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- [00:00]
A
Did the United States government lie about buying crypto? Some head scratchers of remarks from Besant, the Treasury Secretary may have caused the market to dip a bit when he implied that the United States government has no intention of buying more bitcoin. This alongside a whole lot of other news to unpack. We've got NLW here for the Friday 5. Let's go, let's do, let's go. We've got a lot of news to cover as usual here. Maybe a slightly slower week, but still a crazy news cycle, especially for August. Here we go. Let's just dive right into it. We had Besant. Bitcoin drops below 119k after US Treasury Secretary rules out new bitcoin buys. Here is exactly what he said. We've also started to get into the 21st century. A Bitcoin reserve, we're not going to be buying that, but we're going to use confiscated assets and continue to build that up. I mean, that was a questionable remark. He obviously quickly went ahead and corrected it later, which we can discuss. But he did say we're going to stop selling bitcoin. I believe that the bitcoin reserve at today's prices is somewhere between 15 billion and 2020 billion. So actually a lot to unpack. Gave us a bit of confirmation as to how much bitcoin the treasury might hold, but also some wishy washy thoughts here on what that reserve might look like in the future.
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B
It had the feel of like.
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A
A.
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B
Parent who has decided to tell their kids one thing but forgot exactly what they were going to tell their kids, but was basically like, just stop asking me about this. Because basically it sounded like he. That it was almost. It was, if you listen to the actual interview, it was a total throwaway line. It wasn't like someone was like, hey, are you going to keep buying it? He just kind of said it nonchalantly like, no, we're not going to keep buying it. And then moved on. And everyone was like, wait, hold up. And then for the next 24 hours, you know, the entire bitcoin world came with pitchforks and he, you know, corrected it.
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A
I don't know.
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B
It's very, it's very hard to tell what's going on. It seems like there is, there's sort of this vague notion of looking for budget neutral ways to acquire more, but that's also pretty clearly not a priority. I think that if we are looking for positive signs, it's that they're not going to sell more, but it's certainly not the full Throated. We're going to go out and try to buy as much as we can.
- [02:43]
A
Yeah. And with Bo Hines gone, we don't know who's going to bullpost and bull comment all day about strategic bitcoin reserves. I saw some terrible takes that were like, now we know why Beau Hines has left. I mean, give me a break. I don't think Bo Hines took his like four months of government duty into a high paying private job and left because of a strategic bitcoin reserve. But it is just that now we got that somewhat clarity on how much bitcoin the United States government might hold, or at least that vague comment about just also has this crazy element of we're going to confiscate a bunch more bitcoin from people in the future. We're going to keep that very libertarian and very within the ethos of bitcoin.
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B
The interesting thing about the strategic bitcoin reserve conversation has always been that it has these very weird bedfellows sometimes in the same person, which is like, are we excited about this because it's the US government pumping our bags, which let's, let's not be cynical. That's awesome.
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A
Right.
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B
Or are we excited about this from some assessment of like us's place in the world where we think this is important?
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A
Right.
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B
You hear Cynthia Lummis talk about this, she's clearly thinking about it from the standpoint of US success more than bag pumping.
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A
Right.
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B
But others obviously are just thinking about what it's going to mean for price and they're very different positions, like wildly different positions on this thing.
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A
Yeah. I think it just indicates that this isn't the number one priority for the United States of America, even though we would love it to be. And we're probably not going to get a lot of clarity anytime in the near future. And that's fine because everything else has been going swimmingly for the crypto industry. I guess we can kind of pack further this slight sell off that we've had here. We hit an all time high. Obviously it lasted about 12 minutes and all of a sudden woke up and we're a few thousand below and went back into the 117s. Apparently this is a huge deal. But we kind of had the double whammy. We had the percent comments in the morning and then the inflation print for PPI that came in a bit later. That was hotter than expected. So of course, the hundred percent certainty we were getting rate cuts in September, it was literally 100% now in question. Once again, what will we Do.
- [04:55]
B
Yeah, I mean it's interesting. We, you know, we didn't, we didn't, we're not talking that much about the, the sort of. The CPI from earlier. CPI was one of those classic CPI prints where it is a Rorschach test for what you wanted it to say. Anyone who wanted to justify any narrative could find plenty in there to, to, to, to tell their own story. The, the. And so, you know, because markets want this cut so badly, the story they told, they, they decided to hone right in on the number that was better than expected.
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A
Right.
- [05:23]
B
Not the sort of like very nuanced that maybe suggest worse than expected. Unfortunately, PPI came around. It was, you know, a little bit clearer in its signaling and dampened enthusiasm. Damp, you know, basically gave Powell more, more justification to continue sitting on his hands. And I think that that's just sort of, you know, rattled, rattled markets in general. It wasn't just Bitcoin.
- [05:43]
A
Yeah, I agree. And we don't need to dive too deep into the macro. We have other days to do that. I think the next story is actually the biggest one of the week because of the potential implications. Means introducing ark, an open Layer one blockchain purpose built for stablecoin finance. This is Circle announcing that they're launching their own Layer one. I think this one is the biggest piece of news, but we have to give an honorable mention along the same lines to Stripe to build Tempo Payments blockchain with Paradigm. So we have a number of private public traded companies generally announcing that they're effectively going to build their own Rails for stablecoin. We know that Tom Lee has been relentlessly bull posting about the reason he wants to own a big Ethereum treasury company and continue investing is because Stable coins on Ethereum makes you scratch your head. Now when you think about Circle having their own Layer one.
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B
Yeah, I mean I think that everyone is sort of a little, a little head scratching right now about, about all of this. You know, on the one hand it's not totally unclear why, you know, a private company would want to own the Rails and sort of, you know, enjoy the benefits there. From I think Meltem Demures had a tweet that was basically like, come on guys, this is completely obvious why you would want to have access to this. Like what are we thinking? But the flip side is, and I think this is where and to your point why Circle hit harder for folks than Stripe Stripe people look at and they're like, yeah, I mean look, they're a fintech company. They weren't you Know, they've, they are as pro crypto as the regulatory apparatus around them allows them to be and no more.
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A
Right.
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B
And so fine, whatever we, this is kind of the thing you expect from a financial institution that's not crypto native. Circle, on the other hand, is crypto native. They're supposed to get it, they're supposed to be a part of the sort of, you know, the ethos of the ecosystem. And I think even more than any sort of moral or sort of principled stance here, I think that a lot of people are just gaming this out to the scenario where, you know, this isn't, this is just a wildly balkanized, frustrating, you know, annoying system to deal with where all the benefits of crypto are basically out the window and it's just, it's worse than the existing financial system. That's what people are frustrated about. It's not again, it's not some like principle like you're not allowed to make money by owning, you know, the Rails. It's that by, if everyone does this, it obviously leads to a place where the system just sucks, you know, and isn't useful. It isn't good. It's more frustrating. And I think that people kind of are looking at Circle and basically thinking to themselves like, you guys should know better, like of course this is where that leads if this is the decisions you make. But whatever the decisions they're making right now and you know, they're, they're, they now have competing forces, they have to, you know, continue to keep markets excited about them and you know, the markets might not be playing out the same kind of game. Theoretical scenarios that all of us who are watching kind of the crypto space evolve are.
- [08:36]
A
Yeah, there's sort of a couple themes to unpack here for me. I literally just fired up ChatGPT to get the actual numbers. So a, which is not that is that this could of course compete with Ethereum. We could be seeing a battle for the heart of decentralization now, right? Will we have institutions choosing to use our beloved blockchains in a more decentralized manner to build things, or are they all going to go with walled gardens, make sure that they control the transactions, they make the money. In the case of Circle here, I've given this example a couple times. If you have 72 year old Betsy, who's three years away from retirement, who's doing accounting for Random Firm and has been told by her boss that they're going to be doing payments now in stablecoins and she sends $500,000 in USDC to a Solana address instead of an Ethereum address. She can't call the Solana Foundation. Right. So from that perspective, I totally understand that Circle would want to galvanize here, create a more institutional grade blockchain where they can actually help people who need the help and are not native and have customer service and things like that. So I get that. And I think this is also though a way to mitigate the inevitable humongous losses that are coming when we get interest rate cuts. They need to find more ways to make money as a company to now justify the stock price. Right. And this is the numbers that I brought up. I mean it basically says each 25 bip rate cut that we see will be about 100 million drop in EBITDA for Circle in 2024, 98 to 99% of Circle's revenue came from interest earned on US treasury bills and other short duration securities backing USDC. These companies. This stock is basically a bond with interest rate exposure. You're just buying interest rate exposure.
- [10:30]
B
Yeah, no, I, I, look, I think it's the, the, there is a real lived financial reality that these companies have to play in that's going to come at the cost or compromise potentially, you know, the, the things that we would like them to do.
- [10:46]
A
Yeah. I also wonder what it means for Coinbase. Our next story is all the things that Coinbase is doing. But we know that Coinbase, I think makes about 55% of the revenue on USDC. This could be a way for Circle to sneakily kind of detach themselves from that and make a little more money on their own without giving as much to Coinbase. But Coinbase, man, they are absolutely crushing it. We've obviously reported on this deal before, but it's closed. Coinbase seals Deribit acquisition and six deal of 2025. Crazy. But Coinbase also has been making news that speaks to what I was just talking about, which is that we're going to have this battle between people building their own things or just using either existing blockchains or in this case crypto incumbents, PNC Bank, JP Morgan, all saying we don't want to build this stuff. We're just going to use what Coinbase has and we'll have a partnership. That's what we're seeing a lot of. So I think we just are really in this interesting inflection point. But Coinbase is not stopping. They're going to continue to be an everything company and do it all over the world.
- [11:48]
B
Well, and that's interesting. If you take that Coinbase being an everything company lens, and apply it to Circle, right? Like, again, people are reacting to this Circle news as though Circle is a primarily a crypto native institution that's supposed to in some ways uphold like the sort of principles of crypto as opposed to just a generic external financial services business. And Coinbase is very clearly and has been for a while playing to not just be the best crypto native institution, but to actually start to, you know, beat out fintech at its own game. In certain places, they're positioning for that. One of the big things we've talked about over the last, you know, number of months is that there's been a bit of a shift in balance where pre Circle ipo, everyone assumed that Wall street was going to just come in, recreate all of these Rails, do it themselves, and everyone was going to want to go with JP Morgan's version of the thing, you know, because it's, you know, the brand, right. But increasingly, as these institutions get more power, as market cap goes up, et cetera, et cetera, and as more of the traditional financial players throw their lot in with the crypto native institutions decide to your point, to partner with Coinbase on something rather than going and doing it themselves, it creates more sort of momentum and strength in the crypto native institutions who are managing this. And so if you take that lens to look at this Circle thing, it's like someone's gonna build the, you know, I can call them up version of these Rails. Do we want the, do we want it to be Circle or do we want it to be JP Morgan who's building the I can call him up version of the Rails? There's an argument that Circle, that someone was going to do it, and it's better to have it be Circle than it is to have it be, you know, to a tradfi company that doesn't care at all, but who knows?
- [13:25]
A
That makes a ton of sense. And I, and I think what we're seeing on the other side here in my mind is all of the exchanges trying to find an identity beyond just being exchanges. Coinbase obviously leading, but I would say we have basically Coinbase versus Robinhood right now, because, I mean, Coinbase I think, has five times as many users actually as Robinhood, which I didn't realize. It's pretty crazy how much of a lead they have. But Robinhood obviously already has kind of the Everything app going on, and then we have the two of them as the new entrants that are going to then compete with the J.P. morgan and Charles Schwab's and Morgan Stanley's.
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B
Yeah.
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You know, who wins the young audience and then who takes that audience into the future and replaces the incumbents.
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B
I don't think that's. That Coinbase would ever sort of vocally admit to not caring about the competition with Robinhood and the competition for retail traders. But it also seems pretty clear to me, based on their. That, you know, the. What they're building and where they're prioritizing, that they definitely view JP Morgan as their competition more than Robin Hood. Right. They are. You know, they're going after the, the sort of, the, the biggest possible institutional plays. I mean, Deribit's a great example of that. You know, it's not just sort of, you know, access to more retail users, it's access to this, you know, a new set of instruments that are going to be appealing to a totally different type of group.
- [14:42]
A
Yeah, we've unpacked that. But the Terabit, it's way bigger than people can even understand. I think just the, the sheer size of Deribit and their market share of futures trading. But then also, as you said, just the license, you know, it's not huge in the United States, but they basically have just opened futures trading for the entire world. For Coinbase.
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B
Yep.
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A
The next story we've got to talk about is obviously something we've dug into in the past, which is crypto adjacent stocks effectively being the new alt season with irrational pumps left and right. And I'm going to throw this one out there as something I would, as much as I like bullish, call a slightly irrational pump. Bullish stock ends first day at 70 with 90% gain given crypto exchange market cap above 10 billion. So much like Circle. Actually, I looked into the numbers. It's very, very similar. Circle raised about a billion dollars. They were about to launch between 28 and $32, had this massive launch IPO above 90, pumped above 100 and then settled in down below. They both basically did the same thing. But Circle, I think people expected because we just had the genius act going through. There was this wild appetite for exposure to stablecoins. Bullish is not Coinbase or Robinhood or even Kraken and pulled off the exact same move. So is this just market exuberance? Froth. What, what do you, how do you view this ipo?
- [16:09]
B
I view it as froth, straight up. I mean, this is, this is the clearest indication that we have disconnected and that anything with crypto right now is going to be rewarded. And that is an unsustainable situation, period, full stop. And again, there's no slight to Bullish like, you know, strike while the iron is hot, you know, but there's nothing that justifies that, that, that price, that pop, any of that in, in, in their financials. So they're sitting at around an eighth of Coinbase's market cap right now with 3% of their revenue. And it's not like this is like particularly desirable revenue where there's some clear path and it's just going to be unlocked. You know, the, the recent financial performance hasn't been particularly, you know, exciting. Where they sit in the sort of market and what they fit is like not particularly clear to people. It's just crypto name is Bullish Go. You know, and like I said, this is nothing to no knock on them. I would, you know, try to, try to get as much as I can while the iron is hot as well.
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A
But yeah, I mean, it is definitely mass. Yeah, this is 12D chess or whatever we call it at this point. They just got public at the exact perfect time. They captured the moment. I mean, imagine this IPO two years ago.
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B
I will tell you that Kraken is losing their absolute ever loving crap right now. Not being, not being public yet.
- [17:28]
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That, that's exactly what Sid Powell said yesterday. He was like cracking in. Gemini is like, they gotta get, you know, they gotta start skating to that puck, man, because it is time.
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B
Yeah, well, it's, I mean, unfortunately, I think that there's a, there are indicators that, that it's, it is now past time. If, you know, bullish has all the hallmarks to me of the one that you look back on as a, as a top. But you know, look, these are not strictly crypto forces. These are, there's other types of exuberance right now. The market is extremely hungry for things like this. Look, if, if there were. There's also a dearth of the theme that markets really want, which is AI that they can buy. There's not like AI IPOs happening every day. And so AI and crypto are kind of getting lumped together as sort of like the new frontier things and people are just buying whatever they can get their hands on. So, you know, it's like I said, it's not, it's not the crypto industry leading the froth, it's a broader market phenomenon that crypto is benefiting from right now.
- [18:30]
A
Yeah, we're in the middle of all this froth. And you have to remember we also had a four year frozen period of no IPOs, no come to market, no mergers and acquisitions. There was just nothing. I mean, we just had that Figma ipo, which was equally insane and has nothing to do with crypto.
- [18:44]
B
Yeah, no, people are really, really hungry for, for liquidity. And, you know, people are excited to be back in this sort of period, but it's, it, it looks frothy, let's put it that way.
- [18:55]
A
Speaking of liquidity, BlackRock now holds over 100 billion in crypto. Wow. And of course, we have BlackRock buys 150 million in Ethereum signaling institutional confidence. I hate these headlines. I hate the way they're structured. I hate when people tweet. And my news guys, I think they've done it once or twice, but we're like, BlackRock buys 500 million. Are you bullish enough yet? And you're like, no, some people bought a bunch of ETFs and BlackRock then had to buy the coin and custody it with Coinbase. But no, Larry Fink is not bullishly smash buying Bitcoin for BlackRock's balance sheet. But still, this just speaks to the incredible institutional thirst for ETF products that BlackRock has created. This also continues on what we just talked about with the IPOs and anything crypto adjacent that's available to public markets. But the other side of this is that a big chunk of this is becoming Ethereum.
- [19:55]
B
Yep. Look, I, I think that, you know, we've talked about this before as well. There, there's. It, it has always seemed like it made sense for, as crypto moved into the financial sector, for there to be like, you know, on the desk, the, the big Bitcoin ticker and the big Ethereum ticker. Bitcoin representing store value and digital gold, Ethereum representing all the other stuff. And for a while, that wasn't happening. People only cared. This, to me, feels like a very kind of natural settling in. Yes. It's being driven, of course, by, you know, you've got a new sailor in the form of Ton Li who's playing that role for Ethereum. But the market is responding to that narrative shift.
- [20:29]
A
Right.
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B
The, the ETF. Ethereum ETFs have been absolutely crushing and outperforming. You know, we had a couple billion or something inflows this week compared to, you know, 330 million for Bitcoin. So, you know, it's. I think it's, it's naturally sort of like recapturing its place. I mean, keep in mind, Ethereum hasn't, still hasn't reached an all time high. Right. Since 2021. It's, it's like we are still in the catch up phase of, of where it should be, relatively speaking. So that's, you know, these ones I, I actually view as much less frothy and top signaling. I think that they're kind of a, a natural, natural calibration frankly.
- [21:06]
A
Yeah. The price action for crypto was so crypto this week. The fact that bitcoin made this slight all time high and immediately lost it and that Ethereum sniffed it for the first time basically in four years and then just couldn't get there. Just leaving that level of anticipation that we were all so used to after all of these years. But I think we're still in the mid innings of this thing. I think it's August and the fact that we're not down is probably just good news in and of itself.
- [21:36]
B
Absolutely. This is a rip roaring August based on August. These are, these is not market, you know, participants off in the Hamptons like there is a. The normal, the normal patterns of regular markets are pretty out of whack this summer as well. So it's a, it's. You can't really apply old lessons I think in quite the same way.
- [21:54]
A
You got it, man. We, we cooked through those. It's the Friday 5, but we usually call it like the Friday 905 or the Friday 908. We always start a little late. Today we hit it, we nailed it and we're like punctual people.
- [22:06]
B
Don't expect that. This is a change.
- [22:09]
A
Don't get used to it. Friday, Friday 9 10. We'll be back next week. Guys. Give a listen as always to the breakdown and to NLW of course. Otherwise we will see you next week. Thank you guys. Have a great, amazing weekend. Bye.
- [22:24]
B
Later.