Podcast Summary: The Wolf Of All Streets Episode: Texas Proposes BTC Reserve | Crypto Town Hall: Chat W/ Axelar
Release Date: December 13, 2024

1. Introduction

In this episode of The Wolf Of All Streets, host Scott Melker delves deep into the current state of Bitcoin (BTC) with his macro favorites, Mike McGlone and Dave Weisberger. The discussion spans Bitcoin's recent price surge, institutional adoption, the proposal of a Bitcoin reserve by Texas, and the critical role of interoperability in the crypto ecosystem, featuring insights from Gary of Axelar.

2. Bitcoin Market Analysis

a. Current Price Action and Market Sentiment

Scott opens the conversation amidst technical glitches, highlighting Bitcoin trading above $101,000, a significant leap that seemingly overshadows the recent bear market.

Scott (00:01): "We got bitcoin trading above 101,000 American dollars. It's almost like we've forgotten the bear market of a few days ago."

b. Dave Weisberger’s Insights

Dave describes the current market as a "coiling spring moment," where mainstream adoption by large financial players meets speculative frenzy from retail investors. He notes the decrease in liquidation rates as a positive indicator.

Dave Weisberger (01:10): "We are in the coiling spring moment. The irresistible force is mainstream adoption by large financial players... Bitcoin showing tremendous strength here."

Dave posits that Bitcoin might soon delink from traditional risk assets, setting the stage for its next upward movement, possibly later in the month.

Dave Weisberger (04:07): "I think we are setting up for the next move. Personally, I hope it takes a little while because for personal reasons I like to accumulate some more... I think we are on the verge of bitcoin delinking from what people term as risk assets."

c. Mike McGlone’s Perspective

Mike, while cautiously optimistic, emphasizes the risks of predicting market tops in bull markets. He underscores Bitcoin's high correlation with traditional risk assets and suggests that institutional strength might drive Bitcoin to new heights, potentially reaching $140,000.

Mike McGlone (04:22): "The next standard deviation move means bitcoin can easily get to 140,000 and it can easily get to 60."

Mike also highlights the persistent inflows into Bitcoin ETFs compared to gold, citing their higher potential for upside.

Mike McGlone (07:51): "Bitcoin's outlet makes perfect sense. But we've had that. And finally, it's in the mainstream."

3. Institutional Adoption and Texas’s Bitcoin Reserve Proposal

a. Institutional Recommendations

Scott references significant endorsements from financial giants like BlackRock and Interactive Brokers, which now recommend allocating 2-3% of portfolios to Bitcoin, a notable increase from previous suggestions.

Scott (12:49): "BlackRock just put out an entire paper this week that said people should be allocating 2%. I believe they said the CEO of Interactive Brokers said 2 to 3% into Bitcoin."

b. Texas’s Proposal for a Bitcoin Reserve

Scott discusses Texas’s groundbreaking proposal to establish a Bitcoin reserve, comparing its potential impact to a major economy like France undertaking a similar move.

Scott (15:57): "Texas proposing a bitcoin reserve... Texas is like the seventh largest economy in the world. It's bigger than France."

Dave supports the idea, arguing that major financial players recognize Bitcoin's value, and anticipates significant institutional investment in the near future.

Dave Weisberger (16:45): "Anyone want to take the other side of this bet that every one of the top firms... is going to go through a gold rush to apply to FINRA to be able to trade spot bitcoin on behalf of their customers in 2025."

4. MicroStrategy’s Bitcoin Strategy

a. Leveraged Exposure Concerns

The conversation shifts to MicroStrategy’s leveraged Bitcoin strategy. Mike criticizes the sustainability and risks associated with MicroStrategy’s approach, which involves issuing convertible notes at low-interest rates to buy more Bitcoin.

Mike McGlone (30:08): "Yeah, it's impossible to satisfy the needs of any real-world applications today. And if you make an analogy of a blockchain as being a decentralized computer, if we look in Web two, there's billions of computers, but there's only one Internet."

b. Community Debate

Participants like Teddy and Danish express skepticism about relying heavily on MicroStrategy for Bitcoin exposure, warning against the inherent risks of leveraged trades.

Teddy (33:25): "Look, these different companies... you just do a portion of your holdings to leverage trade. But, like, don't go nuts and put all your money in MicroStrategy when you have this great asset that has actually tested multiple cycles and executed well."

Dave counters by emphasizing the fundamental differences between Bitcoin and other altcoins, supporting sustained institutional interest.

Dave Weisberger (36:23): "A bitcoin reserve, people laugh it off as, yeah, just another state... But these are huge fundamentally shifting pieces of news if they happen."

5. Alternative Cryptocurrencies and Meme Coins

The hosts briefly touch upon the volatility and speculative nature of meme coins like Dogecoin and "fart coin," contrasting them with Bitcoin's stability and growing institutional acceptance.

Mike McGlone (08:47): "I think that's why I shouldn't say outperforms actually goes down when beta goes down or doesn't go down as much on a risk-adjusted basis."

6. Axelar’s Role in Crypto Interoperability

a. Introduction of Gary from Axelar

Gary, representing Axelar, joins the discussion to elaborate on the importance of interoperability in the blockchain ecosystem. He explains how Axelar connects disparate blockchains, facilitating seamless asset and information transfer.

Gary from Axelar (65:12): "Blockchains for decentralized computers. They are all in silos and as a user, if I have my bitcoin, how can I use it in DeFi on Ethereum to get a loan against it."

b. Security and Decentralization

Gary contrasts Axelar’s decentralized bridge technology with other platforms that have faced significant security breaches, highlighting Axelar's robust security measures.

Gary (67:00): "With Axelar from day one we made it a point to build decentralized technology... so you get a similar level of decentralization to the other blockchains we connect."

c. Future Developments and Adoption

Axelar plans to scale across numerous blockchains, including non-EVM chains like Solana and Ripple, aiming for substantial cross-chain transaction growth.

Gary (73:34): "We see the emergence of a lot of non-EVMs... the cross-chain activity will explode. And this is what we noticed when we were starting out."

7. Predictions and Conclusions

a. Market Predictions

Participants share bullish outlooks for Bitcoin, anticipating continued growth driven by institutional investments and strategic reserves. However, some caution that traditional market cycles might still influence Bitcoin's trajectory.

Brian (51:55): "I have never seen a front-running opportunity that has lasted this freaking long... we are grossly underestimating this."

b. Innovation and Infrastructure

Gary emphasizes the critical role of infrastructure projects like Axelar in enabling widespread blockchain adoption and improving user experience across diverse ecosystems.

Gary (74:08): "It's all about user experience... making web3 usable in a world with millions of chains that's completely fragmented."

c. Closing Remarks

Scott wraps up by acknowledging the diverse viewpoints shared, reinforcing the importance of both institutional support and innovative infrastructure in shaping Bitcoin’s future.

Scott (62:25): "The speculative degen money will find a home... We're going to see further price suppression. But I also think that there's going to be an inflow of capital from people that are more bullish on MicroStrategy."

Notable Quotes

• Scott Melker:
  "We got bitcoin trading above 101,000 American dollars. It's almost like we've forgotten the bear market of a few days ago." (00:01)
  "Texas proposing a bitcoin reserve... Texas is like the seventh largest economy in the world. It's bigger than France." (15:57)

• Dave Weisberger:
  "We are in the coiling spring moment. The irresistible force is mainstream adoption by large financial players... Bitcoin showing tremendous strength here." (01:10)
  "Anyone want to take the other side of this bet that every one of the top firms... is going to go through a gold rush to apply to FINRA to be able to trade spot bitcoin on behalf of their customers in 2025." (16:45)

• Mike McGlone:
  "The next standard deviation move means bitcoin can easily get to 140,000 and it can easily get to 60." (04:22)
  "Bitcoin's outlet makes perfect sense. But we've had that. And finally, it's in the mainstream." (07:51)

• Gary (Axelar):
  "Blockchains for decentralized computers. They are all in silos and as a user, if I have my bitcoin, how can I use it in DeFi on Ethereum to get a loan against it." (65:12)
  "With Axelar from day one we made it a point to build decentralized technology... so you get a similar level of decentralization to the other blockchains we connect." (67:00)

Key Takeaways

• Bitcoin's Resilience: Bitcoin continues to show strong price performance, potentially setting the stage for further growth driven by institutional adoption and strategic reserves.

• Institutional Endorsement: Major financial institutions are increasingly recommending Bitcoin allocations, signaling a shift towards mainstream acceptance.

• Strategic Reserves: Texas’s proposal for a Bitcoin reserve could be a game-changer, influencing other states and sovereign nations to consider similar moves.

• Interoperability’s Importance: Projects like Axelar are crucial in addressing blockchain fragmentation, enabling seamless cross-chain transactions and enhancing the overall crypto ecosystem.

• Leveraged Trades Caution: While leveraged positions like those taken by MicroStrategy can amplify gains, they also introduce significant risks, emphasizing the need for prudent portfolio management.

• Future Predictions: The consensus among participants leans towards continued Bitcoin growth with potential for significant price milestones, albeit with attention to traditional market cycles and speculative risks.

For more insights and updates, follow Scott Melker and The Wolf Of All Streets on Twitter and stay tuned for future episodes exploring the depths of Bitcoin, trading, and the evolving crypto landscape.