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- [00:00]
Scott Melker
Bitcoin is pushing towards $95,000 and for once altcoins are seemingly following along. But when we talk about crypto markets set to explode, it's not really about local price action, but more about predictions of what this industry can look like in the coming years. One of those being the global tokenized real estate market could explode to 4 trillion by 2035. That was coming from Deloitte. That's just one of the main stories today. We have Trump versus Powell 21 capital, the ECB freaking out about dollar stable coins, a number of United States companies looking to get bank charters and of course the Fed withdrawing crypto guidance. NLW and I are here to break it all down for you on the Friday 5. Let's go. Let's do what is up everybody? I'm Scott Melker, also known as the Wolf of Allstreets. Before we get started, please subscribe to the channel and gently tap that like button. Good morning. Happy Friday sir.
- [01:09]
NLW
What's happening?
- [01:10]
Scott Melker
Just crypto stuff and Trump stuff and more Trump stuff. You know, it seems to always be Trump stuff. I don't think we've yet escaped the markets only care when he tweets environment.
- [01:22]
NLW
Quite yet I don't think we're going to although I think we are getting actually I have this hat the beatings will continue into morale improves on and I feel like I didn't mean to but accidentally kind of picked pick the hat of the, of this of the time.
- [01:37]
Scott Melker
That's amazing. Listen, before we get into the main stories we have this sort of hyperbolic title that crypto markets are set to explode as bitcoin approaches 95 while bitcoin I mean just went to 94. 9 making another high in this kind of local cycle. But like I said, this is more about what's likely to come in the future. This was one of the stories about real estate market exploding to 4 trillion. I've had a lot of conversations of late about how tokenization really is going to be the future of growth in crypto. We have a lot of crypto native applications that people are likely to adopt but really the big numbers are going to come from the other side. It's going to be tokenization and stable coins which we get to.
- [02:16]
NLW
Yeah, no, look, I think, I think that there are, there's a, there's a whole slew of really interesting things that crypto could do. But these are long term trends. So the tokenization piece, you know, I think to some extent one of our mistakes with it has always been to view it as sort of like a cycle hype narrative as opposed to just critical infrastructure that's clearly coming. You know, and I think that this, this report and these predictions are sort of validating that it seems inevitable. Right. You know, again, there's questions of sort of exactly how it, how it, you know, value accrues to the tokens that are used and all that sort of stuff. But it's absolutely the case that the, you know, the, the, the economy and assets are going to be increasingly crypto economy and crypto assets, whether they look like that today or not. So, you know, long term trend lines are still pointing in a very specific direction.
- [03:06]
Scott Melker
Yeah. At the end of the day, the story really will be if that's investable or if that's just captured by a bunch of legacy institutions on their own private platforms and blockchains and they tokenize everything and we can't participate.
- [03:19]
NLW
Yeah, I mean, look, I think that the good news is that part of why it feels inevitable is that it creates tons and tons of interesting, unique investable opportunities that people can play around with. Right. And there's a lot of ways that that gets wonky and gross and weird, but there's also a lot of ways that it just opens up, you know, sort of proxy access to different types of assets that weren't available before. And I, I think optimistically it's likely to me that the market is going to find lots of ways to have, you know, to expand access and to expand different types of participation. You know, look, I, I think the, the sort of, the, the, the wealthiest, you know, most capitalized sections of markets always benefit most from new types of sort of asset exposure. But that doesn't mean that there can't be opportunities for other types of investors as well.
- [04:06]
Scott Melker
Absolutely. So the first major story we have, we pegged it as Trump versus Powell, but I think we could probably just put it as Trump versus, because obviously we also have Trump versus China. And I think these have been in my mind the two biggest stories since Liberation Day and what we should be hyper focused on because he clearly played his hand with tariffs. We have varying results, mixed results we can discuss all around the world, but very clearly we had two narratives that the intention was to lower rates and to force Powell to do so, and of course to bring China to the negotiating table. At the moment that it happened, both of them seemed to call his bluff. Whether it was a bluff or not, they definitely called. The question now is how that's evolved and what's going on. So we obviously Know that with Powell specifically, that we'll talk about first, Trump called him a major loser, said he was going to fire him, said that he was incompetent, all these things. Now, obviously walking back a lot of that rhetoric after he saw what it did tomorrow markets, in my opinion, and saying he has no intention of firing him. Yes, we should cut rates, but I'm looking forward to working with him. You know, the usual. The usual backtracking on the aggressive rhetoric.
- [05:18]
NLW
Yeah, I mean, I think that the. The couple things. So one of the challenging things to figure out, you know, for everyone when, when analyzing Trump is like, so he calls Powell a loser, tweets about him a bunch of times, but then in the next breath says that he has no intention of firing him.
- [05:33]
Scott Melker
Right.
- [05:33]
NLW
And so the natural kind of human instinct is to be like, all right, well, he walked it back. But what if those things actually just aren't mutually exclusive for Trump, where he could call someone a loser while also actually not intending to fire them? You know, I think that the thing that's hard for markets to wrap their head around is that Trump seems sincere when he says, no, of course I'm never going to fire him because he just wants the punching bag. He wants to have someone to. To blame. But in any case, it is certainly the. It is certainly the case that markets did not like that being sort of like the new source of antagonism and acrimony. They were getting real jittery based on that for a variety of reasons, I think. And so, you know, again, whatever the proximate cause, however much intention there had or had not been around firing, there was clearly a softening of the rhetoric. You know, not just around firing, but also around, you know, sort of the Fed in general that markets responded very positively to when it happened.
- [06:29]
Scott Melker
Yeah, it's sort of an interesting debate that I've had with other guests, but a lot of people saying, obviously if he fires Powell or continues that rhetoric, markets are going to crash because there's a lack of faith in the dollar and a lack of faith in American institutions. Dave Weisberger and others I've seen take the other side. They're like, well, if he actually found a way to fire Powell and people knew that he was going to bring in a really dovish commissioner, then you match. The markets are going to go up because the Fed would be controlled by Trump and do exactly what he says. But I take the former argument.
- [06:59]
NLW
Yeah, I think that the. Look, we are. Markets are quite good at finding ways to be cynical for the Sake of short term gains. But I think that, that one would, that would really challenge even, even these markets ability to sort of, you know, trade. Trade the short term for the long term.
- [07:18]
Scott Melker
So really quickly now, going to the China side as an update, Trump says he spoke with China. Z. Trump says trade deals are going well. Trump will end up with lots of good deals. Trump says Russia, Ukraine coming along. Then literally 45 minutes ago, China, US not having any talks on terrorists and Chinese embassy, US should stop creating confusion. Chinese embassy. What the hell is going on here? No, you never know from China.
- [07:41]
NLW
No, it's, it's. Yeah, I mean, look, it's, it's you. I think that, I think that it's basically what people are doing now is they're mostly using what comes out of Trump's mouth not to understand where things stand, but to understand where Trump stands and then try to sort of, you know, from there extrapolate that to what might be going on. So Trump talking about sort of, you know, deals coming along with China and intent is not about him having had a bunch of conversations. It's about where his head is at relative to the conversations that, you know, will be, will be held. You know, that is confusing, but it's also, I think, fairly clear to American observers that's sort of the way to interpret a lot of Trump statements there. Let's put it this way, more than most presidents, his statements are leading indicators rather than lagging indicators when it comes to stuff that's going on.
- [08:30]
Scott Melker
Yeah. I think it's also fair just to show this one article. Trump was warned of empty shelves and financial turmoil from tariffs and fiery pal. Of course, this is from CNN Business, so maybe it's a hyperbolic title. His U turn pushed stocks higher. I mean, we just discussed this, obviously, but there are reports from multiple sources that while Wall street called and they were not happy.
- [08:52]
NLW
Yeah, I mean, yeah, yeah. I think it's, they've been trying to dramatize how unhappy they are for some time. Again, it's, it's very hard to tell how much. I don't know. Let's put it this way. I am, I am fairly uncomfortable calling U turns, you know, with any sort of real conviction. I think we're still in an incredibly volatile scenario with a lot of moving pieces where, you know, all we know that right now is that it's. Everyone's a little happier than they were on Monday. And that's the. I'll take that W Heading into the weekend.
- [09:29]
Scott Melker
Yeah, for sure. So the next story and one of the biggest ones certainly of the week is obviously what's happening here with Ganner, Fitzgerald, Tether, Softbank et al. Of course we first got the report that we were going to get a microstrategy slash strategy slash sailor competitor in this company called 21 that was going to launch a sailor like fund with 42,000 bitcoin. Then we got the news a day later. I believe that Jack Maller was going to be the CEO which I think obviously gets the bitcoin community pretty pumped. He's the only guy who can go on TV in hoodies and a T shirt and a hat, you know, kind of turn to the side and apparently have credibility. It's actually pretty amazing to watch him work. But this is big news. First of all, it's another institution saying that what strategy doing is a viable opportunity to gain more bitcoin. It's confident that there's going to be enough investable, you know, enough people interested in investing in another vehicle like this, in this kind of convertible debt buying bitcoin. But I think what's most notable to me is who's in the partnership. So obviously Cantor Fitzgerald, not a huge surprise knowing where Lutnik stands. Tether and Bitfinex, clearly not a big surprise. But Softbank coming in with 900 million bitcoin is the real story here in my opinion because either they had it and we didn't know or they've been buying it to participate in this also. We obviously just have this being slightly structurally different than the strategy, so to speak, because Mahler's gone on TV and has said basically we're worried about bitcoin value per share, we're not going to trade at a premium to nav, which by the way, I don't understand how they can earn a yield without doing that. But basically saying this is going to be a safer version of what Micro Saylor is doing.
- [11:19]
NLW
Yeah, I mean hold aside the specific kind of financial engineering dynamics because I think that's maybe the for, for many people will be interesting. I think for our purposes kind of from a zoom out perspective, it's the least interesting thing. There's a lot of. I've loved this story this week. One because sort of on the face of it is clearly positive, more institutional interest, more excitement. But it's also shown, I think around the discourse just, you know, how robust the adversarial thinking of the bitcoin community continues to be. Because this was not just a full, kind of full on cheer sort of response. I think you saw a whole variety of things. You saw some folks who are just, you know, pure cheering and basically say, you know, Mahlers is the type of person that we're, you know, really excited when, when he gets more rather than less power. And we like those folks, you know, having a big stack. People have been excited about the fact that there, there does appear to be sort of like more accumulation happening here. People have been excited about softbank. You know, one of the really interesting points I think that people have made is that even though Masayoshi son has really taken a hit and had a hard time on his sort of, you know, previous softbank investments or, sorry, bitcoin investments, he's sort of decided not to take, you know, to deal with the psychological hit of how much more he could have had and, and weighed back in, which is a positive. But then on the flip side, you have people who have been, you know, quite nervous about, you know, having another, you know, highly powerful kind of, you know, accumulator in the space. The potential trend lines that, that indicates there have been people who are questioning sort of, you know, how much this is tether, just trying to find a kind of, you know, a U. S regulated institution that they can kind of do, do what they will with. You know, none of, none of which is to say that those are, those are the right ways to look at it. But it's fascinating to me how much conversation an otherwise sort of just very, you know, kind of on the surface of it, positive thing, you know, has, has brought up.
- [13:14]
Scott Melker
Yeah, and we have this kind of blockchain, Long island iced tea. Long island iced tea blockchain, whatever it was element to it where your stock flies if you mention bitcoin right now. Cancer skyrockets 130% as traders FOMO into the stock on Bitcoin SPAC frenzy and I think they're up another 25% pre market right now. This thing is going absolutely nuts on this news.
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NLW
Yeah, no, it's, I think obviously the, you know, net net people are pretty excited about this.
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Scott Melker
Yeah. Okay, so the next story that we have here is about the European Central bank, everybody's favorite institution but the commission versus the central bank arguing apparently about Trump dollar and stablecoins. This is one I have not dealt deeply unpacked. But I do love this headline Commission livid as ECP warns of crypto apocalypse under Trump. I mean, let's go.
- [14:08]
NLW
Yeah, I mean, so we, we had touched on this story before where Europe is getting increasingly freaked out about the, you know, stable coins as a destabilizing force for the euro. I think that's being exacerbated by the fact just by the, by the sort of the presence of the Trump administration. But it's also being complicated by the fact that within Europe, there is not a lot of consensus here. So two different groups that the ECB and the European Commission brought different reports on these issues together and they completely disagreed with each other. So there's, you know, internal, you know, squabbling. There's, there's sort of external nervousness. It's just kind of a, you know, I don't know, it's a get your popcorn moment for all of us over here sitting on the dollar. But it's, you know, I think that the other piece of this is that US Politicians are now officially adopting the sort of recognition that stable coins are a tool of expanding US Dollar hegemony. So it's not like the Europeans are coming from nowhere with this. You know, there, there, there is some.
- [15:11]
Scott Melker
Intention here, depending on what Asia does and how tariffs go. There's a world where stable coins or stable coin issuers are the number one buyer or certainly top three of United States treasuries.
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NLW
Yep.
- [15:25]
Scott Melker
So hard to argue that they're wrong in that perspective considering that somebody's going to have to buy these things and that's definitely going to be stablecoin issuers. Speaking of stablecoin issuers and crypto companies based in the United States, it seems that in advance of likely legislation on stable coins, we are getting a whole lot of institutions trying to get banking license. So we got the Wall Street Journal here. Crypto knocks on the door of a banking world that it shut out. Circle Bitgo and other crypto firms plan to apply for bank charters or licenses. Coinbase apparently going for it. Here you go. Once again. Circle Bitgo. I don't know why I can't say that. And others. And then you have stablecoin turf war, bank of America tether and circle battle to shape US rules. So this is, we all know that they're all lobbying and trying to get what they need into the bills. And then of course, Citigroup predicts stablecoin supply could hit 3.7 trillion by 23. By the way, there's more. You even have the bank of America CEO bullish on stablecoins. We'll get into that business. It's a never ending talk on stablecoins here. But perhaps the story worth double clicking on is the banking charters, because that to me tips the hat as to what they think this legislation will look like, and what will be required to compete?
- [16:43]
NLW
Yeah, I think there's a combination of things going on. I think one, crypto institutions have had a long term interest in, in sort of the opportunity like basically moving on over into the traditional financial and banking world via vis a vis bank licenses. It got, you know, obviously sort of stumbled and held back over the last couple of years with Operation Choke Point. But this is a, this is not like sort of a new ambition. Right. People have recognized that a lot of opportunities open up and crypto institutions are ambitious. They don't want to just be the biggest thing in crypto. They want to, you know, use crypto to take over the rest of the economy. So I think that's one part of what's going on. But certainly I think that the flurry of activity that we're seeing is reflective of the potential that the way that this legislation goes with stablecoins is that you have to have some version of a bank charter, whether it's a limited version or a complete version to actually participate in this game. I think that's certainly the proximate cause for this amount of activity and is validated by all the, all sort of, all the banks waiting, waiting in as well. So, you know, people are gearing up for what they perceive as one of the big sort of important competitive areas, which is stablecoins. And it, and it looks as though, I don't even think that it necessarily means that they think that for sure banking licenses will be required. I just think that based on where things are, they think there's enough of a chance that they're taking it real seriously.
- [18:02]
Scott Melker
Yeah, I mean if this could be there, even if they only view it as a 5 to 10% chance, get that banking charter, it can't hurt. Right. And we know Kraken has a banking charter actually in state of Wyoming. They're not one of the ones listed, although I think it's very narrow rules as to what they can do. But it would make sense for basically every exchange in the United States to get their own bank, even outside the stablecoin legislation, to get their charter just so they can't be debanked by a future administration.
- [18:28]
NLW
Yeah, yeah, absolutely. Like it's one of those things that makes a lot of sense to try to take advantage of a friendly regulatory period to try to lock in some advantages and value that come from that.
- [18:41]
Scott Melker
And then the next story, speaking of operation choke point 2.0 and issues with banks, we have the Fed joins OCC, FDIC and withdrawing crypto warnings for US banks. Here it is. Directly from the Federal Reserve. Federal Reserve Board announces a withdrawal of guidance for banks related to their crypto asset and dollar token activities and related changes to its expectations for these activities. Interestingly, I saw a whole lot of tweets from the industry saying, we won, it's over, we did it. And then a whole lot from the other side, the Caitlin Longs and others saying the Fed is still part of the anti crypto army. Don't believe this. They're still coming after us.
- [19:20]
NLW
Yeah, absolutely. I don't know. It's. I. Look, I think that the signals are positive when it comes to what's happening publicly, but at the same time, there's clearly some. There's some challenges that are happening as relates to what's going on behind the scenes. So be cautiously optimistic, but also listen to the people who are dealing directly with the folks there.
- [19:44]
Scott Melker
Yeah, I mean, that's really the final story that we have for the day. I think in general, everybody's just kind of holding their breath as usual and waiting to see what price does, because bitcoin's at one of those levels where a meaningful push at this point could give people confidence that the nonsense is over, at least for crypto. But, man, it's hard to get super excited when you see those kind of tweet storms and news storms back and forth between Trump and China and others. I just think there's going to remain a lot of uncertainty and volatility for a while.
- [20:15]
NLW
Certainly how it feels to me, I think, you know, look, I think we. We celebrate the short term wins, you know, kind of continue to position yourself defensively, you know, be optimistic where there's room for optimism. But I think it's a. It's going to be volatile for as far as the eye can see from where I'm sitting.
- [20:32]
Scott Melker
Yeah, I agree. All right, guys, give NLW a follow. Check out the breakdown. Of course, I'm not sure I'll be back next Friday with the Friday five, because I think I'll be traveling, but maybe. Maybe you'll do it. You don't need me. Yeah, we'll be.
- [20:45]
NLW
We'll see. All right.
- [20:46]
Scott Melker
I'm not required here. Let's be honest. All right, everyone, we'll see you on Monday. Thanks. Bye. Cheers. Let's go. Let's dope.