← Coin Stories with Natalie Brunell
Coin Stories with Natalie Brunell
News Block: Bitcoin's "Worst Month Since 2022," Price Crash & Quantum Fears, Chase-Epstein Bombshell & Policy Shifts in D.C.
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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.
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Some of us did not expect Bitcoin to crash as much as it has recently. It dropped as low as $82,000 last week, triggering around 2 billion in leveraged liquidations and putting it on track for its worst month since the 2022 crypto winter. And naturally, everyone has a theory about what's driving this drawdown. Some say it's the long term holders taking profits, which we have seen on chain. Others view it as a macro story, investors de risking as worries build around stretched valuations in stocks, what some believe to be an AI bubble and tightening liquidity. And then there's the October 10 shock. Nearly $20 billion in crypto leverage wiped out in the market's largest liquidation event ever. Last week I sat down with BlackRock's global head of digital assets, Robby Michnick, who pointed to that October 10th liquidation as one of the key drivers behind this latest correction. If you haven't yet, make sure to listen to that interview to hear his full perspective. That Same day, though, October 10, another development flew under the radar. MSCI, which builds many of the world's most important stock indices, released a consultation memo on how to treat companies that hold large amounts of Bitcoin or other digital assets on their balance sheets. The core question was basically should Bitcoin treasury companies even be included in MSCI indices at all? Some market participants argue that companies whose primary activity is holding digital assets look too much like investment funds, which are currently not eligible for index inclusion. MSCI has therefore proposed excluding certain digital asset treasury companies from its indices. And here's the key part. If a company holds 50% or more of its total assets in Bitcoin or other digital assets and its core activity resembles a digital asset treasury raising capital mainly to buy and hold crypto, then it may be excluded from MSCI indices under the proposal. Now this of course, matters because Strategy is currently included in major indices like the NASDAQ 100, MSCI USA and MSCI World. JP Morgan analysts estimate that roughly $9 billion of Strategy's $50 billion market cap sits in passive funds that track those indices. Their research suggests Strategy could see about $2.8 billion in outflows if MSCI removes it from its equity indices and as much as $8.8 billion if other index providers follow suit. Strategy has clearly benefited from index inclusion and the passive flows that come with it, so this understandably spooked some investors. MSCI is now taking feedback, and Michael Saylor himself weighed in forcefully. He emphasized that strategy is not a fund trust or holding company, but a publicly traded operating company with a $500 million software business and a unique treasury strategy that uses Bitcoin as productive capital. He stressed that index labels don't define the company. Its strategy is long term, its conviction in Bitcoin is unwavering, and its mission is to build the world's first digital monetary institution on a foundation of sound money and financial innovation. In my view, this shouldn't even be a question. Strategy is an operating company, full stop. The MSCI consultation is open until December 31, 2025, with final conclusions expected by January 15, 2026. Any resulting changes would be implemented in the February 2026 index review. Until then, uncertainty around these rules is one more ingredient in the negative sentiment we're seeing today. And that sentiment right now is about as bleak as I've seen since I got into Bitcoin. Fear. Fear is super high. But is it justified? Bitwise recently pointed out that this is Bitcoin's 23rd bull market correction of 20% or more and we're currently sitting at roughly a 30% drawdown from the all time high. In other words, this is painful, yes, but it's actually pretty par for the course for Bitcoin. Need cash, but don't want to sell your Bitcoin? Leden is the global leader in Bitcoin backed loans, issuing over $9 billion in loans since 2018 and they were the first proof of reserves. With Leaden, you get custody loans, no credit checks, no monthly payments and more. Visit Leden IO Natalie to learn more and get a quarter percentage point off your first loan. All right, Weeks like this are where conviction gets tested. Investors have to ask has Bitcoin's fundamental value proposition changed or is this just another volatile chapter in an ongoing bull market? Jan Vaneck, CEO of Vaneck, told CNBC that his firm would walk away if Bitcoin's fundamental thesis ever breaks, citing quantum computing and privacy as two potential threats. Now that raised eyebrows because he's been a long time advocate. Last year he said he held way more than 30% of his personal wealth in Bitcoin. His concerns were also echoed by Ray Dalio this week who said he keeps only about 1% of his net worth in Bitcoin and worries about the Quantum risk. Now, I don't claim to be a quantum computing expert, so I lean on people whose work I really respect. And the message I'm hearing is pay attention but recognize that current quantum fears are likely overstated. Lyn Alden recently told Jack Farley on Monetary Matters that the quantum narrative can get overdone, but it is worth monitoring. She noted that even if quantum computing advances, it's not as simple as press a button and Bitcoin unravels. Bitcoin is upgradable software and can be made more quantum resistant, although there are of course trade offs. Nick Carter has been writing extensively on quantum as well. He frames Quantum as the 100 year storm risk. He mentally assigns roughly a 10% probability to some kind of quantum disruption, but stresses that in that 10% scenario the downside is enormous if we don't manage it properly. Now, my read is that quantum capabilities have accelerated over the last 12 months, as we expected they would, which is making more people nervous about a future in which Bitcoin's underlying cryptography could be at risk. That's why some in this space want to raise awareness now so that the community can debate potential solutions well before any upgrade is actually needed. Adversarial thinking is a superpower for protecting Bitcoin. Bitcoiners are often Bitcoin's toughest critics. But but as Lynn emphasized, every protocol upgrade involves trade offs and potential new risks. You've probably heard the saying, the road to hell is paved with good intentions. Quantum risk is real, but in my view, still a low probability high impact tail risk. We should be discussing it now, thoughtfully, without panic and without rushing into a quantum solution that might weaken Bitcoin in the long run. If you're worried about this topic, don't miss Preston Pysh's takes in our recent interview with both Preston and Larry Lepard, where we dig into quantum and Bitco security model. All right, Whenever bitcoin's price drops sharply, you know that its critics come out of the woodwork to declare yet again that bitcoin has failed or bitcoin is dead. And they've been wrong every time. One of bitcoin's loudest critics has been JP Morgan CEO Jamie Dimon, who loves to say that bitcoin is for criminals. Back in January he said bitcoin itself has no intrinsic value. It's used heavily by sex traffickers, money launderers, ransomware. Now those words are especially ironic in light of what came out this week about his own bank, Senator Ron Wyden released a memo detailing how JP Morgan allegedly protected Jeffrey Epstein and enabled his sex trafficking operation through egregious compliance failures spanning nearly two decades. According to the memo, Epstein was one of the bank's largest clients, part of an internal elite group dubbed the Wall of Cash. Senior executives, including top private banking leadership, were in frequent contact with him. The memo alleges that JP Morgan initially reported only about $4 million in suspicious Epstein related transactions, only to later retroactively flag around 1.3 billion. Wyden says records show top executives who reported directly to Jamie Dimon closely supervised Epstein's accounts. And he argues this goes far beyond a simple compliance breakdown. He's calling for a criminal investigation into how the bank may have enabled Epstein's crimes. So while Dimon is on TV claiming Bitcoin is used by criminals, a US Senator is publicly accusing his bank of helping facilitate one of the most notorious sex trafficking operations in modern history. It's no surprise that social media is now full of calls to close Chase accounts. Now that brings us back to Bitcoin. It's not that Bitcoin will never be used by criminals. Criminals use everything. Dollars, banks, the Internet, and yes, sometimes Bitco. The problem isn't the technology, it's the people who choose to abuse it. Bitcoin is open source code and a public ledger. If we're serious about fighting trafficking and money laundering, the focus should be on holding bad actors and the banks that protect them accountable, not scapegoating a neutral technology that improves people's ability to save and enables peer to peer payments. So the next time you hear Bitcoin is only for criminals, remember to ask who's saying it and who they were banking. Now back to Jan Vaneck's comments for a moment. He specifically said that Vaneck doesn't think Bitcoin's fundamental thesis is broken. And frankly, how could he, given all the positive developments we're seeing? Just this past week, we had multiple moves from regulators and lawmakers that could meaningfully advance Bitcoin adoption. First, the occ, the main US banking regulator, published guidance confirming that banks are allowed to hold digital assets on their balance sheets as principal in order to pay blockchain network fees. On the international front, the bank for International Settlements, the bis, which is the central bank for central banks, signaled it is rethinking its strict crypto capital rules after the UK and UK refused to implement them. Last year, the BIS put Bitcoin into its most restrictive bucket, essentially requiring banks to hold about a dollar of capital for every dollar of bitcoin on their balance sheet that would make Bitcoin extremely capital intensive and discourage direct ownership. The fact that the BIS is now openly reviewing those rules is one of those boring but very huge developments bitwise. CIO Matt Hogan called it enormously important and a huge win because more reasonable capital treatment is a prerequisite for serious institutional adoption of Bitcoin. And finally, in Washington, D.C. we also saw the introduction of a new Bitcoin bill, Representative Warren Davidson, who by the way, recently tweeted the Nothing stops this train meme from Lynn Alden. He just filed the Bitcoin for America act, which would allow Americans to pay their federal taxes in Bitcoin. With those coins flowing into the strategic Bitcoin reserve, it's just a bill for now and has a long road to becoming law. But direction matters. We now have members of Congress explicitly arguing for a strategic Bitcoin reserve and for normalizing paying the IRS in Bitcoin. And if you want to feel for how much the mood in DC is shifting, look no further than Pub Key dc a new Bitcoin themed bar just blow blocks from the White House at its grand opening last week. Treasury Secretary Scott Besant showed up in person. Yes, the Treasury Secretary showed up to the opening of a Bitcoin bar. So a huge congrats to the Pub Key team on opening the DC location and thank you Pub Key for hosting my Bitcoin Is For Everyone book signing party at Pub Key in New York. The book is now available on shipping, so grab a copy. It makes a great holiday gift. So to wrap up, we can debate short term price action of Bitcoin all day, but at some point you have to step back and ask, what more do we need to see to understand where this is all heading? I know that the market is bearish, but I for one am feeling very much the opposite.
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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 Coin Story 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.
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Sam.