Podcast Summary: The Wolf Of All Streets – "Massive Bitcoin & Crypto Crash | SEC Issues Meme Coins Policy 🐶🚨"

Release Date: February 28, 2025
Host: Scott Melker
Guests: NLW

Introduction

In this episode of The Wolf Of All Streets, host Scott Melker, known as the "Wolf of all streets," delves deep into the tumultuous events unfolding in the cryptocurrency market. Joined by his co-host NLW, they dissect a week marked by significant market corrections, regulatory shifts, and high-profile security breaches. This comprehensive summary captures their insightful discussions, key points, and expert analyses.

1. Market Overview: A Stormy Week for Bitcoin and Crypto

Scott Melker kicks off the episode by highlighting a "massive bitcoin and crypto correction" currently underway. He sets the tone with a metaphor, stating, "There is blood in the streets. The question is, are you buying?" (00:01).

Bitcoin's Performance:

• Bitcoin is trading around $82,000, showing some resilience despite recent drops to $78,029.
• Cryptocurrency markets are experiencing significant downturns, with all major coins down approximately 60-70% for the month.
• Melker notes, "Bitcoin still holding up a bit," suggesting relative stability amidst broader market chaos (01:47).

Macro Market Factors:

• The hosts discuss the broader financial markets, noting that "80% of the gains in legacy markets have been erased since the election" and that over "50% of the stocks in the S&P 50s and P500 are down more than 50%" (02:00).
• They attribute part of the market volatility to policy uncertainties under the Trump administration, including fluctuating tariffs and low liquidity environments.

Investor Sentiment:

• Melker shares his personal investment positions: "I bought Bitcoin at $82,000, $79,000 here. I bought Ethereum at $2,100. I bought Solana at $126.50" (09:06).
• He emphasizes a bullish long-term outlook despite short-term pain, citing bullish divergences and oversold conditions suggesting a potential bounce (09:40).

2. Macro Factors Impacting Crypto

The episode delves into how macroeconomic policies, particularly those associated with the Trump administration, are influencing the crypto markets.

Trump Administration Policies:

• NLW suggests that "the man [Trump] doesn't care about the stock market in the way that we thought he was going to" (02:59).
• There is a sentiment that the markets are testing the new administration's policies, potentially leading to increased volatility and uncertainty.

Tariffs and Economic Uncertainty:

• Scott Melker highlights the chaotic tariff environment: "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%" (04:27).
• This unpredictability contributes to a "low liquidity environment with austerity of sorts," complicating investment strategies and market stability.

3. Crypto-Specific Challenges: The Bybit Hack

A significant portion of the discussion centers on the recent Bybit hack, the largest in history.

Bybit Hack Details:

• Scott Melker references the $1.5 billion Ethereum hack attributed to North Korea's Lazarus Group (10:06).
• The hack exploited cold wallets and multisig systems, raising concerns about the security of crypto exchanges.

Implications for the Industry:

• NLW remarks on the sophistication of the attack: "Lazarus has gotten extraordinarily more sophisticated" (11:06).
• The incident underscores the ongoing challenges in securing crypto assets and the vulnerabilities within custody infrastructures.

Community Response:

• Both hosts commend the crypto community's resilience and collaborative efforts in combating such threats, viewing it as a positive aspect amidst the crisis.

4. Regulatory Developments: SEC's Shifting Stance

The episode covers the latest moves by the U.S. Securities and Exchange Commission (SEC) concerning cryptocurrency regulation.

Case Dismissals:

• Scott Melker announces the dismissal of Coinbase's case by the SEC, marking a significant regulatory shift: "Coinbase case dropped by SEC as agency reverses crypto stance" (14:31).
• NLW observes that this signals a broader trend of the SEC shutting down enforcement actions, potentially focusing only on substantial fraud cases.

Meme Coins Policy:

• The SEC, under Commissioner Hester Purdy, releases a memo clarifying that meme coins are not classified as securities: "SEC publishes Meme Coin stance, reinforcing Hester Purdy's comments that meme coins are not securities" (21:32).
• This clarity aids the market by legitimizing certain cryptocurrency projects and reducing regulatory ambiguity.

Future Regulatory Outlook:

• Both hosts express optimism that the SEC will create a "regulated, safe legal space for experimentation with security," fostering innovation within the crypto industry.

5. Stablecoins and the Battle for U.S. Regulation

The discussion shifts to the competitive landscape of stablecoins and the regulatory battles they face in the United States.

Circle vs. Tether:

• Jeremy Allaire of Circle criticizes Tether, advocating for stringent U.S. regulations: "Anyone who's going to operate in the United States should be heavily regulated here" (16:52).
• In response, Tether emphasizes its role in "US dollar hegemony and distribution across emerging markets" (19:02).

Entry of Traditional Banks:

• Scott Melker introduces the possibility of major banks like Bank of America launching their own stablecoins, potentially overshadowing private stablecoin providers: "We'll have JP Morgan coin and Goldman Coin and Bank of America coin and everyone else coin" (20:57).
• NLW speculates that established institutions might struggle to gain traction against private entities like Circle and Tether due to differing reputations and client trust levels.

Legislative Impact:

• The hosts anticipate that stablecoins will be among the first crypto segments to receive detailed legislative attention, given their prominence and practical applications in daily transactions.

6. Politicians and Crypto: Legislative Proposals and Conflicts

The episode touches upon proposed legislation aimed at curbing political misuse of cryptocurrency.

House Democrats' Legislation:

• Scott Melker mentions a bill targeting the creation of crypto tokens by federal agents or politicians, aiming to prevent conflicts of interest and insider trading: "Taking aim at Trump crypto meme Coin, but basically saying that no federal agent or politician should be able to launch their own token" (23:13).

Implications for Political Figures:

• NLW discusses the broader implications, asserting that restricting politicians from profiting off crypto aligns with public sentiment against financial misconduct: "Americans don't like it that Nancy Pelosi has made a boatload of money trading stocks while in office" (24:02).

7. Long-Term Outlook: Bullish Despite Short-Term Turmoil

Despite the current market volatility and regulatory challenges, both hosts maintain a bullish outlook for the long-term prospects of cryptocurrency.

Investment Strategies:

• Scott Melker emphasizes the importance of viewing current downturns as "short term pain for long term gain," highlighting the "tailwinds for bitcoin" driven by favorable policies and regulatory clarity (07:13).

Resilience and Adaptation:

• NLW points out that the crypto community is constitutionally more suited for volatility, suggesting that the industry's inherent resilience will weather these storms: "We are constitutionally more suited for volatility than any of these normies out there" (25:38).

Conclusion

In this engaging episode, Scott Melker and NLW provide a thorough analysis of the current state of the cryptocurrency market, grappling with severe corrections, significant security breaches, and evolving regulatory landscapes. Their discussions underscore a belief in the long-term viability and growth of crypto assets, despite facing immediate challenges. The hosts encourage listeners to adopt a resilient mindset, positioning the current volatility as a natural phase in the broader adoption and maturation of the crypto industry.

Notable Quotes

• Scott Melker (00:01): "There is blood in the streets. The question is, are you buying?"

• NLW (02:59): "Crypto in this situation feels very wrapped up with the rest of the risk asset world versus something that's sort of independent."

• Scott Melker (09:06): "When I see everything massively oversold... I think the bottom is close. And so I'm also interested in buying."

• NLW (11:06): "Lazarus has gotten extraordinarily more sophisticated when it comes to these things."

• Scott Melker (14:31): "Coinbase case dropped by SEC as agency reverses crypto stance."

• NLW (19:57): "Circle has for a very long time been positioning itself as the sort of de facto US digital dollar."

• Scott Melker (16:52): "These are very short term things as the market absorbs it."

• NLW (25:38): "We're the ones who ride these waves. Like it's like a beach in summer, Man."

Note: The timestamps correspond to the points in the provided transcript for reference.