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The Wolf Of All Streets
Massive Bitcoin & Crypto Crash | SEC Issues Meme Coins Policy 🐶🚨
00:27:30
Massive Bitcoin & Crypto Crash | SEC Issues Meme Coins Policy 🐶🚨
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- [00:01]
Scott Melker
There is blood in the streets. The question is, are you buying? We have a massive bitcoin and crypto correction underway with questions about the macro hacks and more. This has been an insane week in crypto NLW and I will unpack everything happening with the market and the news here on the Friday 5. Let's go. Let's do 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. You can like the show, but you don't have to like the market. Gonna bring on NLW right now. The one thing I do like, as I said to you right before the show, is that I am not at East Denver because that seems like the worst place on earth you could possibly be right now.
- [01:01]
NLW
Yeah, yeah. I mean I guess they. There's probably a lot of places that have open bars and stuff at night. So there's some, some upside. But beyond that, I don't know, man.
- [01:09]
Scott Melker
Drink away Those sorrows, man. First listen, it's the Friday 5. We review the biggest stories of the week. But there's one that just hit, that's an honorable mention that has nothing to do with crypto. That just had me laughing. So I got to bring it up. Citigroup mistakenly Credits Customer Account 81,000,000,000 in near miss. So they're supposed to, this person supposed to get 280 bucks and Citigroup just small rounding error through 81 trillion into this person's account. Which begs the question how do you make a mistake like that but be like, how does a Bank just have 81 trillion to credit to someone's account?
- [01:42]
NLW
I think there needs to be a finders keeper's rule where if a bank makes a mistake that egregious, you get.
- [01:47]
Scott Melker
Something out of it that's just an absurd number. 81 trillion. You should get to at least keep like 800 bucks or something like a fraction round to the nearest 0.00001. Here we are looking at the market Bitcoin at 82,000 actually looking kind of decent at the moment when you know that it went as low as 78 to 29, obviously all coins getting shattered alongside it. Which leads everyone to wonder what happened to the golden age of crypto? What happened to the world's most pro crypto president? Is that what's going to happen here? Obviously. I saw on Bloomberg today that 80% of the gains in legacy markets have been erased since the election. Over 50% of the stocks in the S&P50s and P500 are down more than 50%. Obviously all coins largely trading below where they were at the election. But bitcoin still holding up a bit. Bitcoin set for worst month since June 2022. Crazy worst week since November. That year we had the worst three day slide since ftx. And that wasn't even counting yesterday. This is pretty savage. Obviously the headlines just keep on coming. What's going on here, man?
- [03:00]
NLW
I mean, I think that everyone's trying to figure that out. The, the obvious proximate cause of all of this is volatility following, you know, Trump policies and you know, the, the, the, the, the sh. That maybe the man doesn't care about the stock market in the way that we thought he was going to.
- [03:22]
Scott Melker
Right.
- [03:22]
NLW
I mean that, that's really what it feels like. It feels like the markets are one, nervous about the idea that their assumptions around how much the stock market was going to be used as the metric of administrative performance is actually true. But two, it also kind of feels to me like they're putting this new administration to the test. Right. The market is trying to, you know, scream and holler and make their opinions known by, by virtue of this, you know, they're, they're basically saying there's going to be a cost, you know, a political cost for these policies and, and you know, you're gonna have to decide what to do with it. I, it feels very much, you know, crypto in this situation feels very wrapped up with the rest of the risk asset world versus something that's sort of independent. Now, of course, to the extent that it is about Trump and Trump policies, crypto is highly associated with those things. So it's, you know, perhaps a little bit more than even its normal kind of leading edge indicator type of approach, but that's what feels like it's going on to me. But you know, I'm sure there's lots of, lots of other analyses and interpretations out there as well.
- [04:27]
Scott Melker
Yeah, it's certainly a huge part of it. Obviously all of these stories about tariffs and I think markets hate uncertainty. And one day it's a tariff on, one day it's a tariff off, one day it's 25%, one day it's 10, 10%. So I think there's a lot of confusion. But listen, when you add up doge and tariffs and all these things, we're effectively in a low liquidity environment with austerity of sorts. Right. And I don't think that people kind of had that mentally as their framework when they approach the Trump market. To be fair, I think rip the band aid off if this is what you intend to do, and get it over with now. Probably the best time politically for them to allow the market to fall, get what they need done, and then attempt to pump it, I guess, into midterms. But this is not what people signed up for, certainly in crypto when they were thinking about the Trump presidency. But how much do you play in which we'll get into the hack, obviously. I mean, there's been just a few kind of things unique to crypto, I guess, that have been bad, the hack being one of them and the tariffs here. Do you think that any of those kind of crypto native narratives have much to do with it? Because the market's down, but it's not down. I mean, we're getting, you know, all coins are down 60, 70% a month.
- [05:44]
NLW
I think that, so we had already identified, I mean, we've been tracking for the last couple of weeks the, the broader, you know, shift and the, the imbalance between, you know, not just retail attitudes and institutional attitudes, although that was part of it, but also the, the vagaries of retail. Right. The, the difference in Robinhood retail versus, you know, buybit retail for, for lack of a better term.
- [06:05]
Scott Melker
Right.
- [06:06]
NLW
Meme coin retail. And so there already had been that split. I think that the, where we were even before all of this was significant narrative exhaustion around everything that wasn't bitcoin. You know, Solana was, was being dragged by, by the rest of the sort of meme coin come down. So crypto had more sort of farther to fall. It felt like because of, it was, you know, running up against those walls already. But, you know, I don't know. I, I think that everything is about sort of the bands of, of what would be. It feels to me like the macro is driving the, the overall. But there's all these reasons to be, you know, not that enthusiastic about the absolute dog that's available in the crypto markets already. That just makes it in this context, you know, it just, it just hurt even more so, you know, look, I think that if you're trying to understand the, the, the, the side of it or the part of it that's connected to macro, bitcoin is going to be, just continue to be your best, you know, your best, most interesting barometer for that and everything else sort of shows the crypto native pieces surrounding it.
- [07:14]
Scott Melker
Yeah. And my take is once again, short term pain for long term gain. We'll get into a lot of it but the tailwinds for bitcoin are still astounding. All of the things Trump largely said he would do for the industry, he is doing. So these are very short term things as the market absorbs it. But the fact that we have the SEC that we'll get into what's happening there, all of the pro crypto appointments across the board, all exceptionally bullish to me. Long term.
- [07:41]
NLW
Yeah, no, I mean, listen, I think that the other thing about this is that this bull market, the sort of straight line bull market, since it looked like Trump, you know, since basically the crypto markets determined that, that Trump was going to win, this thing hasn't had any sort of big term correction. Now I don't really think that this sell off is you know, the standard or, or kind of historic 30% bull market, you know, shed that we've seen in the past. However, you know, it, it. One thing that's bullish I guess for, for bitcoin is that because we do have that patternicity, even if the circumstances are totally different, it creates a, a kind of a narrative floor. I think that as we start to turn, you know, once we, once we kind of like hit wherever the bottom is going to be now there's going to be, there's this natural narrative that people are going to be able to draw from that says hey look, you know, we, we always experience these 30 drawdowns, you know, on our way back to the top. So don't stress about it, you know, we'll keep going. And a lot of this, you know, a lot of these things are psychological games we play with ourselves along the way. So you know, I, I think that there's, I certainly am not waking up in cold sweats or anything because of this. It's just the most dramatic one of these we've had since the sort of full bullishness of a change in, in guard in Washington take taking over, you know, really, really started to get digested by the market, you know, at this point nine months ago now.
- [09:07]
Scott Melker
Yeah, I mean just to wrap the price action conversation for transparency, I bought Bitcoin at 82,000, 79,000 here. I bought Ethereum at 2100. I bought Solana at, at 126.50. When I take a look at the fear and greed index at 10 which is year multi year low. When I see everything massively oversold. For me as a chart guy, I see bullish divergences with RSI on every single chart. It just seems like we hit that irrationally. Oversold and are looking for a big bounce. I think the bottom is close. And so I'm also interested in buying.
- [09:41]
NLW
Here even if the bottom isn't close. Obviously, like none of this is financial advice, but even if the bottom isn't in, it's. We're clearly discounted relative to where people were. Right. Like, you don't see these big multi day, 25% sell offs. And I think that, you know, the mistake that the. One of the most common mistakes is people thinking they have to perfectly time things rather than just generally time things. Right. This is a discount opportunity. You know, it may not be the biggest discount opportunity we have this whole cycle, but it's a good one, you.
- [10:07]
Scott Melker
Know, so, yeah, yeah, I mean, I have pretty high conviction. At some price, it will trade multiples higher and not many multiples lower. That's all I need to know to be a buyer. The next story obviously is the Buybit hack, which sort of dropped after we did the show on Friday last week. Obviously that has now been attributed to North Korea and the Lazarus Group. For those who missed it, and I know you didn't because we've been talking about it all week. $1.5 billion largest hack in history, Ethereum hack. But now we're starting to get some actual clarity onto what happened here, whose fault it was, how they were able to exploit cold wallets and multisig. And I think one of the bigger stories here is how successful Lazarus has actually been in laundering this Ethereum with the entire world watching. To me, that's been one of the shockers that they've still been able to cash out hundreds of millions of dollars here, which is obviously being chased. Here's that forensics report. Maybe you can dig into us. What happened here with this hack.
- [11:06]
NLW
It is so beyond my pay grade to really dig into, to this hack. I think that the, the key takeaways though, from, from the stand, from kind of a layperson standpoint, is that it was extremely sophisticated. It was not like some, you know, Bybit sitting there being, you know, twiddling their thumbs like idiots or anything like that. I think that the, the takeaway is that Lazarus has gotten extraordinarily more sophisticated when it comes to these things. Security gets more, not less, challenging. We, we cannot operate as though we just think we have these things solved. We're going to need to expect more from exchanges, more from, you know, from sort of the existing custody infrastructure. I think it's another great reminder of the challenges of, of keeping your crypto on exchanges, although even that's sort of, you know, less, less clear than it, than it, than it was. You know, I think that the, the, one of the positive pieces of this is, is that the, rather than the Spider man finger pointing, the industry is doing a lot of trying to rally and collaborate to, you know, it's basically crypto versus Lazarus right now is sort of the, the vibe out there and I think that that's very positive. I think that crypto is an extremely, you know, the, the, when it, when it marshals its power together, it can do very, very powerful things. We've seen this with policy. I think that, you know, it's a lot of credit to Bybit for the way that they've sort of rallied the, the, the, the world behind them. You know, I don't, my impression is that they haven't shirked responsibility where they've needed to have responsibility. But you know, I think that it's. Lazarus is a fact of the world that we live in and they just rose up and showed that they are, you know, really, really good at this and, and to fight we're gonna have to be really good as well.
- [12:47]
Scott Melker
Yeah, it seems like the wallet infrastructure from SAFE was actually where the major exploitation was that Bybit followed their normal protocols. But listen, we all know that any system that's built online, hackers are going to be one step ahead and you're just trying to catch up and figure out what they can do. And they showed exactly what they can do here. It's pretty terrifying to be honest, because you're told don't keep your wallet in exchanges self custody. But a lot of these same sort of exploits and phishing and mistakes are made in self custody as well. Like it's pretty amazing to me. I'm not surprised, but it's eye opening that custody is still such a massive problem in crypto at every level.
- [13:32]
NLW
Yep. I mean look, the, the nothing is a silver bullet. This is why it's sort of, you know, imperative for everyone to, to, to, to take it seriously. Right. To figure out the systems and risks that they're willing to take. It's, it's not as clean and clear. You know, I think, I think that to your point, for a long time it's just been a, just use a, you know, a hardware wallet and you're good. And it's, it's not even that clear, you know, or not even that obvious as well. Obviously these systems are getting more and more sophisticated. The good news is that there's a lot more incentive for, you know, especially as institutions come in to have sort of different, different levels of custody and different approaches to custody. But it's a, it's a, it's a real challenge out there, and it's one that's not going away. I, I don't anticipate that we will ever, in crypto have a time where we just feel comfortable with this. The, the, the incentives are too high, the opportunities are too immense. You know, it's, it's just going to, going to be a fact of life forever.
- [14:31]
Scott Melker
There will probably be a time in the future when we're talking about Bitcoin being stolen from bank of New York Mellon or State street, almost for sure. Yeah. So it's coming just be an issue of how well you're insured and how well they cover customer assets and what systems they have in place for that. The next story, obviously, Coinbase case dropped by US SEC as agency reverses crypto stance. This was dropped with prejudice. You can see Brian Armstrong simply case dismissed. Then of course, Paul Graywald, their head counsel. Goodbye and good riddance. But this really isn't the only story right now from the sec. It's almost hard to keep up. I mean, in the last week or 10 days, roughly, Coinbase, Robinhood, Uniswap, OpenSea consensus. Did I miss any? I mean, they have just unwound Gary Gensler's entire legacy in a matter of weeks.
- [15:21]
NLW
Yeah, I mean, this is what I think a lot of folks were waiting for. We, we had all of these indications that things were turning around and that this SEC was going to handle things differently. The big outstanding question had been the, the court cases. Right. The actual legal actions, the enforcement actions against companies that has now clearly started to shift. You know, the, the last question for some had been, you know, is there any logic or reason to which ones are outstanding versus not? It seemed as though it was literally just a matter of the sequence of upcoming court dates from a prioritization standpoint, and that continues to, to look like the case. So, you know, not everything has been closed out at this point, but it, it certainly appears that the trajectory is all of those enforcement actions getting closed or resolved in some way.
- [16:08]
Scott Melker
Yeah, it feels like if you're left in a week or two, maybe there's some actual fraud there that they're investigating. Because clearly the SEC's new mandate with the way they're setting up their systems and organization is to go after actual fraud and leave anybody who's trying to innovate alone.
- [16:25]
NLW
Yeah, how about that? That's crazy.
- [16:27]
Scott Melker
Crazy. That they actually would follow their mandate and the law. But I think that this goes back to the conversation at the beginning, which is that the things that are happening under this administration are long term, exceptionally bullish for crypto, like these tariffs and the macro and all the things we discussed at the beginning. Even a hack here and there or the Trump token should be nothing in the face of this turnaround from our biggest enemy.
- [16:53]
NLW
Yeah, look, I think that the 1 agree with all of that to the, to me, the big thing to start watching for, we're still in policy cleanup phase. Where it gets really exciting is when we get to actual policy making phase, particularly I think with the SEC and the potential for safe harbor type stuff. I think that the, the most deterministic impact that, that this SEC could have on the shape of crypto is, is creating regulated, safe legal space for experimentation with security. Like things around tokens. That's where the floodgates get open. That's where people actually start to do really interesting things that they've wanted to do for a decade now. That's where people have an incentive to stay inside the regulated market instead of go outside of it. So, and we're still not even there yet. We're getting, you know, kind of nudging towards that. But basically the point being that even as bullish as all this stuff is, there's, there's more bullishness to come, I think when it comes to the likely, the likely trajectory of policy in the.
- [17:52]
Scott Melker
U.S. yeah, they've used the eraser to get rid of everything that's bad, but still need to flip that thing around and start writing actual regulation and legislation that will give us clarity. But I think we're going to get a safe harbor type proposal and things are going to move forward nicely. We're talking about getting rid of our worst enemies. Well, speaking of worst enemies, we've got circle and tether trade views, Trade views on US Regulation. As stablecoin war heats up. Jeremy Allaire firing some public shots across the bow of Tether, basically saying that anyone who's going to operate in the United States should be heavily regulated here, maybe have a banking relationship in the United States. This is sort of him saying the quiet parts for many months out loud. And then Palo Alto we know, quickly firing back from Tether and basically saying that USDT is the most successful tool for US dollar hegemony and distribution across emerging markets. These guys are going to, you know, obviously fight for their own companies and the future of their stable coins in the United States. In the broader Sort of, you know, context of stable coins being the lowest hanging fruit and probably the first thing to be legislated on in the United States.
- [19:03]
NLW
Yeah, I mean this battle of, this clash of the titans was completely inevitable. It's been playing out, you know, behind closed doors in Washington forever. It's now breaking out into the mainstream. There's clearly narrative jockeying going on. Circle taking advantage of the fact that, you know, everything right now is bring it back to America, do it in America. You know, that's sort of all the rhetoric that we're getting from this administration. I think that they're playing off of that. You know, there's huge financial stakes here. I think that Circle has for a very long time been positioning itself as the sort of de facto you US digital dollar. That's what they want to be that. And so this, you know, makes sense of that context. However, I also think that there are fairly serious, you know, consequences for many in the crypto industry who do not like this sort of approach to business competition. You know, Nick Carter's real loud about this right now and he's, he's hardly alone.
- [19:58]
Scott Melker
I have a feeling that the bigger narrative in stablecoins as we approach actual legislation is going to be the crypto incumbents like to Heather and USDC first, the big banks that are coming in.
- [20:10]
NLW
Yeah, there's, there's absolutely a lot. This could backfire very aggressively to, to sort of be, you know, squabbling amongst ourselves when, you know, bank of America is determining that they're gonna, you know, launch.
- [20:24]
Scott Melker
Let me show you guys a video here. Here's the CEO of Bank of America. For anybody who may have missed his comments this week, let's just show the video.
- [20:31]
C
Which is gonna be a fuller dollar backed type of thing, which is no different than a money market fund with check access, is no different than a bank account really. And so if they make that legal, we'll go into that business. So you'll have a Bank of America coin and a US dollar deposit and we'll be able to move them back and forth because now it hasn't been legal for us to do it, but it's just then like another foreign currency. The question of what it's useful for is going to be interesting.
- [20:58]
Scott Melker
I mean this is a, you know, pretty, pretty, pretty clear here that we're going to have JP Morgan coin and Goldman Coin and Bank of America coin and everyone else coin. And if we're looking for institutional adoption of tether or circle, where do you think the institutions are going to Go. When we have our trusted Wall street banks here saving the day with their own stable coins.
- [21:20]
NLW
I like to think that everyone knows that bank of America is a piece of crap and they're super lame and so maybe they won't get a lot of traction. But Jamie Diamond Coin is definitely going to be a hard competitor is when push comes to shove.
- [21:32]
Scott Melker
Yeah. So I really think that Circle and Tether are going to sort of have to get on sides with one another and fight for the industry and the private stablecoins that they have before the big banks take over everything. And finally, this is back to the SEC and Commissioner Hester Purse. Hard to keep up with everything they've been doing. But SEC publishes Meme Coin stance, reinforcing Hester Purse's comments that meme coins are not securities. Here's that staff memo. This also echoes what David Sachs has been saying, largely in defense of Trump Token, that these are more akin to collectibles than they are to securities. I mean, this is just a lot more clarity on the nonsensical market. This is kind of what we assumed, but still good to have it on paper.
- [22:23]
NLW
Yeah, you know, I, I read an early version of the memo that was titled stupid comma but not securities. Just kidding. That's not true. But yeah, no, look, I, I like the Hester has been pushing, I think the, the, the, the, the most middle of the line, common sense argument about this, which is basically it's not the SEC's job to tell you what you can, what stupid thing you can or can't invest in. It's also not our job to fix it when it goes bad. But you know, the great thing about liberty is you get to make those decisions and this sort of, you know, is the legal instantiation of that approach, which is good. You know, look, meme coins should live or die on the basis of, of, of, of their own merits, not based on some, you know, sort of weird, weird regulatory treatment.
- [23:13]
Scott Melker
Yeah, I mean, I, we didn't have this story queued up, but obviously as we have Hester Purse talking about the meme coins not being securities, we also have the House Democrats floating legislation says taking aim at Trump crypto meme Coin, but basically saying that no federal agent or politician should be able to launch their own token. I have no idea whether this will make it through or not. I wish I had the video of the guy pointing at a thing explaining what a rug pull was. I don't know if you saw it, but he's on the floor of Congress with like a Poster board, it says rug pullers, but explaining this. So listen, I mean, we're gonna get more clarity. I guess. I would say that they should be focusing on insider trading from politicians as well, but. Yeah, maybe politicians also shouldn't be firing off meme coins.
- [24:03]
NLW
I'm, I. There are a lot of things to be annoyed at Democrats about. Extending the sort of, you know, traditional understanding of the types of ways that you can benefit from your office to not being able to pump a meme coin. Seems fairly reasonable to me. If we're gonna be trying to give, trying to give any side credit at any time, I do think that there's always a prioritization question. Anything, you know, look, you know, any, anything that has the word Trump associated with it is, is, you know, political fire, you know, either good or bad. So it gets messy when those things get connected. But look, it feels completely inevitable to me that, that all of these sort of crypto interactions will just be treated like normal financial stuff where you kind of can't do that while you're in, you know, in office. I, I also think that in general, look, Americans don't like it that Nancy Pelosi, you know, has made a boatload of money trading stocks while in office. I don't think they're gonna like it, you know, if they make money off of crypto either. I think that it's just that this is, you know, we are so divided in so many ways that when you can find common sense things like people shouldn't profit off their political office, at least while they're in their office. You know, you got to, you got to jump on those things.
- [25:17]
Scott Melker
I think Nancy's just a really good trader, you know, see why she gets so much. She. Excuse me, her. Paul, it's her husband's name, right? Yeah. Anyways, yeah, I don't think that politicians in general should be financially capitalizing off of their constituents. Call me crazy, so I'm on board for, for any of that. I think we covered it all actually pretty quickly there. Is there anything we might have missed today?
- [25:38]
NLW
I think everyone's just licking their $82,000 wounds right now. But, you know, look, we'll, we'll, we'll be back next week. I think it'll be interesting to see how much has changed. And then we are in a, we are in a very volatile moment. And look, I think what crypto people need to remember is that we are constitutionally more suited for volatility than any of these normies out there. Like why, why are we the ones stressing it's ridiculous. Like, we're the ones who ride. Ride these waves. Like it's, you know, like. Like it's like it's a beach in summer, Man.
- [26:07]
Scott Melker
I just hope we're not talking about Swastikoin next week.
- [26:10]
NLW
We almost definitely will be.
- [26:12]
Scott Melker
Oh, God, kill me. The Kanye token. If you want something to put in the ceiling, if we get a rally, that could be your biggest culprit.
- [26:18]
NLW
I'm not going to fully commit to this yet, but I've spent seven years or eight years in this industry not really, like, calling out people and being loud about how much awful they are. If this thing happens, I. I might reverse some policy and go in on. On some folks. So we'll see. It could. Interesting episode to watch.
- [26:37]
Scott Melker
I. I joined. I had to actually look back. I joined Twitter, I think, in, like, November 2008, and among my first 10 tweets were my hatred for Kanye. And it's been consistent for literally decades. So this is one that I will get right. All right, so for sure, everybody's on board with hating Kanye now. It's great.
- [26:56]
NLW
Tune in next week for.
- [26:57]
Scott Melker
For.
- [26:57]
NLW
For fireworks on Friday 5.
- [27:00]
Scott Melker
All right, guys, that's all we got for you. Check out the breakdown. Follow nlw, and we'll see you next week. Thanks, man.
- [27:06]
NLW
Later, guys.
- [27:08]
Scott Melker
Let's dope. That's dope.