← The Wolf Of All Streets
The Wolf Of All Streets
Bitcoin Vs. Trump: Trade Wars, Policy Shifts, & Crypto’s Uncertain Future
00:27:05
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- [00:01]
Scott Melker
Market volatility has been absolutely insane over the past few weeks since Liberation Day. The s&P, NASDAQ, Bitcoin dollar and everything else move at the whim of Donald Trump and any comment or tweet that he makes. Is this a healthy market? What does it mean for bitcoin long term? And what are the other major news stories that are driving prices and interest in crypto right now? MLW and I are going to unpack all of it for you here on the Friday 5. That's dope. Let's dope. 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 hit that like, button tariff. Paloa.
- [00:57]
MLW
Yeah, we have a, a shocking lack of news stories to talk about because there's only one thing that's dominating everything right now.
- [01:05]
Scott Melker
It's unbelievable. Right now markets are completely unhinged. I was just kind of taking a look at even on the year, from the highs to the lows. But we have this crazy situation where risk is down. Right. Stocks are down, Nasdaq's down, S& P is down. Bitcoin's down from the highs earlier in the year, but also the dollar is down. I'm old enough to remember when risk assets were supposed to have an inverse correlation to the dollar. And of course, yields keep going up no matter how hard they try. And gold is surpassing 3200 bucks.
- [01:36]
MLW
Yeah, it's always a good sign when everything tries to go down, including the things that usually go up when everything else goes down.
- [01:45]
Scott Melker
Yeah. And obviously it's all a result of this, right? Generally, tariffs. But the bigger story here is the indecision around tariffs, the 50, 50 split views on what each of Trump's moves means. Like half the country and world seeming to think that he capitulated, half seeming to think that he's playing 12D chess and executing the art of the deal. Either way, I can tell you that both Powell and China, who are probably his biggest opponents at the moment, have called whether it's a bluff or not, they've called China once again here, raising their tariffs up to 125% and calling Trump's levies a joke officially coming out of China. And of course, Powell pushing back and saying, well, we're less likely to cut now because we're afraid inflation is going to go up.
- [02:34]
MLW
Yeah, I mean, you know, I think the interesting sort of story of this week, if you look at the pattern was, you know, we came into Monday everyone's asking, is it going to be, you know, a Black Monday redux? Kramer's screaming for it. So of course it doesn't happen, you know, but things still aren't looking good. Bonds start freaking out. I mean, this is all the stuff I'm sure you've covered over your show every day. But, you know, for, for the quick hit recap, bonds start freaking out overnight. And, and that, I think seems to catch attention given that while we've turned away from the stock market as the, as the indicator of what's, you know, successful, the treasury yields are, are, are, are, are, are, are still kind of firmly in the, the driver's seat, at least in terms of the narrative. So we get the 90 day reprieve. And the 90 day reprieve isn't exactly a reprieve. It's, it's mostly a reprieve. But stocks rip, right? You know, because they're waiting for something, some sign, any sign that maybe this won't be as bad as we thought. But then 24 hours later, I think a combination of two things happens. One, people remember that they have no goddamn idea what, you know, what, what's for dinner, you know, to say nothing of whether things are actually going to be the same in 90 days. And then at the same time, they also kind of recognize that maybe all of it's a distraction for what the real thing is, which is this trade war with China. And that clearly is still on, you know, like Donkey Kong. And the rest of the week has been basically digesting the, you know, tit for tat escalation of that very specific piece of the story, which is China versus the US and so we end the week with China, to your point, calling. And, and I think people even who are very supportive of these policies being pretty nervous about a slap fight with a country that doesn't seem to have nerve endings. So, you know, here we are.
- [04:21]
Scott Melker
Yeah, I mean, I've said this over and over again. China has shown no lack of ability to torture their citizens for political gain or just to prove that they're right. I mean, obviously when during COVID they were locked down for years past when everyone else does. So it's very clear that this is a very high stakes game of chicken with an opponent that's very, very unlikely to flinch. I mean, you dig through these articles and the takes are wild, right? Trump and Z are preparing for a war nobody wants. I think everybody agrees with that. Trump, terrorists. But U.S. services trade surplus with China at risk, dollar sinks and gold swords and Spiraling trade war Treasuries are trading like risky assets and warning to Trump. I mean, you said all of this, but the expectation was that yields would drop or at least the pundits expectation was that they were doing this to make yields drop. Yield skyrocketing is a pretty bad sign.
- [05:19]
MLW
Yeah, I mean look, the, even, even more than most times, I think, you know, the illusion of control in this situation. We're not only playing with live ammunition, we're playing with, you know, entire arsenals all at the same time. And no one has, there's no precedent. We're way, I mean it's like, it's quaint now. There's just nothing that people can compare this to because we have no, no precedent. So of course things are going to behave in a way that is totally unpredictable and unexpected. Again for the people who are supporting Trump, they will point to endlessly the fact that, you know, chaos has been a strategy historically. He tends to relative, you know, when we're talking about comparative advantage, he's certainly better in chaos than in sort of normal situations relative to other people on average. So, so maybe it's all, again, this is where the sort of the, the 12D chest argument comes in. But you know, for market participants who want some amount of predictability over what happens, the fact that nothing is behaving and no one is behaving the way that they might expect, except honestly, China is behaving exactly the way that you would expect in this situation is not a, is not a very comforting thing.
- [06:26]
Scott Melker
I mean look at that monthly chart for the 10 year yield. We're back up at 4, 4.5%. This is not supposed to happen. And I'm old enough to remember a few months ago when the Fed cut and yields also went up. Right. These are the, it seems like there's no lever to pull right now to make these yields go down, to be able to refinance the debt cheaper, to bring mortgages down for some relief to the average person. And this is not, I'm not saying it's Trump's fault or otherwise. I'm just saying the classic tools that you utilize to get yields down are just not working.
- [07:01]
MLW
It's because there's no, there's no amount of monetary policy is going to fix political issues. It's as simple as that. You know, these, the premise that somehow we could create a totally unprecedented situation that upends the entire global trading order that has existed for 80 years and think that markets are just going to behave the way that they're supposed to because you did X, so Y happens. Good luck, man. I, I, you know, I think, I think there's, there's a, a high level of delusion if we think that we can just kind of casually push on the same levers or pull on the same levers that we have before. And, you know, I mean, look, maybe, maybe it's a good thing that the market is sending the signal so clearly so early that that's simply not going to be the case and there is no control here. So, you know, to the extent that we want the, the, the, the chaos to be controlled, it's not going to come from predictable market actions, I don't think.
- [07:54]
Scott Melker
Yeah, there's also a lot of reasons for why bonds could be selling off and yields could be skyrocketing. I haven't seen the evidence of it yet, but it seems like common sense with gold prices going up and bonds crashing, that China's retaliatory measure here behind the scenes might be to sell off U.S. debt, obviously, and sell off U.S. bonds and to buy gold. I'd have to imagine that part of these negotiations with all the countries that have come in is the United States saying, oh, you have to buy our Treasuries. Yeah. Not only are we exporting dollars, but you got to buy these things.
- [08:26]
MLW
Yeah. Someone needs to tap Paulo on the shoulder because tether is the only buyer left, man.
- [08:31]
Scott Melker
He's my, he's my podcast for Sunday. I talked to him about the other day. They're literally going to be like number one by the time this is all done.
- [08:38]
MLW
Yeah, well, you know, there were out of here, out of a group of one, you know, by the time this is all done. So, you know, they're also going to be last place at this rate.
- [08:47]
Scott Melker
Yeah, absolutely. I mean, let's talk about how bitcoin's behaving in context of all this. So bitcoin's recent drawdown proves it's more than just a leverage tech Play. Despite a 26% drop from all time highs, Bitcoin holds steady compared to leading tech stocks, signaling increasing maturity. I tend to agree with this. Obviously we talked about it last week before the Sunday drop. Right. We said, holy wow, Bitcoin is just hanging out here at 82, 83, 81,000 while markets are in turmoil. Last Thursday and Friday, of course, then we ended up getting the sell off on Sunday. But I think we all know rationally that when people are panicking and there's nothing to sell, they're going to sell the thing they can sell. And so bitcoin dropped. But here we are, all this turmoil killing at 82,000.
- [09:31]
MLW
Yeah, I mean look, we talk about this it feels like every week. But bitcoin is not an either or asset. It's a both and asset. And it's got a big weird coalition of buyers and holders now. And it's going to behave in contradictory ways at the same time because of totally different, you know, patterns, interests and behaviors of, of its bas. And we often see the weirdest sort of psychic fracturing at these low points where the parts of the holder base that are, you know, sort of, it's just a risk asset alongside their portfolio there for portfolio construction are competing with the die hards who will hold forever and who might even be quietly scooping on the side. And you know, and those things, those we wore at the bottom. And that's why I feel like we often see this sort of, you know, we get to, you know, we race down with everyone else, but then we hit sort of our floor more quickly and, and stick there because of that, you know, that, that inbound base. So it's not particularly surprising to me. I think every time we see this, it's, it's helpful in explaining this or helping, you know, new, new participants in the market understand that there are some very different dynamics of bitcoin, especially on the, the sort of bottom end of, of these type of market cycles. But it doesn't surprise me at all to see it, you know, hanging out and holding, you know, I wouldn't carry that on. Like there is always more legs down to be had. It's just that as we start to reach, you know, bases, I think that we have a, a kind of a stronger, stronger community than, than most when it comes to it.
- [10:58]
Scott Melker
Well, I can tell you in my experience in the last week and a half and reading the comments constantly today and all the other days is people don't like these conversations. This conversation is nauseating. How about give it a minute? That's one of them people saying we're judging him in three months. I will say everybody should give the benefit of the doubt. Maybe there is a grander play. But it's our job still to unpack what's happening in the short term. And it's hard to think that there wasn't a smoother way to do this. Maybe is accurate and maybe the.
- [11:27]
MLW
Sorry, I'm gonna, I'm gonna throw down here. Scott, if you think this comment, this conversation is nauseating, you are way too up your own butt when it comes to your perspective on people. If you can't look at this situation, if you genuinely think that you understand what's going on or that anyone really understands what's going on and that you have that thing and it's not worth discussing, turn off the TV for a while, my friend, because you're wrong and no one knows. We are in completely uncharted territory. You don't have to waste your time if you don't like the conversation, but if you think it's nauseating because you know your boy's being critiqued, check yourself. That's how I feel.
- [12:04]
Scott Melker
Yeah. I mean, I keep getting accused of tds, and I like to remind people of the kind of conversations we had about Gary Gensler, Elizabeth Warren and Joe Biden in the past few years. Did I have jds? Is that a thing, Joe?
- [12:16]
MLW
Yeah, look, Trump, Trump, we're just, we're.
- [12:19]
Scott Melker
We'Re just equal opportunity critic critiquers.
- [12:22]
MLW
He's in the power seat right now. Also, if you think that this discourse that Scott and I have in general is Trump critique, you are way off the rocker for what critique looks like. I mean, look, I, I don't, I don't give a. I've, I've. I have lived for years with people on one side thinking that I'm not enough, and then on the other side think I'm not enough. So whatever, man, bring it on. I got a podcast and you don't. So.
- [12:47]
Scott Melker
Yeah, listen, at the end of the, at the end of the day, it's going to take time to see how all of this sorts out. But there's no way you can look at this and think that the messaging has been consistent and that everybody who is driving markets right now is on board with whatever plan is happening. Unless you believe that Howard Lutnick is literally a stooge who has decided as a billionaire to throw himself in front of the bus on behalf of Leader Trump. You can't say, wow, what a brilliant negotiating technique this is. Look at all these countries that came. And also say, we're going to get an external revenue service in the tariffs of the future of American economy.
- [13:23]
MLW
Yeah. Also, you also like. It is, again, not to really hammer on this, but not critiquing people is not patriotic. If you think it's American to just sit there and wait and not have discourse around these issues. Like, I don't know what history you're paying attention to, but it's not history of my country. So.
- [13:44]
Scott Melker
Well, let's go ahead and pivot to things. We like, let's talk about things we like, like the Wall street consultant Paul Atkins confirmed to lead sec. So while we can be critical of Trump's tariff policy and debate to death whether it's intentional or why it's happening, we all agree that Trump right now, for the industry outside of price, has been the best thing that could possibly happen in the United States. For crypto. We've got pro bitcoiners in literally every seat of power, whether financial or otherwise. And now we get an absolutely massive win in the SEC after already having an incredible win with Hester Purse being the acting commissioner and rolling back everything that Gary Gensler did and more.
- [14:29]
MLW
Yeah, I mean, look, this is, this is nothing but good. This is, this is, this is also a, you know, a role that people were excited about him playing for beyond just the, the bitcoin implications. You know, we'll see. Like I would say that I'm certainly a little gun shy of going full throated excitement for, for anyone. I worry that there's something about the SEC chairman chair that, that warps people. There's an anti bitcoin curse that was put on it at some point by, by someone in the past, but it's, it's certainly optimistic relative to, to what it could have been. And I, and I think nice to see that progress happening even in the midst of, of other changes that we.
- [15:08]
Scott Melker
Don' Yeah, I mean it's not just the SEC either, of course. There was obviously this week the Trump signed the law overturning the IRS rule, which was one of the most hated things about the Biden administration, effectively calling brokers and defi, you know, exchanges having to report. So that was another massive positive. And of course this US Justice Department Disbands crypto enforcement team citing Trump order. So now basically all of the anti crypto army infrastructure one by one has been dismantled. I mean we saw it at the sec. They had a completely new mandate for their enforcement team. Now the DOJ has a new mandate for their enforcement team. This is absolutely incredible. And more importantly than all of that which we've talked about in the past is the ending of Operation Choke 2.0 and how the bank regulators have rolled all these rules back.
- [16:00]
MLW
Yeah, this was a, this was a, the creation of this team was a sort of clear sign of the ramp up of chokepoint 2.0. The, the unmaking of it is, is the reverse sign firmly in the category of exactly what you'd hope to see, exactly along the trend lines that seem so positive but still really powerful in that it's sort of, you know, the coming to fruition of those changes. And also I think, you know, in, in general we've seen a lot of faster changes in the agencies and I think that where people's attention shifted after that was to treasury, to geo, to doj, you know, to, to kind of understand how these other antagonists in the past were going to behave even as, you know, the SEC and the CFTC kind of get, get on board. So very positive. Even if, if, you know, kind of the type of thing that we would hope that we would have seen.
- [16:53]
Scott Melker
Yeah, we have kind of a couple stories here that really speak to this emerging crossover between the bitcoin industry, the crypto industry and, and TradFi and in this new sort of regulatory environment with an expectation of more clarity on legislation, we're seeing a lot of moves that we definitely wouldn't have seen in the past, one of which is Tether eyes new US based stablecoin for institution as regulation advances. I did talk to Paolo a bit about this. He was pretty clear to say we're not saying tether's not going to be allowed in the United States. He believes they will. This is just like a product that's even more tailored towards United States institutions. But the very fact that Paolo Arduino of Tether is able to walk around in Washington D.C. for the first time and have conversations with legislators and is backed by Lutnick tells you everything you need to know about this massive sea change that we've seen with regulation legislation in the industry. He used to think that he might get jailed if he stepped foot in the United States because of all the Tether Fund.
- [17:55]
MLW
Yeah, I mean, look, I think this is a, this makes sense to me as a, as a strategic move, a way to kind of play in this market but not also give up the, the opportunity that, that, that exists in, in Tether as it's currently constructed. They're clearly building out the narrative framework for it which is totally coherent. These products serve different markets and so they want to actually offer products that fit, you know, the different market dynamics. So you know, I, I think it's bullish. I, in general, I'm, I'm a, I think that there is going to be, whenever banks get involved, it tends more often to be consolidation and artificial barriers than it does to be big free market participation. So having our sort of most powerful crypto native institutions be able to take their swings and compete feels like a positive a win to me for consumers and businesses who, who want choice and.
- [18:44]
Scott Melker
To that end, though, it's been interesting because the incumbents have largely been locked out of the crypto industry in the United States. And we're screaming from the sidelines that they wanted a pie of it. Right. And to that, to that end, when the ETFs were launched because of SAB 121, we saw Coinbase effectively get to custody 80% of the ETFs. Yeah, right. And now we have a situation where, because SAB121 has clearly been rescinded and the banks are starting to get their way and be able to participate in this industry. One of those tradfi crypto crossover stories, it's huge, is Anchorage Digital becomes newest digital asset service provider for BlackRock. BlackRock was custodying their ETF with Coinbase. This is basically Anchorage. If you're not aware, Anchorage is the only U.S. federally chartered digital asset bank and they will now be participating in the custody of all of BlackRock's digital assets, including some of the ETF assets. So this is a diversification for them and also a move now from the federally chartered banks into the space for custody.
- [19:43]
MLW
Yeah, I mean, look, this was quietly the sort of theme of the week. Had there been no tariffs, the big blaring headline for us, I think would have been just this wave of trad fi crypto native institutional overlap. This was leading, but there are, you know, a slew of other stories like this. Again, to the extent that what we were saying about the sort of the crypto enforcement unit going away being an indicator of just the strong trend lines towards, towards a different industry, this is the other side of that. The tradfi world coming together with the crypto native world and participating and I think in the form of these institutional alliances is, you know, I think, I think a very positive sign. It also, I think to the extent that we are, you know, concerned and not everyone is, but to the extent that one is concerned with a set of very powerful institutions that don't necessarily share the crypto industry's values, coming in, doing all of the kind of the market activity, the fact that you're seeing so much interest in partnership and alliance and basically bringing those crypto native companies into the fold rather than just trying to out compete them from, from the ground up, I think is also a positive sign.
- [20:50]
Scott Melker
Yeah, bringing it home. That's a theme right here. Galaxy Digital gains SEC approval for Delaware move. NASDAQ listed in May. So Galaxy was based in the Cayman Islands. They're now becoming a Delaware corporation. This would have never happened anytime in the history before now that a company like Galaxy would be comfortable being registered solely in the United States for all of their actions. And they're planning to go public, or at least go, I should say they're planning to direct list on the Nasdaq. Right. Because they're already traded on Canadian exchange. And so.
- [21:20]
MLW
Yeah, no, this is, I mean, this has been in a, a long time in the works for, for these guys and it just hasn't, hasn't been the right time yet. Now there's still some, some progress to be made. I think that they're trading at around half of the market cap of what they would need for nasdaq. But, you know, again, all things pointing towards the right direction here.
- [21:38]
Scott Melker
Yeah. And then the final one is kind of the flip side of this. Ironically, we saw the roller coaster of circle and their IPOs. Now they're considering an IPO delay with the economic uncertainty and all the tariffs. But in the past cycle, we know that they tried to list by spac that completely fell through. There was a very little merger acquisition, ipo, direct listing going on for the past few years. Many viewing the new environment, great for that in crypto and beyond. They were about to list again. Now say they might not list.
- [22:12]
MLW
Yeah, I mean, listen, I think that this is, I don't think that this is particularly Circle specific. I think there is a big freeze in risk assets. You're seeing it in the venture world. I mean, every VC that I know that was trying to go out and raise funds is now freaking out because LPs are all sitting on their hands. And that's going to have downstream effects on how startups get funded. And part of the issue is that there's no liquidity profile. Right. There was an interesting profile of, of, of precursor ventures in the information recently. And they were talking. Charles Hudson, the, the, the partner of that fund was explaining how he anticipates for the next five years liquidity and his returns to investors are going to be 75 to 80% shares on, you know, shares of secondaries. Basically. He just does not anticipate significant M and A and IPO behavior for, you know, the foreseeable future. And so it's not just Circle. Is the point that, that this, you know, the IPOs that we had been excited about are all kind of on pause until further notice. And I think it's a rough one for Circle because it did seem like there's a window before, you know, big competitors come in to their space.
- [23:19]
Scott Melker
It is a crazy time because when the last administration went out, it seemed all systems go. And now because markets are being rocked, they're having to pause. And all this happening in a matter of months. I mean I just hit the quit quick chat GPT to see what other companies were basically delaying IPOs due to tariff induced market volatility. Klarna, obviously, the Swedish fintech company StubHub, everybody knows online ticketing all the way down to Etoro and crypto Medline Industries. I mean there's quite a lot of companies that were just on the cusp of doing it and now are just hitting pause till they see what happens. This is not unique to Circle, as you said. Yep.
- [23:56]
MLW
And again, as nauseating as this conversation may be for some of you, this is the type of thing that happens when we don't know what's going on. And that's not a critique of the policies, a priori or a judgment of whether they'll ultimately work for whatever their objective is. The point is that we are operating in a world where no one knows what tomorrow is going to hold. That is a very, very difficult environment for market participants. It allows for no planning, it allows for no strategy. It basically means that everyone has to wake up every day and figure out what the best action is based on that day. That's not where markets want to be. And there are impacts to that. Whether you think they're worth it or not, there are impacts and we're seeing them start to materialize. And I think that the, the big important part of this and the part that is very clear from where I sit, you know, living inside startup and venture land and dealing with funding issues and things like that is a 90 day reprieve does not change that fundamental insecurity around what happens next increases. And yeah, and so for, for the, the, the, the entire section of, of risk assets, it's a, it's, it, it might as well have been nothing changed. You know, in fact, to your point, Scott, it might actually be worse in some ways to, to have this sort of flip flopping. So you know, that that's just the reality. You know, again, doesn't mean that the reality won't be worth it on the other side, but that's the reality that we're living in right now.
- [25:15]
Scott Melker
Yeah, I mean there are plenty of things that you can look at as historic fact that are happening right now that are not up for debate. You can debate endlessly what the intention is. But 12% NASDAQ market swings to the upside in a downtrend are never signs of a bull market, and we saw 50% of that retrace. The biggest crazy insane volatility and bullish rallies are not a sign of a healthy, slowly grinding bull market to the upside. The last time we had a move that big on The NASDAQ was 2008. And everybody remembers what happened after 2008, right? So I think that people just don't know what to do right now. And maybe there's a master plan and maybe we'll get there and there will be certainty. But for now, I expect continued insane volatility every tweet to send markets up and down and for us to just brace and hope for the best.
- [26:03]
MLW
I mean, listen, I will say, I've said before, I continue to think that crypto people are best, at least emotionally or psychologically situated for this type of volatility. It's kind of like everyone has to live in our world now for a little bit. And so once we kind of, you know, grock that, we can take. Take advantage of our psychic scars and. And maybe go profit during it. So, you know, listen, it could. It could be worse.
- [26:26]
Scott Melker
I can't wait to see what we're talking about next week. But my bingo card says tariffs.
- [26:32]
MLW
Yeah, well, we'll see.
- [26:34]
Scott Melker
All right, guys, give NLW a follow. Check out the breakdown. Of course. Follow about X and check out his YouTube channel. And we will be back for the next Friday, five next week. Thank you, man. What man? We have.
- [26:45]
MLW
Later, guys.
- [26:47]
Scott Melker
Let's do.