Podcast Summary: "Bitcoin Hits 108k, MicroStrategy Drops 5% | Crypto Town Hall"

Host: Scott Melker
Guests: Dave, Brian, Dan, Dwayne, Grant, Matt, Panos, David
Release Date: December 18, 2024
Podcast: The Wolf Of All Streets

1. SEC Leadership Shake-Up and Its Implications

The episode kicks off with a significant discussion about the recent decision by the Securities and Exchange Commission (SEC) not to reconfirm Carolyn Crenshaw. Scott Melker draws a parallel to the "Wizard of Oz," exclaiming, "the wicked witch is dead" (00:00). Dave fervently criticizes Crenshaw's tenure, stating, "there are, this also is, you know, there's a game that, that we used to play a card game called Bullshit... I so hope that they do mean so" (00:31). He argues that Crenshaw was not neutral and had an agenda detrimental to the crypto industry.

Brian adds to the conversation, emphasizing the need for the SEC to embrace pro-innovation leadership: "I think the SEC is needed in some respects to... crypto is a breeding ground for scams. But at the same time, I think what the Biden administration did was they overregulated." (05:21). The panel discusses the potential positive impact of appointing pro-innovation candidates to the SEC, moving away from the perceived anti-crypto stance of previous commissioners.

2. Political Dynamics Influencing Crypto Regulation

The conversation delves into the political landscape, especially how the crypto industry's alignment influenced the recent election. Scott mentions, "Raoul Pal... framed it in a way that I hadn't really thought of it. He said it wasn't really necessarily a right or left." (10:10). Brian contends that both political sides have nuanced positions on crypto, with Trump leveraging the industry's support to his advantage: "He saw that there was an opportunity there. He is a populace, and he took that and ran with it." (13:09).

Dan provides historical context, highlighting that crypto aligns more with conservative ideals: "Bitcoin and crypto... self sovereignty, self dependence... conservatives are more predisposed to be pro crypto." (15:05). This alignment, according to Dan, contributed to the Democratic Party's anti-crypto stance, inadvertently aiding Trump's pro-crypto campaign.

3. MicroStrategy's Market Movements Explained

Transitioning to market analysis, Dave addresses MicroStrategy's recent 5% drop despite Bitcoin reaching an all-time high of $108k. He explains the phenomenon using his expertise in program trading: "The typical pattern that you see is a run up that's small, a push on the day of an index inclusion to a high price... exactly exactly what has happened with MicroStrategy." (19:10). The decline is attributed to professional traders taking profits after the initial surge, a standard occurrence in index reconstitution events.

Dan adds, "Michael Sailor is aggressively selling shares... he's just hitting it very hard. But I'm long MicroStrategy and Bitcoin." (20:58). The panel reassures listeners that the drop doesn't signify long-term issues for MicroStrategy, provided Bitcoin maintains its upward trajectory.

4. Institutional Interest and ETF Developments

The panel shifts focus to institutional investments, highlighting BlackRock's substantial purchases: "BlackRock alone bought 3/4 of a billion dollars worth of bitcoin yesterday." (23:10). This surge in ETF-related investments underscores growing institutional confidence in Bitcoin and other crypto assets.

Scott notes the robust inflows regardless of Bitcoin's price movement: "The flows are good on up days and down days. That didn't use to be the case in the beginning." (23:44). Dan emphasizes the unsustainable nature of current inflow rates: "The inflows are so high they're eclipsing... you can't continue buying 10 times the newly day issued forever without a massive explosion up in price." (23:50).

5. Regulatory Challenges: Accredited Investors and Tokenization

A significant portion of the discussion centers around the limitations imposed by current regulations on accredited investors. Grant criticizes the existing frameworks: "the $200,000 minimum accredited formula is such discriminatory, borders on racism." (42:03). Matt echoes this sentiment, advocating for expanded investor accreditation criteria: "There has been a movement to expand investor accreditation to encompass other factors, education or... measures of sophistication." (44:25).

Panos introduces the concept of tokenizing investments as a potential solution: "Would there be a way around this... if we were able to tokenize these investments?" (45:35). Dave explains the technological promise of tokenization but highlights regulatory hurdles: "the instant you provide economic value, the SEC is going to scream it's a security." (46:57).

6. Ethereum and Future of Tokenized Assets

David provides insights into Ethereum and his company's efforts to integrate staking within a regulated framework: "the company announced a couple of months ago that it would use Ether as its primary treasury asset... we're on the cusp." (52:08). He discusses the challenges of transitioning a traditional oil and gas company to a crypto-centric model under Canadian regulations, aiming to bypass stricter U.S. oversight.

Dave envisions a future where tokenized assets become standard due to their efficiency: "every liquidly traded instrument will eventually be tokenized simply because the rails are more efficient." (49:44). However, he cautions about the resistance from traditional financial entities that profit from existing inefficiencies.

7. Broader Regulatory and Political Impacts

The panel touches upon broader regulatory issues, including Biden's stance on banning stock trading for Congress members: "out and Republican, I, I really believe it's going to help cutting regulation." (33:23). Grant criticizes the revolving door between politics and finance: "Public service has just become a path to exceptional wealth." (34:16).

Matt remarks on the SEC's inefficiencies and the need for it to pivot towards more consumer-friendly fraud prevention: "I for one would love to see them kind of pivot into more consumer friendly, like fraud prevention type direction." (30:18). The conversation underscores the necessity for regulatory bodies to adapt to the evolving crypto landscape.

8. Concluding Insights and Future Outlook

As the episode wraps up, the guests share their optimistic outlook on the future of crypto, despite current challenges. David highlights the potential of tokenized Real-World Assets (RWAs): "Tokenization is the future." (48:54). Grant reinforces the belief in deregulation's positive impact: "SEC is also a group that I think is going to be looked at as not the protector of the little person." (43:07).

Scott emphasizes the importance of having knowledgeable individuals in regulatory positions: "the people being put in charge of the regulatory agencies are going to have a much bigger impact on deregulation than Elon Musk." (38:48). The panel collectively envisions a more innovative and less regulated financial future, driven by both technological advancements and strategic political appointments.

Notable Quotes:

• Scott Melker (00:00): "reminds me of the wizard of Oz, you know, Ding dong, the witch is dead."

• Dave (00:31): "there are, this also is, you know, there's a game that..."

• Brian (05:21): "the SEC is needed in some respects to... crypto is a breeding ground for scams."

• Dan (15:05): "Bitcoin and crypto... self sovereignty, self dependence."

• Grant (42:03): "the $200,000 minimum accredited formula is such discriminatory, borders on racism."

• Dave (46:57): "the instant you provide economic value, the SEC is going to scream it's a security."

Conclusion

This episode of The Wolf Of All Streets provides a thorough examination of the current state and future prospects of the crypto industry, highlighting regulatory challenges, political influences, and market dynamics. The panel's discussions underscore the critical need for pro-innovation leadership within regulatory bodies and anticipate significant shifts towards tokenization and institutional adoption. Listeners gain a comprehensive understanding of the interplay between politics, regulation, and technological advancement shaping the future of cryptocurrency.

Upcoming Events:

• Next Episode: Crypto Town Hall, tomorrow at 10:15 AM EST.
• Special Show: The Daily Finance will host an FOMC special at 1:30 PM, featuring Jerome Powell's remarks.

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