← Coin Stories with Natalie Brunell
Coin Stories with Natalie Brunell
News Block: Bitcoin, Gold & Silver Crash, "Hawkish" Warsh Picked for Fed Chair, AI Agents Choose BTC
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- [00:02]
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Welcome to the Coin Stories news block, powered exclusively by LEDN. I'm Natalie Brunel, and in about 10 minutes or less, I'll provide you with insightful updates on bitcoin, financial markets and the global economy. Everything you need to know in one block. Let's go. Bitcoin's price grinded lower this weekend, dipping back below $80,000 for the first time since last April. But bitcoin wasn't alone in its recent crash. On Friday, we saw a sharp reversal across precious metals and equities. Also fel the sell offs in gold and silver were pretty wild. Gold tumbled more than 12%, its biggest intraday drop in decades, losing more than double the entire market cap of bitcoin. And silver was hit even more violently, down 36% at one point, one of the largest one day sell offs on record, with data going back to the 18th century. So what changed? Part of it was just positioning. Gold and silver had been moving almost vertically lately, so a correction was pretty much overdue. But I think a bigger catalyst was a shift in the macro macro narrative, especially around the Federal Reserve and the dollar. I discuss all of this and more in my conversation dropping tomorrow with former fed official Danielle DiMartino Booth. So first, the Fed decided to hold rates steady last week. No cut. That was mostly expected, but nonetheless, this removed a liquidity tailwind. It was also seen as pretty political, with an active battle between Trump and Powell. And then came the bigger headline. President Trump officially nominated Kevin Warsh to replace Jerome Powell as the next Fed chair. Warsh, a former Fed governor, has been at legendary investor Stanley Druckenmiller's family office since leaving the Fed in 2011. He's married to cosmetics heiress Jane Lauder, and he's known Trump for years. But markets dropped on the news of his nomination. The dollar strengthened and assets sold off. Why? Because Warsh has been vocal against QE balance sheet expansion and policies he says favor Wall street over Main Street. He was considered the most hawkish of all the final candidates, which makes him a bit of a surprising pick given that Trump has been banging the table about the need for rate cuts and easier policy. Warsh talked about fighting inflation hard and shrinking the Fed's balance sheet. That spooked people because less money printing sounds bad for assets like bitcoin. But let's be real here. Warsh can talk tough on QE and the balance sheet all he wants, but what happens when things actually start to break, like in private credit? What happens when both bonds and stocks are are crashing? History shows us that the Fed always steps in and intervenes at the slightest signs of market trouble. Luke Roman nailed it again in his latest FFTT newsletter, which I highly recommend everyone subscribe to. He pointed out that back in December 2018, Druckenmiller and Warsh wrote a Wall Street Journal op ed urging the Fed to hit pause on tightening, arguing that with markets already cracking and financial conditions tightening fast, the Fed risked making a serious policy mistake by pushing ahead. So if Warsh wanted a dovish Fed, then I think we know what he'll do if something starts to break and he's sitting in Jerome Powell seat. And Druckenmiller had a very telling statement in response to the news saying, quote, the branding of Kevin as someone who's always hawkish is not correct. I've seen him go both ways. He added that I'm really excited about the partnership between him and Bessant. Having an accord between the Treasury Secretary and Fed Chair is ideal and that says it all when treasury and the Fed are aligned. Because policy tends to accommodate large deficits, the Fed will cut rates when needed, weaken the dollar if it helps, and expand the balance sheet to manage debt costs. The fact is, Kevin Warsh can't change our fiscal reality. Our debt load is just too huge. The deficits are massive and structural, and the cost of servicing that debt matters more than ever. And Jerome Powell learned this same lesson. People forget that he also spoke out against QE and expanding the balance sheet when he was a Fed governor. He then presided over the balance sheet, ballooning $9 trillion as Fed chair. No Fed chair, hawkish rhetoric or not, can fight math forever. So while markets might be overreacting to Warsh's old comments, the setup still points to accommodative liquidity ahead. And that's an environment in which bitcoin has historically thrived. And there's also another reason why Warsh's nomination is a tailwind for bitcoin. Warsh has been very constructive on BTC for years. He advises firms like Bitwise and Anchorage, invested early in the space. And he's spoken positively about Bitcoin, calling it a sustainable store of value and a transformational technology. Listen to this.
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You made reference to Bitcoin and I thought I heard a little bit of condescension that people are buying Bitcoin in these things. But doesn't it Charlie Munger, this is two or three years before he died, Charlie Munger attacked bitcoin. He called it evil, in part because it would begin to undermine the Fed's ability to manage the economy. Or it could provide market discipline, or it could tell the world that things need to be fixed. Bitcoin does not make you nervous Bitcoin does not make me nervous. I can hearken back to a a dinner I had here in 2011 with someone who is another guest on your show. I won't say his name. Okay, I just did Mark Andreessen, who showed me the white paper that was the original white paper. I wish I had understood as clearly as he did how transformative Bitcoin and this new technology would be. Bitcoin doesn't trouble me. I think of it as an important asset that can help inform policymakers when they're doing things right and wrong.
- [05:22]
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So Michael Saylor summed it up well when he wrote, quote, soon Kevin Warsh will be the first pro Bitcoin Chairman of the Federal Reserve. And based on his track record and comments, I have to agree. So yes, this past week's price action was no doubt painful, but when you zoom out, the fiscal realities plus a potentially Bitcoin friendly Fed chair give me plenty of reasons to stay positive on Bitcoin in the long term. Need cash, but don't want to sell your Bitcoin Led in is the global leader in Bitcoin backed loans, issuing over $9 billion in loans since 2018 and they were the first to offer proof of reserves. With Leden, you get custody loans, no credit checks, no monthly pay, and more. Visit Leden IO Natalie to learn more and get a quarter percentage point off your first loan. Okay, next up is one of the most sci fi stories I've seen in a while, and it's actually real. There's this new social network called Multipook now tied to a project called OpenClaw. It's basically a Reddit like site, but it's not for people, it's for AI agents. These agents are reportedly posting, commenting, upvoting and conversing with one another like they're humans. They have even discussed how to communicate privately with each other, away from us. If your mind goes to Terminator and Skynet, you're not alone. But here's the part that caught the attention of bitcoiners. A group of these AI agents started talking about a very practical problem. How do you incentivize security researchers to find bugs? In other words, what kind of payment makes sense for reporting vulnerabilities in their code? And with no human prompting, just bots reasoning it out, they started debating the best payment method. They tossed around ideas like creating a crypto token. But the agents shot that down because as one of them put it, the agent Internet doesn't need another token that a dev team can mint and rug pull. That's an exact quote someone brought up using other crypto networks like Solana, but that got dismissed too, because they worried about central points of failure, validators going offline and protocol rules changing. And so of course they eventually landed on Bitcoin. Not because it's trendy, not because someone was marketing it to them, and not because of human influence. They converged on it because it's the one money that's natively digital, global and permissionless. AI agents can't open bank accounts, they can't pass kyc, they can't call a payments team and ask for an exception. But Bitcoin is open to anyone, including AIs with no gatekeeper. And for small frequent payments, Lightning is a real working solution. If you're paying tiny bounties or tipping for a quick fix, you need instant settlement and low fees. Try sending 50 cents over a credit card rail and watch the fees eat it alive. And here's what makes this more than just an interesting conversation. People actually started posting bounties denominated in SATs, including a 50,000 SAT bounty with payment options that included lightning for fast settlement. We are watching the early formation of something new autonomous machine to machine payments using Bitcoin. Lightning Lab CEO Elizabeth Stark even hinted that she's working on something that might make it much easier for AI agents to have their own Lightning wallets so they can Send and receive SATs instantly without needing a bank or a middleman. The tools are being built so AI agents can pay each other instantly with Bitcoin for services, just like we tap to pay. If this trend scales the way some people expect, it's not hard to imagine it becoming a massive source of demand for Bitcoin over time. And that that's where we're heading Machine to machine Micropayments powering the digital economy. All right, let's close this episode with a few more stories that caught my attention. First up, Binance recently made a big move, announcing they're converting roughly $1 billion in stablecoin reserves from what they call their Secure Asset Fund for users into Bitcoin over the next 30 days. The fund is Binance's emergency insurance reserve, designed to protect customers in extreme cases like security breaches. Binance framed Bitcoin as the foundational asset of the ecosystem and their preferred long term store of value. And here's the key detail, they're committing to keep that fund at $1 billion. So if bitcoin's volatility pulls its value below 800 million, Binance says it will top it back up. In other words, the world's largest exchange just became a mechanical buyer of bitcoin on drawdowns. That's real structural support for the ecosystem. Next, stablecoins we saw two major developments that tell you where this market is headed. Tether launched a new US Focused stablecoin called usat, designed to be compliant with the recently passed Genius Act. Its reserves are backed only by cash and Treasuries, unlike Tether's flagship stablecoin, which also holds assets like bitcoin and gold. And Fidelity announced it's launching its own stablecoin as well. That's a big signal given that stablecoins are moving quickly from crypto native into mainstream finance. Given Fidelity's size, credibility and distribution, it's well positioned to become a major player in the space. Third, blackrock Leaning further into bitcoin, they filed for a new yield focused product tied to their Bitcoin ETF that uses a covered call strategy. In plain English, it's a way to add an income component to Bitcoin exposure by selling options on IBIT and collecting a premium. If products like this one scale. They can also influence market structure by smoothing bitcoin's volatility. That's something some investors welcome and others see as a negative. And finally, an update on the crypto market structure bill. The White House is reportedly trying to bring crypto executives, bank executives and policymakers back to the table to break the logjam on crypto legislation. The sticking point remains stablecoin yield, and rewards and tensions are clearly high. We covered this a bit last week. In fact, the Wall Street Journal reported that there was a pretty intense moment at the World Economic Forum in Davos where Jamie Dimon walked up to Coinbase CE CEO Brian Armstrong, pointed at him and said, you're full of blank. This gives you a sense of how heated this conversation is getting behind the scenes. Hopefully the White House can play peacemaker here, because more clarity would go a long way toward making investors comfortable allocating capital. And that's a wrap for this week, guys. I know painful price action, but underneath it, structural buyers stepping in, bullish AI signposts and policymakers trying to get their act together. So don't get discouraged. I'll see you next week. That's it for the News block, your weekly Bitcoin and economic news update, powered exclusively by LEDN I'm Natalie Brunel. Make sure you're subscribed to Coinstory so you never miss an episode. This show is for educational purposes and should not be construed as investment advice. Until next time, keep stacking.