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The Wolf Of All Streets
Bitcoin Sentiment DUMPS As CLARITY Act Talks Crater! What You Must Know
00:29:45
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- [00:01]
A
Bitcoin price has fallen once again reaching around $69,000 as the clarity act, no surprise to anyone here, has hit yet another roadblock and now is really on a very tight timeline if they're going to get it done before 2027. Of course we still have a war raging in the Middle east that is affecting markets. And some big news from Fannie Mae on crypto backed mortgages. We're going to talk about all of this and more with my friend David Jung right now. Let's go. Let's dope. Good morning everybody. It's Throwback Thursday and I'm back in my old studio here, as you can see. Just for the day, we're gonna get going right now. I've got David here. Good morning, sir. How are you?
- [00:59]
B
Morning, Scott.
- [01:01]
A
So, yeah, I mean, a lot to talk about. Maybe first we can just start with kind of your broad strokes on the market. I mean, we talked probably six weeks ago or something, but there was no war. So we kind of had your thoughts pre war. So, you know, now, now that we have this sort of, I don't know if it's escalating, it's ending, it depends every five minutes. But obviously having an effect on crypto markets.
- [01:22]
B
Yeah, I mean my, my thoughts pre war were that we would be more of a neutral, sideways kind of move in crypto. That's still happening, by the way. The only difference is that everything else, all the other asset classes are being dragged down. So crypto looks downright resilient relative to that. I think that when you look at it from a risk adjusted perspective, you know, crypto is moved, you know, not Even, you know, one barely moved one standard, deviation, whereas everything else is moving like three, maybe four standard deviations, which is where crypto was back in October 10th, on February 5th. So we kind of front ran that whole negative performance cycle. And I think as a result, crypto is actually doing pretty well. And it's funny because there's not a lot of safe havens right now. You see how Gold Silver has been performing. It's been doing fairly badly because people have been taking profits on that. A lot of those multi asset funds basically said we need to raise some cash. And you see the surveys, like, the surveys went from like, I think 3.4 in February to like 4.3% cash within a month, which is a huge jump if you look at bank of America's survey of fund managers. So I think a lot of them are saying, well, we need to take whatever profits we can while we still Can. And that isn't crypto. That's all the other stuff. And, and so this is kind of why equities are doing poorly, precious metals are doing poorly. But crypto is like bitcoin at least is hanging in and around 70.
- [02:47]
A
So, I mean, effectively, I guess there's a few ways you can view it. Some people say that it's behaving as a safe haven because it's outperforming, it's up. All other things are down. That's not my view. I think we just actually had seller exhaustion, which is potentially equally as bullish, which is that those huge wallets that were continually selling everything down. There's just no big sellers in the market. There's no big buyers equal either. So we have a slight equilibrium. Prices are up. And that's still good news. That, that's kind of my view. I, you know, I willing to be wrong.
- [03:17]
B
No, I think that's true. I mean, there's technical factors as well. We can't ignore that. Like stretch, for example, strategies, you know, Digital asset credit vehicle, you know, it's still raising money. They're able to use that to purchase Bitcoin. So, so there are like demand sinks that still exist in this market, whereas there's not a ton of demand for all the other stuff. I do think it's interesting right now because for the last four months, bitcoin's been trading alongside the dollar. Typically, it should be going against that because when the dollar is doing well, that should be hurting us, given that we're denominated in that. But, you know, oil prices going up actually benefit the dollar. It benefits it not just as a safe haven asset, but because, like, you know, you need to spend more dollars to actually buy the stuff now, you know, to import, export the stuff. Dollars are in higher demand. And I think that same narrative is actually playing in parallel with Bitcoin. So I think that if bitcoin just kind of stays where it is, where everything else is just kind of falling apart, that can create a new narrative for Bitcoin in a place where previously I think we were, you know, kind of, kind of stuck, to be honest.
- [04:25]
A
Yeah. I want to move on a bit to the Clarity Act. So the, you know, the Clarity act, is it passing? Is it not passing? Back and forth is about as aggressive as Trump's back and forth on whether, you know, the war is over or not over at any given time. Every day is a different headline. Today we have Clarity act news today. Senate has six weeks to pass crypto law. Or delay until 2027. So effectively we have the markup coming in, I believe, three weeks. If that gets delayed, as it has in the past, basically there's no chance for this happening in 2026, because once they go away for Memorial Day in May, that's pretty much it for the year, apparently, or at least for this agenda. And we had all this news that there had been an agreement now between the industries on stablecoin yield. And of course, Coinbase yet again rejects Senate stablecoin Yield compromise. Coinbase pushes back on the latest Clarity act draft warning. The proposed rules could limit how stablecoin years are structured across the industry. It did feel like everything I was reading about this quote, unquote agreement was basically that the banks just got everything that they wanted and the crypto industry was going to be punished.
- [05:31]
B
Yeah, I got to speak carefully here because as you just kind of pointed out, Coinbase is involved in these discussions. I can say that, you know, this might not be a fully satisfying kind of view for some of your listeners. You know, Coinbase has been working with industry partners to align on the most important changes needed to make this draw draft text workable. I mean, this particular, you know, news with regard to the stablecoin rewards, I mean, this was kind of a leak. You know, this, it wasn't necessarily the, the final version of what this bill was going to be. It was a draft form that was kind of provided to a handful of stakeholders. It wasn't released publicly initially because it wasn't ready for prime time. But, you know, Coinbase, we still believe rewards are crucial to the continued adoption of stable coins. You know, and like I said, we're in deep negotiations to protect our customers, protect our business. We feel confident that we will be able to reward our customers for using USDC and other genius stable coins going forward. But these details are still in flux. So I think that the goal is to resolve this issue over the next three weeks. I think that will position the bill for markup in the Senate Bank Committee probably by the third, fourth week of April. You know, Congress isn't in session, I believe, for those first two weeks of April, but then we are going to be working with staff on, you know, it's the other key issues besides stablecoin rewards, because obviously the media is just focused on this. But we also have to think about how do we ensure the SEC front door it's workable, how do we protect layer twos, for example, how do we defend the SEC's exemptive authority? So it's more than just this one issue that I think is being hammered on by the media.
- [07:07]
A
Yeah, I've been saying that the whole time and I think a lot of people agree. I mean, stablecoins make a great headline and that's an industry to industry issue. But we still have to get through DeFi and most importantly, I guess the ethics clause, which is the real political issue. It's like we have an industry issue that we're talking about in the media this whole time. But at the end of the day, we know that Democrats don't want to pass something that allows Trump to participate in crypto. And Trump's obviously not going to sign something that bans him from doing so. So I don't think we've gotten to the biggest issues.
- [07:37]
B
No, I think there's still more to work on. But, but I don't think that my calculus has changed in terms of what the timeline looks like. I think the possibility of getting this markup in April and then getting it to the Senate floor by May is still entirely possible. But we live in a very headline driven world these days. So things like this get leaked and of course the market's going to react.
- [08:02]
A
I mean, Patrick Witt obviously is as close to this as you get. Plenty of uninformed FUD circulating on social media this week. It's all going to work out bullish. So, you know, we're still getting definitely the talking points of people close to it saying it's going to get done. And you know, I, I think Patrick's been a great voice throughout all this. I just think that there's still a lot left to do. As I said before, maybe I'm wrong. Maybe I'm being too much of a pessimist.
- [08:26]
B
I mean there's, it's always like less than people put, but maybe more. Yeah, more. It's less than what the pessimists would kind of guess, but like, probably more than what the optimist would guess. It's, it's somewhere in the middle. I think that's where truth lies. That probably goes for anything. But, you know, the crypto industry is going to be sending counter proposals. It's going to go to the Senate, the White House staff. I think that, you know, there's going to be principal level calls to key senator to explain what some of the changes should be and then we'll see where it goes.
- [08:57]
A
Yeah. Circling back to the market, I mean, I guess we didn't really dig in so deeply to what the, the war might mean. I mean, do you think that the war ending or war continuing or any other high level catalysts. You see in your mind that could be the thing that sort of stabilized things. And if crypto is outperforming, we could actually see it break out.
- [09:17]
B
I mean, energy prices are the key right now. And I think this has been the biggest problem for the equity markets and crypto has been able to kind of shield itself from it. But this is more of a, you know, economic activity kind of problem for months to come. Because even if the war ends, like a lot of the infrastructure on oil has now been damaged. It will take at least four months for that to repair, probably a little bit longer than that for the market to correct themselves. So I mean, I don't think that there is going to be an easy path to do this. But to your point, I also don't know what to believe anymore because the White House is saying one thing and they're like, oh, you know, we're in negotiations and they totally say that they want to come to the table. And, and then the Iranians are saying like, nope, we have no idea who you're talking to, but we have no deal on the table. There's no 15 point plan. We didn't even see it. How can both these things be true? I feel like again, the truth is probably somewhere in the middle. Maybe they're talking to someone, but maybe the Iranians want to make people look bad. I have no idea what's propaganda, what's real anymore. And so this is the problem with trading in this market. There is no edge because unless you are at the table and maybe not even then, like you don't know what to believe and don't know what to do. So I feel like you're kind of left with, you know, systematic traders, algo traders. Like this is the only ones who can, who can make money in this environment.
- [10:41]
A
I mean, it's kind of crazy to me that you know, you look at a hyper liquid and we know that hyper liquid is not reflective of the wider market, right. It's actually a bunch of crypto degens just finding the hot ball of money and trading it on hyper liquid. So you saw silver and gold were leading there for quite a long time, actually way over the crypto trading now it's all trading oil, right? And trading oil right now with leverage in my mind is almost like trading a meme coin because you're literally just waiting for the next tweet or truth, right? Because oil is completely just reactive in 10% in either direction. And if you're using 10x leverage, there's 10% moves, right? You're on a comment in the news any given day. So I think that it's just kind of crazy how speculative even the most quote unquote stable assets are.
- [11:27]
B
Yeah, and you know, I used to work in tradfi. I've mentioned this before and I will say that, you know, there's so much that goes into trading oil specifically, just commodities in general, that I mean, I've never traded it in my own personal account because I have no edge. And I realize that I will never have an edge compared to what all these other guys know about it. And it honestly borders on like, you know, just a cabal of people who are just like, oh yeah, I know that this is going to come out from the IEA and new supplies are going to be unlocked. Or like, I know that like the strait of her moves can actually be relieved this way. Like honestly, it's, it's tons of stuff that if you are just trading the headlines, you're so far behind. I, I, I don't do it in part because I know that I can never catch up to that kind of stuff.
- [12:17]
A
Well, regardless, I mean, even with bitcoin kind of trading sideways ish, we still are back to 10 extreme fear, down from a extreme fear of 14. So you can tell exactly where sentiment is on crypto. It's still in the dumps.
- [12:28]
B
Oh yeah. I mean, in part, I mean like crypto doesn't have this problem. You know, you can look at the, you know, NUPL kind of ratio or you can look at like sopr, like the spend output profit ratio and you can kind of say like, oh cool, like this is kind of where people bought in. This is where like people are either selling at a profit or selling at a loss. I mean, these things are a lot more transparent in crypto. And yeah, you know, I think like sentiment is weaker now. But this isn't a surprise. This is where we've been for a few months now. I don't think that anyone's got a full beat on it, personally. I also think that some of this has to do with what's going on inside the bitcoin community itself, with the bitcoin core devs. What happened with V30, what happened with a new proposal for VIP110 which no one is paying attention to. But all these things coincided with some key dates that have been out there, including 10:10 and February 5th. So I feel like these are some important kind of background things that maybe the OGs in the space are familiar with. But at the same time I feel like what you said earlier is true. Like anyone who wanted to sell probably has already sold at this point. So a lot of that noise has been priced in.
- [13:39]
A
Yeah. I have a quick video actually here from Paul Atkins we can look at. But SEC Chair Paul Atkins tells Eleanor Tourette, Crypto America the SEC's long awaited tokenization innovation exemption could arrive in the next few weeks. I'll just show it really quickly, but really this just speaks to the fact that even if the Clarity act is on pause or they can't figure it out, the regulators are very much moving forward. And here's some like kind of.
- [14:00]
B
I know we can expect that innovation exemption. I've asked you this before, Chairman Atkins,
- [14:04]
A
but I'll soon, soon.
- [14:07]
C
I think here in the next few weeks. You know, we have our own process that we have to go through, you know, with respect to new things like that. As far as clearance with people who are the oira, you know, the Office of Information and Regulatory affairs at the Office of Management and Budget. That's a good mouthful for that organization. But anyway, so they're the ones who are kind of the last step when they look at what agencies of the government are about to promulgate. And you know, they're trying to be a good review for the administration, don't begrudge them that.
- [14:40]
A
So I mean this is just one of, like I said, this is kind of one of those steps. I think that this is the basically the safe harbor idea that Hester Purse had floated for years, which is you can basically start something in the United States and you have it a certain amount of time, I think, to become sufficiently decentralized and something reasonable that's been floated. But we also just got a token taxonomy with five categories for tokens. I mean the sec, the CFTC are working together. This on the regulatory side, it's clearly full steam ahead and as bullish as you could possibly get. Right, I agree.
- [15:13]
B
I mean obviously Jerrykin said that this still needs to be finalized in Congress. And I think that is true. Definitely it has longevity. This will. If it can go through Congress and get passed as a law, then you know, we don't have to worry about this every four years. It's going to be very hard to unwind. But you're absolutely right. I think there's been a ton of progress coming from the agencies themselves. I mean the fact that the SC and CFTC are no longer wrestling over this, the fact that they have a memorandum of Understanding that they want to be like kind of tackling this. I thought that the taxonomy too. Like, one thing that really struck me was they named assets by name. Like it wasn't just that they said, like, okay, broadly this stuff or the. These tokens are commodities, are a few of these might be securities. They actually said bitcoin eth, xrp, sol, et cetera, et cetera. Like all of these things are crypto commodities. They are not securities. I think that was a huge thing that could change how people actually treat the stuff in their portfolios.
- [16:16]
A
Yeah, I totally agree. And even not on the regulatory front, but for some promises that are moving forward, we also have. Let me remove that one. We have update. The White House clears review of a proposed 401k rule by US Department of Labor that can allow crypto investments. We've talked about this kind of at length. We know that the 400k, 401k and retirement market is just massive trillions and trillions of dollars. And this is a real push to start to be able to allow bitcoin and other crypto assets into that. This is plumbing again, I think. But I think that this is potentially really, really big if the market starts to heat up. And this is actually past. I don't think most people know, but in a 401k, you're very limited on what assets you're allowed to invest in for your retirement.
- [17:00]
B
Right? Yeah. And this isn't an entirely new headline. I mean, I know that one just came out an hour ago, but I mean, they've been saying this for a while. I think that the crypto industry doesn't realize, like, this is potentially a bigger deal than having a like SBR Strategic Bitcoin Reserve. Like, like there's trillions of dollars sitting inside of pension funds that if they allocate a small amount to crypto and, you know, I think that they will because there's the demand for it. They just haven't had the ability to. I think that that could be a huge amount of demand going into crypto. Probably it's going to go into like the more large cap names at first, but certainly like this, I, I think people were like, kind of counting on the government or sovereign entities kind of buy. And I'm like, this is kind of what you're looking for. This is like people actually including this stuff alongside the rest of their portfolio, alongside the rest of their assets.
- [17:56]
A
And in a way that they don't think about it at all. I mean, you know, most people kind of set and forget their 401k for an entire lifetime. Right. So if you get a person who's getting a new job in their twenties and they're crypto friendly, they just set it to buy some bitcoin and stop when they're 65. I mean, it's pretty crazy how passive most people's 401ks are. Some people don't even actually actively make a decision when they're launched. They don't even know.
- [18:21]
B
Yeah, I mean, we were debating this with a colleague of mine just yesterday because he wants to buy crypto for his kids and actually put it aside. This is obviously not a retirement account, so it would be kind of. But you know, like once upon a time, like if you roll it back four or five years ago, like the only way you could do that was to buy like GBTC or something and put it in there. Hopefully you got a discount and not the premium. But like, you know, that was the, like that was your only kind of recourse. We are in a better place today because if you're depending on your retirement fund, for example, you could actually go out and buy the etf, but then you're still kind of subject to not being able to trade that stuff on a weekend or the weekday. Like, if you're crypto native, you still want the asset and there should be no reason why you shouldn't have the asset inside your portfolio if you wanted to. If you want to.
- [19:11]
A
Yeah, I think everyone agrees with that. And we have some other. Actually, I think this is another massive story and we had seen this floated from the administration as well. So there's kind of two parts to this, which is one is that this is not the story that's here, but Fannie Mae and Freddie Mac basically will be accepting crypto as part of your collateral or portfolio when they analyze you for a loan, which is obviously huge news. Anybody who has the majority of their wealth in crypto or even a meaningful amount of, and has tried to go get a mortgage and you're told that money doesn't count. Like, it's not money, Right. So it doesn't count to your net worth. It doesn't count for like the amount that you have to have in holdings. But the bigger problem is that generally people are forced to liquidate that for it to count and to use it as a down payment. So you have to actually sell your assets into dollars. So now here you go. Coinbase brings token back down payments to housing markets. So this is really interesting because Fannie Mae effectively, to my understanding, is going to allow it to be counted when they decide whether to give you a loan. But now Coinbase and Better Home and Finance are going to actually allow you to take a loan against it to use for the down payment. So clearly. So, listen, there's some risk there because now you have two loans, right? You have a loan on your down payment, which is, you know, listen, I've done it before where I went to a third party, went to Abra and I took a loan and. Same thing. But being able to do it, where Fannie Mae is actually counting it as part of that package, is really, really compelling.
- [20:37]
B
Absolutely. And I mean, this is a new headline, so even I'm kind of getting my head around it. But you're right, I mean, this is kind of where D5 kind of came from. Right? Because traditionally, if you wanted to use crypto for down payment, you had to sell it for dollars or the bank just didn't want to even recognize it and you're kind of like, just stuck. So then you'd have to kind of, you know, find some other way when, you know, D5 came from out of this. Right? Because we were like, oh, we'll lend to each other then. But this partnership allows homeowners to pledge their Bitcoin or USDC or whatever as collateral instead of selling it. And I think that this is kind of where the mainstream breakthrough happens, because now you also have Fannie Mae's stamp of approval. Like, you know, niche crypto mortgages, maybe they're. They've kind of been around, but no one's like, it doesn't have a huge mainstream kind of pickup on it. But this product is actually designed to conform to Fannie Mae's standards. So I think that these loans can be bundled. This can also be probably sold into the secondary mortgage market. I mean, there's, there's a lot to this. And I'm thinking with more of my institutional kind of cap on, but, you know, I think that part too, it's going to be a massive change.
- [21:45]
A
I think it also, it's just yet another sort of stamp of approval that this is a real collateral and is a serious, serious asset class, you know, and it's one thing for people, I guess, to be able to take loans. I think this is huge that you'll be able to do this as part of your mortgage package. But this definitely also shows us directly where institutions are going to go with their holdings. Right. You know, like that. That being my melons. And the huge custodians of the world are not just going to be holding this for people. Everything's going to be put to work. It's all going to count. This is going to be viewed as the pristine collateral that it is.
- [22:18]
B
Absolutely. And I mean, it recognizes two realities as well. Number one, there are 52 million Americans who own crypto. We are also seeing, number two, that there are increasingly younger people who want to buy their first home or, you know, just kind of actually grow to actually be able to be stable here. And they have a significant portion of their wealth in digital assets because there is a massive wealth transfer that is underway at the moment from older Americans to younger ones. And I think that for those that actually sit on crypto, you know, because life has gotten harder, it's increasingly difficult to actually afford high interest rates, the home prices that are out there. This is one way of actually tapping in to that change that we're seeing right now in society. So I think that this is another thing that maybe isn't, you know, on the headlines, but definitely something that we should be thinking about in terms of, like, well, why is this happening right now?
- [23:17]
A
Yeah. Another story before we move on. We have this one here. There's been a lot of debate as to the behavior of miners here, but Justin Bitcoin miner Marathon Digital Mara sells 15,133 Bitcoin worth over $1 billion. So this is just kind of interesting because they were one of the first to follow in strategy's footsteps to actually raise debt to buy bitcoin to add to their balance sheet. That was less than a year ago, and now they're a pretty sizable seller. I'm assuming a lot of this has to do with the kind of move to AI and just the treasury model being less shiny and beautiful as it once was. But I mean, what do you make of this minor selling that we're seeing? And then specifically, I guess, marathon.
- [24:04]
B
Yeah, I mean, there's a few things going on, like, you know, a year ago, which would have been where it's March 26, so let's just say like April 2025. I mean, many of these DATs on the Bitcoin DAT side, they were at M NAVs of 1.5 or 2 or definitely above 1. And now we're kind of petering around 1. Some of them are sub 1. So this is kind of what you should expect when things start to kind of go in that direction, where if you are sitting on a bitcoin stockpile, you have to say, okay, I need to kind of bring it back up to like an Nav of one, which means that we need to maybe sell like the assets that we're holding and kind of bring back up. I mean, we saw this in eth as well. You know, like a lot of those eth stats were at like m navs of like 4 or 5 and above. And now we're like at 1 or concept 1. I mean, things have obviously changed here. We also have to kind of recognize that the bitcoin miners too are still kind of underwater. I think the break even cost, the average break even cost for, for bitcoin miners is somewhere around 87, 88,000 per bitcoin. So you know, like, given the fact that we've been at 70 for a while, I think also some of them have kind of turned down their hash rate in order to kind of compensate for the stuff. And like you said, they're probably pivoting towards AI or other things that are a way for them to kind of raise revenue and they got to pay the bills. So I think that this is kind of what's happening right now in the background.
- [25:33]
A
Is there a, like, you might not know. I think I read somewhere that the mining floor, like the capitulation level was 57, 58 or something and a lot of conjecture as to why we bounced kind of above that level and have historically. Have you looked at that at all?
- [25:50]
B
I have, but it's hard to kind of gather sufficient evidence to kind of back this because there's so many variables on this. It's not just the energy prices. It's, that's one factor. I mean, it's energy prices plus whatever they deal, they've been able to strike with the energy provider to actually say like, can we get paid to turn off, turn on like that kind of thing, what they can be compensated with. If they're like pivoting that to sell to an AI provider instead, Is it also on the modeling side or on the inference side? I mean, we tried. It's, it's a ton of stuff. I can't do it justice, to be honest with you. But you know, like, I will say that right now we have seen those, that hash rate kind of come down. It's, it's kind of slowly coming back up again. But I absolutely think that, you know, some of the headlines we've seen in the space like block fills kind of headline from a few weeks back, for example, it definitely pertains to are they sitting on good debt or bad debt? Because a lot of that gets applied to the bitcoin miners.
- [26:51]
A
Before I let you go, anything else I might have missed that's on your radar?
- [26:54]
B
Anything you're looking at, I mean, beyond like this kind of stuff, it's interesting because this is DAs week. You know, it's block works kind of big event in New York City and just kind of talking to people around the sidelines, the, you know, dinners and lunches I've been having. It's interesting that not a lot of people are talking about the price action. A lot more people are focused on. I mean, the big things that we've talked about in the space. Stablecoins, tokenization, AI agents are coming up as a really big one. The fact that agenta commerce, I think is becoming real because now you've got X402 MPP, you've got like there's a third one that's also kind of been announced this week. So I think that increasingly people are looking at it saying like, maybe the new World Order is just AI agents trading with AI agents. And we just got to be comfortable with that. So I think that's going to be a big theme to watch.
- [27:43]
A
Yeah, I agree. It's all the news now is like exchanges launching agentic wallets and AI trading. And that seems to be directionally. Also even the VC kind of pitches I'm seeing, everything seems to be in the AI direction. It's pretty crazy how fast it's happening.
- [27:59]
B
Yeah. But seems like crypto is going to take a part in it. And I think that we, you know, blockchain rails are how these AI agents are going to interact. So we still have a pretty big role that I. I think are going to be. It's going to be important for not just, you know, the world at large, but also hopefully, you know, our pocketbooks, because I think crypto is going to benefit from that.
- [28:20]
A
I totally agree. All right, David, well, thank you so much for joining today. Always a pleasure to have you. Sorry for canceling on you last Thursday when I was being attacked by monkeys in the jungle. But, you know, I want to hear
- [28:31]
B
the full story on that. By the way.
- [28:32]
A
Internet went out, monkeys were punching the kids. Yeah, all the things. So we will have you back very soon, man. Thank you very much. And for everybody else, I will be back tomorrow. Have a good one.
- [28:42]
B
Bye. Let's do. That's dope.