. That's kind of a broken narrative. And actually, Customers Bank kind of admitted that they did something that maybe weren't in line with compliance and that they would.

Starting point is 00:18:24 This bank isn't getting shut down. Right. But sort of an example of what you're saying is maybe there is a gray area and it's not as black and white as I made it to be. And a lot of these people do make it out to be. And your point, I think, about voters is well taken. I had this argument with Rand Nooner and others on a crypto space because he's in South Africa. I just don't understand how anyone could vote for Harris. You hate America. You're a socialist.

Starting point is 00:18:49 You're a communist. And I tried to explain, we don't have anyone. You have Trump voters that are voting for Trump, as you said. And then you have a lot of people who are voting against Trump. You don't really have anyone voting for Harris yet until she has a platform, but you had a lot of people that wouldn't vote for Biden. So the people who emotionally would not vote for Biden, but emotionally would not vote for Trump, that's what accounts for the race getting closer now. And it has nothing to do with crypto. 100%. It's just a very complex situation. Now, again, I am not in any way arguing that being single issue from a crypto perspective is an illegitimate point of view. I think it's a totally rational point of

Starting point is 00:19:29 view, given how antagonistic things have been, given that it is a livelihood-threatening thing. I'm just pointing out that if we want to have a smart conversation about this, acknowledging that we're having different conversations at the same time, I guess, is my point. Yeah. And we can inflate all of them together and make it about us every single time. It's not true. I'm guilty of it to some degree myself. So it makes for a good clickbait and it's hyperbolic. But the fact is, we're a small issue that could be meaningful, but not going to be the immediate priority of a candidate who's been here for two weeks. I mean, listen, I will say that the fact that it is more on the agenda, as much as that wants to be written off as not good enough, is a signal that the loudness is

Starting point is 00:20:17 working. So maybe the point is to just keep screaming as loud as possible, because that's the way that our politics works right now. Loudness working, though. So we obviously know where Donald Trump now stands from a platform perspective on Bitcoin. I think we've agreed that it's a net positive. It's in the Republican platform. He said all the right things. Well, the Trump kids are getting in on the action now.

Starting point is 00:20:45 Donald Trump Jr. is launching a crypto platform to take on the banks. Donald Trump Jr. has finally revealed what his cryptic DeFi post on X is all about, and it's got nothing to do with meme coins. So Eric Trump basically tweeted that he's fallen in love with DeFi, got something coming. Then the next day, Donald Trump Jr. sort of followed it up. And now Donald Trump Jr. says, what we want to do is take on a lot of the banking world. I think there's been a lot of inequality and that only certain people can get financing. So this notion of decentralized finance is obviously very appealing to guys like me who have been debanked, saying they're going to launch a DeFi platform. Listen, on the one hand, if you guys are really catching up and genuinely into this and understanding the plight of the unbanked. Amazing. But the other side of my lizard brain goes to like, welcome to 2020, dude. Yeah. I mean, listen, we're going to launch a DeFi platform.

Starting point is 00:21:36 Yeah. Listen, I think I tend to be, this is an area where I'm like, my base level is to be uncynical about the sort of road to Damascus experiences that people have with crypto because everyone goes through it. Almost everyone comes for the number go up and stays for some other reason. Right. And so, yeah. And so, you know, the, the, the idea, like, you know, it's, it's, it's harder to not be skeptical when there's somehow some political affiliation, obviously. And I think that that skepticism should be higher in those circumstances. But if we cut off everyone who seemed like they didn't understand it a little while ago, and then seems like they do, we'd have no one left here. So again, ultimately, it'll all be about action. And frankly, the funny thing is, if you have Trump himself getting into sort of policy and the big important things like the right to self-custody.

Starting point is 00:22:26 And then you have his kids fucking around with DeFi and meme coins. That really gets a pretty full cross-section of crypto right now. So it really touches all the hot spots. I can't say that they're doing it on purpose, but you're right. I mean, they're in every single corner. I mean, in the meantime, while telling tall tales about Trump's Trump themed token, RTR dumps 95 percent after Sun denies link to the token. I had to plug my nose and read about this a little bit. believed once again, like the Shkreli situation with, uh, Baron Trump before that there was an official meme coin coming out, uh, affiliated with the Trumps because of these tweets and defy. And Eric Trump was like, dude, what is wrong with you people basically? And this token completely

Starting point is 00:23:18 rug pulled, but you have like, what's his name? Ryan, Ryan Fournier. I don't even know who these people are, but,, but a lot of people closer to Trump are huge Trumpers that were pushing the narrative that this was actually official. And then I think you had a bunch of crypto people that were as usual, like early insiders kind of shilling it without discussing it saying they got rug pulled by the Trumps. Come on, man. I'm not, I don't know what anyone did. I have no judgment, but why? Why are we doing this? You literally have Donald Trump on the international stage forcing Bitcoin as a main issue and strategic reserve asset and CBDCs. And on the flip side, his kids

Starting point is 00:24:00 are tweeting about whether RTR is an official meme coin officially associated with the campaign. I can't. Yeah. I mean, I don't have much here. For me, it's always with these questions. It's like, what's the complicity of people who are actually sort of pushing this and what they knew? I feel like the interesting question for me with these things is always how many people were tricked versus how many people handicapped the odds that it was real at around 10% and said, screw it. Because if it is, the chance that I lose my $9,000 on my 10,000 investment is higher than the fact that I make 900,000, but I'm going to go for the big odds because screw it you know and i calculated the product that it feels like there's got to be a lot more of that to me than just the like the the you know ignorance

Starting point is 00:24:50 of the reality or likelihood that this was not real but who knows yeah i just don't like maybe i don't understand why this is so deeply on the radar of the actual Trump family or why they felt compelled to tweet about it. It only makes it worse. I understand they're defending people and making sure other people don't get hurt. It's a no-win situation. But the fact that this can be happening concurrently with Bitcoin being on the international stage as a potential global strategic reserve asset, it's the most crypto thing ever. It really is. You cannot get the good without the bad in this space. It's just the reality. Yeah. And speaking of the most crypto thing ever, we finally can wrap a bow on XRP. Four years in the making, we get $125 million

Starting point is 00:25:40 civil penalty when the SEC was asking effectively for $2 billion. Zero disgorgement, which means that nobody was hurt by any of this. Such an absolute indictment and smackdown of the SEC for doing this in the first place. I mean, what a conclusion. We basically got the Ripple secondary sales are not a security last year, that sort of being echoed here. And a small fine that Ripple would have paid, put it this way, four years ago, if the SEC had said, hey guys, we'd like you to pay a billion dollars and you'll say no fault and you can go on with your lives, Ripple would have said, here's two and a tick. Yeah.

Starting point is 00:26:25 And now they get off for $125 million after four years. Yep. Two of the interesting points that I think that people have been making. One is, boy, if the SEC couldn't win this case, the ability for them to kind of push their theories through on others is really tough. I think someone was pointing to charts showing Ripple Labs communications compared to the price of XRP in the early days. So that's pretty damning of the SEC strategy. Second, and I think that this is a really interesting point too, I saw a number of people saying that one of the downstream implications of this is that it really impacts the SEC's ability to win concessions in advance of actually having to fight legal fights because of the threats of these big

Starting point is 00:27:10 fines, right? Like a big part of the SEC strategy has been to say, you're going to be facing, you know, a billions effectively like company ending levels of, of fines. If you don't just agree to our terms now, you know, we're giving you an you an opportunity to admit fault and get out with your shirts on. And that's going to look a lot harder when they're getting reductions in the fines by like 90%, whatever it ended up being. Yeah. I think your point is right. It's just one more major kneecapping of the SEC's ability to do anything. They bully everyone. They know that 99% of these platforms who they could go after will never be able to afford even the legal fees to defend themselves. And so they just

Starting point is 00:27:50 take their quote unquote wins without anybody admitting fault. I don't think they understood how motivated and well-capitalized this industry was and what would happen when they push this hard. And it's just another example. And it should be noted when we get into politics, because I see it all the time. This case came from J. Clayton. Gary Gensler inherited it. Yeah. I mean, look, I think that the underestimating the willingness to fight of the crypto industry has been the biggest political miscalculus of its opponents basically at every single case. And this is just sort of one more stamp on that.

Starting point is 00:28:31 Yeah. Well, that wraps it up for the week. I think we covered basically everything Bitcoin now back to 60,000. Are we so over? Is it all over again? I don't know. If we go to 59, there's a chance we'd go to 58 according to the technical analysis. It's terrifying. If you close your eyes and talk about other stuff for a week, it turns out it looks basically the same the whole summer. Funny how that works. Then we wouldn't have jobs. What would we even talk about on a Friday

Starting point is 00:28:59 if we didn't have Bitcoin's very important price actually to talk about? And then, like you said, you zoom out and it's like, it's just kind of the same as May or June, July. Well, at least we have politics to talk about to keep us entertained, guys. That's it for the Friday Five today. Of course, follow NLW. Check out The Breakdown every single day. You make my life so much easier because you show up and you just know everything about these topics already, except for I finally got you with the Trump meme point. I know. I was very appreciative that you looked that up. If you go down that rabbit hole, your brain is going to just explode.

Starting point is 00:29:35 Self-preservation. Yeah. Well, guys, I hope you all preserve yourselves over the weekend and have a good one. We'll see you back on Monday and And of course, next Friday for the Friday five. Thanks, man. Bye. Later.

The Wolf Of All Streets - The Bull Market Will Continue | Friday Five

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