ROLLUP: U.S. Crypto Task Force | Ethereum L1 Is Scaling | Microstrategy's Record BTC Buy | Uniswap v4 | Berachain's Massive Airdrop

Bankless Nation, welcome to the weekly roll-up where we cover the weekly news, drama, and developments in the crypto space. This is the second week of February, and today on the show I may have the pleasure of being joined by Mike Ippolito, co founder of Blockworks and another relentless podcaster. Mike, how are you doing, my man?

Doing very well. Doing very well. Thanks for having me, David. This is

Yeah, yeah.

This is gonna be exciting. Uh, before we get into the details of the week, maybe just give me your vibe of the week. Give us a vibe check in. How did this week feel for you?

I feel like right now the vibe for crypto in general is a little bit split. Um, you know, there's, you know, people I feel like the word of the last couple months has been dispersion, and people are describing this as a very dispersed cycle in terms of returns. There are more coins than there have ever been. And for the first time, really, outside of these in sort of the history of crypto cycles, there are big winners and big losers for this last cycle. And people are pretty split in general if this is the top, you know, if we're down only from here, if this is the beginning of a golden bull and you know, a new era of uh DeFi and crypto in the United States. So I think there's a vibe of general uncertainty, if I had to put my try to put my finger on it.

Yeah, maybe to say that another way, there's so much more uh noise. And maybe each like you can parse apart that noise into many different bits of signals, uh, but the signals are conflicting with each other. And I think this is probably just a sign of the fact that there's a lot of market participants and there's a lot of different sectors of crypto to focus on. And I feel like this is uh what you would expect if crypto were to keep on growing. It would grow just so large that the market itself of crypto becomes, like you say, very dispersed.

I feel like that's healthy though as well. You want some amount of dispersion and you want uh certain sectors to be able to outperform. There's been a very strong beta correlation of you know, everyone who's been in crypto for a long time knows it Bitcoin runs first and then ETH and then the new L1s and then Alts and then Fin for the cycle. And, you know, that implies a not super healthy market structure or people aren't allocating capital truly on the basis of performance. They're allocating it on the basis of just risk. And I think it's actually very healthy for there to be more dispersion and you know, for you to have asymmetric outperformance. And yeah, just more coins probably just means more of that going into the future.

I think that's right. And speaking of more coins, Bear Chain has finally launched its main networks up and running. Yeah. I don't know what Q5 is, so that's going to be one of the questions that I ask you. I think many of the listeners are probably also asking what is Bear Chain? What's proof of liquidity? And then also there's an airdrop. So who is eligible for BearA? That's one gonna be one of the topics of the week. Uh Hester Peirce is making moves with the SEC's brand new crypto task force. There's a new website and a new statement from Hester, gives us some insights as to what's happening over there as it relates to crypto in the SEC. MicroStrategy is now just strategy. Drop the micro, it's cooler. Uh and also, Mike informed me of this me of this this morning. Did you know that half of all MicroStrategy's Bitcoin that it owns, that has on its treasury, was bought in Q4 of 2024? We'll talk about the implications of that. Uh Uniswap V4 is live. Uni V4 hooks are bringing a bunch of new toys to the yard. Will it bring all the boys to the yard too? Mike and I will discuss that. And then lastly, Ethereum is scaling the layer one. Validators have signaled that they are pushing the gas limit up to include more transactions into Ethereum Layer One blocks. Ethereum layer one blocks are bigger than they've ever been. So that and a bunch of more topics as well. Before we get into all of that, a message from our friends and sponsors. Mike, let's start with uh Monday, the markets on Monday, which saw uh a bunch of liquidations, uh multi-billion dollars of liquidations on the back of Trump's 25% tariffs on uh Canada and Mexico and 10% on China. We thought we were going into a trade war. That trade war ended very, very quickly when both Canada and Mexico just folded. Uh, and uh Donald Trump said that he's gonna pause his tariffs for 30 days, and then things rocketed back up, but not after liquidating over $2 billion in the crypto markets. Crypto markets fell, I think, by something like 600 billion in total crypto market cap. Uh, what was your read on the situation on the markets on Monday? How did you interpret things?

Yeah, I think that the the last couple of weeks, we've had a couple of spooks just in more traditional markets. So we had the Deep Seek uh scare, which led to a one-day sell-off of NVIDIA of I think 17 or 18%, which was $600 billion worth of value, aka one Ethereum and one Solana combined, which is the largest sell-off of a single stock in absolute terms in the history of the stock market. Uh and then you also had these fears of uh trade wars that Trump spooked. So the the question I think that people were asking was is this a posturing tactic? People who have read The Art of the Deal know that um, you know, I've heard his strategy described as madman theory, which is if you think your opponent is crazy or irrational, then you might actually be more uh concede a little bit more than you otherwise would. And it seems like within 24 hours, there had been uh, you know, joint tweets from the president of Mexico and Justin Trudeau up in Canada that there was going to be at least a 30 day pause on tariffs. So

You know, I would say that you have to treat Trump and AI relatively similarly here in the sense that you really just don't know what either of these what the impact of either of these things are going to be. And, you know, there could be some new weird open source model coming out of China tomorrow that will take the wind out of the sales of NVIDIA, which has been a bellwether for the S ⁇ P. And same with Trump, it's very difficult to know how he really feels about tariffs long term. Uh, there is a great piece by a guy named uh Joseph Wang, Fed guy, why he thinks that Trump has not been posturing about tariffs. But 24 hours after that, you know, we actually had him make some pretty early concessions. And it seems like the stock market has been appeased. So I think this is just gonna be something that makes uh there'll be some noisy headlines about this, which will lead to some sell offs. But until you get much more, uh much stronger signal that this is going to be permanent, I would probably, I don't know, feels like a dip to buy.

Yeah. Yeah. Do you have any opinions as to whether, like, who came out on top here? Like China, excuse me, uh Canada and Mexico both made some concessions with regards to the border. Um, but they also responded with threatening their own tariffs as well. Uh Trump, I think, will wave his flag saying that he like got a victory here, he got a W here, but he also just immediately paused his state uh his plan to actually follow through on the tariffs. Do you have any indication as like who actually came out on top or like what was the actual like fallout of this tense negotiation?

It's probably a little bit too early to say now. It's hard to say that certainly Mexico or Canada came out on top here, especially if you're Canada. I think the, you know, the imbalance of trade is, you know, Canada's a net exporter and they do an enormous amount of trade with the United States. And, you know, I saw estimates that if Trump were to enact the tariffs that he was discussing, it could lead to, you know, a massive 2% decline in GDP, which is sort of recession territory for Canada. And so just imagine you're a Canadian. So Donald Trump has been saying he wants to make you the 51st state. He's publicly bullying your prime minister on Twitter, and there's an immediate concession, and they appointed something called the fentanyl SAR. And if you've looked at the data, the amount of fentanyl coming from Canada's

Absolutely de minimis. So

Right.

you can't really be feeling too good as a Canadian here or feeling like this was a big win for your PM, I don't think.

Interesting. Interesting. All right, let's get into uh crypto prices. Uh Bitcoin down 7.5% on the week. This was largely caused uh by that Monday market sell-off that we talked about. Started uh the week at $105,000, ending the week at $97,100. Uh ETH uh doing something even worse starting the week at $3,260, 16% on the week to where it is now at $2,720. In the middle of the the week, uh, I think if you um uh measure the very bottom, if you go to some of the the centralized exchanges like Kraken or Coinbase, uh Ethereum even wicks it down to something like $2,200. Uh there was a bunch of analysis on the on-chain markets and uh just just the the centralized exchange markets too about Ether and heavy shorts were laid on ether in the middle of that sell-off. Uh and so in addition to global crypto market sell-offs, for there are some actors who are shorting ether and selling ether. And so ether just took uh a brunt of the the market sell-off and did not rebound to the same uh degree as other crypto assets did. Bitcoin, Bitcoin got back above a hundred thousand dollars after this the market sell-off pretty quickly. Um, it's since you know fallen back down to $97,000. But on Tuesday and Wednesday, it was over $100,000 after the sell-off. ETH has not since recovered, which of course uh brings us to ETH BTC, which is at lows that we have not seen since January of 2021, uh, which is basically as bad as it gets. That is erasing the entire uh gains on uh Bitcoin that it made throughout the 2021 bull market. Uh and so we we are now into territory that we haven't seen since uh I started to get into crypto at the point zero two three is where it touched. I think we're at.026. Uh Mike, commentary on Bitcoin price, ETH price, ETH BTC ratio, anything that comes to mind?

Yeah. I think the story here is Bitcoin strength. Um, it's been pretty remarkable how

long into this last cycle Bitcoin dominance has extended its gains. And there was a massive wick during the sell off of like a 10% uh wick here in Bitcoin dominance. I think it peaked at 65% or something like that.

And, you

know, I think part of that story is Bitcoin's acceptance as a global macro asset. I think we'll talk about it a little bit later. I think a huge part of this, which I didn't understand until I looked at these Q4 results for MicroStrategy, is just exactly how much MicroStrategy has been buying here. So that's probably a huge part uh of the story of Bitcoin's outperformance. And then yeah, I think ETH's uh ETH, you know, you got to call us Bait a spade. I think this was a tough uh last week for ETH, you know, pretty lap massive sell off. There wasn't the the bounce that you would have hoped uh as an ETH bowl. Um, I'm not 100% sure what's behind that story, but I think it's basically kind of a good week for Bitcoin, maybe a little bit of a tougher week for Ethereum.

The it was a tough week for Ethereum, but inside of like a tough almost coming up on like three years uh for for ETH BT as it relates to Bitcoin. My attitude here was like the market volatility uh that really happened on Monday really just sped up time in a way. It brought forward time. And so it just hastened some of the continuing trend that we've seen with it with ETHBTC. Uh and for some reason, somebody just decided to pile on a bunch of shorts right in that moment. And that short, those shorts have been working out.

Has Uti done another Death of ETH party so that we can finally reverse this trend? Or

I think he has, but the thing is is like now it's now it came true. He if he did do it, I think I think he did it at point zero three and we're at point zero two six. And so if he did a death of ETH party, like uh he's still he's currently on the right side of that history.

all right. Well, we would have hoped for a jinx uh that the death of ETH party, but

Uh installed. ETF inflows to tell a little bit of a different story. We had some very strong days, and especially on the 4th of February, for the Ethereum ETF inflows, $300 million on the 4th alone, $500 million, almost $500 million in the last five days. And we can kind of more or less count $1 billion of inflows into the Bitcoin ETFs. And then last thing on the market section when we talk about tokens, movers of the week. We usually talk about tokens that went up, but now we're going to talk about tokens that went down. So this is going to be losers of the week. Official Trump coin also down 35%. And it's been about 35% ever down 35% ever since it launched. And then I'll call out those two as the big losers of the week. But Tia, maybe one last one is Tia down 32% of the week. Tia has almost released erased all of its gains that it had since its launch in November ish of 2023. It launched at like a $2, $2.5 price, went up to $20 in February 2024. And we are currently below $3 for Tia. Mike, what do you think about Tia at $3?

I I mean,

not financial advice. I'm not a trader, you shouldn't listen to what I say, but I like Tia. Um, you know, I think I've been listening a lot to uh Chris Bernitsky's takes, and I think Tia basically

Uh, one way that you could look at T is I think they're doing a lot of the stuff that people would like to see from Ethereum and that they've got single slot finality. They are laser focused on larger blocks, uh, packed full of data. And it's still very early days, and people are trying to back into numbers of how much can you really charge for DA over time. But, you know, at least the number is going up. Uh, and I think that people will eventually see that over time, if you even at very low transaction fees, if you get enough volume, there's a compelling amount of fees that TA can generate. And yeah, it's obviously in a little bit of a challenge situation here. But, you know, if you want to take a punt uh here, this feels like a pretty good, pretty good level. I I got a question for you, David, on the Trump loser of the week. Um, what do you think in the alternate universe where Melania didn't launch her coin, where would Trump be at the current moment? Because that thing had so much momentum behind it, and now it has just been.

An absolute stinker. And it I it feels like it's gonna be pretty tough to recover from here, but I'm curious what your take is.

I think I agree with you that it is down only from here. I much desire to be in that universe where Melania was never launched. Because if you look at the Melania Melania coin, uh it is pretty pretty damn terrible. Is this the one? Uh

I think maybe this is the one, yeah. Uh $1.5 billion fully diluted valuation on the Melania coin uh with a $225 million market cap. Uh I think as Trump was launched, there was this Schrdinger's position of uh this is uh the president adopting crypto. He's the crypto president, he's gonna promote this meme coin, it's gonna be great. Uh this is just sure he gets to make money, but this is really good for our industry. Solana jumped by like 33%, Bitcoin jumped by like three or four thousand dollars. And so there was this like harmony between, well, you know, maybe it's a little bit of a grift, but it's really good for the entire industry. And then as soon as Melania launched, all all like all the rosy colored glasses just came off and we're like, this is this is a grift. Uh the momentum is gone. Now I don't want to even play, I don't want to play this game anymore. And like, I don't know why they did it because no, like Melania, I'm sure she's a great lady. No one cares about Melania. Donald Trump is the meme. Melania is not the meme. Uh and so they they destroyed tens of billions of dollars of capital by trying to launch the Melania coin. That's kind of my take on it.

Yeah.

I would agree. I think the whole market said, okay, this might be a grift, but it's at least probably good, net good for crypto. And then the Melania coin launched and then they were like, ooh, it's an incompetent grift. So less good.

Incompetent grift. No one everyone hates an incompetent grift.

Yeah.

Uh

Yeah, not the best.

Real quick, a layer two update brought to you by our friends and sponsors over at Cracks. Kraken Inc has officially launched at stage one, is already at stage one. They have one last red uh slice on the layer two B on their exit window. Uh and so the Kraken Inc. layer two is at stage one. I think it's becoming more and more commonplace for rollups to launch at stage one. The Unichain is launching day one at stage one. And so being a stage zero rollup is now pretty inexcusable these days. It's the the threshold to be is stage one. Uh and then also speaking of Kraken, uh they have reintroduced staking, ETH staking, a staking product for their US clients. Uh and so this was, of course, a very famous uh United States company Kraken versus the SEC, the SEC bully kraken out of their United States staking product. So they had to shut that down and they have brought it back. So a sign of the times. Any comments on these two things?

Yeah, I think it's great that they're bringing staking back in general. And yeah, it feels like they were.

Unfairly bullied out of that uh line of business. So that feels good. On Inc., I'm very curious to see what they ultimately end up doing with Inc. Um, you know, I think if you're launching an L2 today, obviously base has done extremely well. I'm sure Kraken is trying to replicate some of that success. And

Inc. has a leg up on anyone that's launching an L2 because they have a massive uh massive distribution through the Kraken sex. But I would be curious how they're thinking about where the L2 sits uh in relation to their legacy business and what they're going to try to encourage in terms of activity. So, on the one hand, I could see

Basically, I think one of the advantages that DEXs have had over this last cycle is that, you know, there's been a massive amount of tokens that have been brought to market, and the frictions of issuing onto a DEX are, you know, two orders of magnitude lower than issuing onto a sex. And so you've actually seen Brian Armstrong of Coinbase come out and say we need to think, rethink bottoms up what our listing criteria is in light of the amount of assets that are coming online. And so I could see

the Inc.

Basically, being a place where there's a DEX and they're getting some amount of sequencer fees, uh, you know, before that they can actually list on the main platform. Uh, I also saw a couple of weeks ago there was an Apollo distressed debt credit fund, which is getting issued on the mix of Solana and Inc., actually. So I'm unsure really of where that sits in their strategy. It's probably good to have some,

you know, more stable, you

know, TradFi based collateral, right? For big uh DeFi apps that wanna might want to deploy onto Inc. But I'm a little bit curious to just understand what Inc.'s strategy is, and I'm I'm very hopeful uh that'll be something cool.

Yeah. Yeah, totally agree.

Let's get into MicroStrategy, which is now just a strategy. They had an official rebrand, and uh Michael Saylor tweeted this out. Uh, a picture of him in front of uh just strategy. Uh so this is the MicroStrategy offices, which again is now just strategy, but it's strategy with a B, strategy with a little Bitcoin, a superset Bitcoin, right at the end. Uh so they are formally integrating the Bitcoin logo into the strategy logo. Uh, and then this is a tweet from you, Mike. I'll go ahead and read it so you don't have to. Uh just learned that MicroStrategy almost doubled their Bitcoin holdings in Q4 2024, acquired $20 billion of new Bitcoins, bringing their total up to 44 billion. Seems like this might be the real reason behind the Bitcoin strength. Now it's it's hard to say how much $20 billion of buy pressure actually impacted the Bitcoin price. Certainly it was good for the Bitcoin price, but how good, I think, is up for uh analysis, up for debate. I I think you're on the side of things that it represented a very large chunk of the Bitcoin price action, the positive Bitcoin price action, especially in Q4. Um, I will say, in addition to that, there's probably a lot of social posturing that $20 billion of Bitcoin buys that creates probably much more than $20 billion of follow on buys, like people FOMOing into Bitcoin as a result of micro strategies being very loud about it. Um, what was your analysis here on the on this take?

I guess I was just blown away by how much buying they've actually done over a relatively short period of time. And if you had, I guess now we've spoiled it for people, but if I were to just ask you to close your eyes, and I did uh several people yesterday, and try to estimate how much Bitcoin do you think MicroStrategy might have acquired in Q4? The numbers range from on the low end 1 billion to on the high end maybe 5 billion, but I don't think many people knew they had bought just just this much.

Yeah, $20 billion. It's also something that's a little bit funny about MicroStrategy is I don't know how often it is that you have the largest buyer of Bitcoin outside of this, the ETF complexes.

Directly announce

their plans to buy. It just seems like a very easy front running opportunity, especially when there's such a large part of the market still. And I also saw that MicroStrategy introduced a couple of new KPIs, which is BTC gain, which is just the amount of Bitcoin that they have at the end of a period versus the beginning in Bitcoin terms. And then there is the dollar amount gain as well, which

You kind of just have to laugh at. Uh, that's gonna be the noisiest KPI of all time, I would imagine, because they had a great yield on it this this last year. But, you know, it's gonna be, it's gonna be tough just based on how volatile that asset is. And

the the rebrand to strategy is

interesting. There's a lot of jokes that you could make there. I'll stay away from the jokes, but uh, I am curious as to why they thought it was necessary to do. I was talking with one of the guys over at Van Eck, um, Patrick Bush, who theorized that this would make it easier for them to sell BTC treasury management services to other.

Just strategy, which ultimately I could see. Um, you know, I don't know too much about Bitcoin or uh MicroStrategy's legacy business, but

you know, they're not, you know, my my understanding is that they're a

sort of a middling or plateauing software company. They did about 120 million of top line in Q4, um, and they're sitting on 300 some million in uh cash.

So it's not like the legacy business is throwing off a ton of cash or it's a huge revenue business. They're entirely valued at this point off of their Bitcoin buys. So

Yeah. I mean, this is Michael Saylor just doing what Michael Sailor does, right? He's also gathering headlines, which is it's got to be positive for