The Week Crypto Got Its Mojo Back

This is New York Mayor Eric Adams. I was the first American mayor to have my initial three paychecks converted into crypto uh way back in 2022. Many people laughed at me and all I can say is who's laughing now? We're seeing Wait, Brian, didn't we already hear this? Didn't we already do this bit? Yeah. Yeah. There was like I think I feel like it was like three or four months ago and it was Eric Adams basically saying those exact words like I was the first to mayor to get my paychecks in Bitcoin. Who's laughing

now? And it's funny to me because he keeps saying it. David, this is the second time we have heard this. Yeah. Yeah. And it he's such a crypto person now, right? Just like reminding people that he got in early, reminding him that was like it's such a contrary that everyone thought he was stupid. And like who's laughing now? Eric Adams is one of us. Uh I think he's actually hosting a a New York City sort of crypto um conference, something like that. That that's also why he was like talking about crypto. So complete uh a

complete crypto person. Right. Right. Yeah. So that that's the the news that this is uh being packaged up in is the New York City crypto summit is what Eric Adams is announcing. I I think kind of doing like a Trump alignment thing. Uh probably it would be great if New York was more crypto aligned. We need to get the rid of the Bit License as a state. That needs to go away. Uh but he can't do that would be great. He's only a mayor. He's only a mayor. He can't do everything, but he can definitely buy Bitcoin. He can definitely get his paychecks in Bitcoin. So, you know, Bitcoin's over 100K if he's bragging about it. David, we got a lot to talk

about on the rollup this week. First of all, the tariff truce. The US and China, uh they came to an agreement on tariffs, at least an agreement to pause them. The market is up on the news. I got some macro takes for you. I've been trying to make sense out of macro. I think I got it, man. This week, I think I've got like I understand what's about to happen. All right. So, I want to give you the take here. You cracked the nut. I'm I'm excited to hear about that. Over in the in the crypto side of things, we got both good news and bad news coming out of Coinbase this week. The good news, S&P 500. Uh our crypto company, the number one crypto company to go

public, is now in the S&P 500. We're going to talk about that. Uh bad news, there's a major major there's a customer data leak coming out of Coinbase. hackers are demanding $20 million in ransom out of Coinbase, but Brian pulls the reverse Uno card. So, we'll talk about that. Uh, and then I'm going to explain the internet I'm going to do my best to explain the internet capital markets meta to Ryan. So, strap yourself in. We're going to see if I can get anywhere close to what's going on in the trenches. Yeah, I think that's going to hard be a hard one to explain uh to me what the heck that means. Uh, also,

Robin Hood is acquiring an Ethereum layer, too. We'll we'll talk about who and and what's going on there. And uh David, you know what's making me kind of bullish on the week? Eric Adams. The SEC. What? The Securities Exchange Commission is actually making me bullish. I want to tell you about that, too. Before we get into all all of this and more, we're going to talk about our meetup that's happening at Permissionless. So, if you are going to permissionless, which is happening in just a few short weeks on in June 24th through 26th in Brooklyn,

we are doing a meet up with Fracks. We're hosting a little bankless frack meetup at Permissionless. And so if you are a bankless citizen or a previous podcast guest or just a friend of the pod, there's a link in the show notes so you can come to our meetup at the Italia Beer Co. in Williamsburg, Brooklyn. Uh so there is a link in the show notes to to sign up uh to join us and Fracks. We're all just going to hang out and drink some beer. Beer is on us. We are paying for the beer, Ryan. Oh, nice. Is this You said it's open to friends of the pod. Is it open to enemies of the pod? Can anybody just drop in? Yeah,

there's no there's there are a few enemies of the pod, but generally speaking, most people are automatically friends of the pod. Yeah, that's right. That's right. All right, David, tell me about prices. I really want you to tell me about prices. Please embellish it. Please take your time, okay? To let it sink in to my pores here. Yes. All right. Okay. Are you ready? Bitcoin is up 1.5% on the week to $13,000. $13,000. We uh got almost up. I think we maybe we touched $105,000 on a couple

exchanges. Uh I think alltime high for Bitcoin is something like 106 107. So Bitcoin is very close to striking distance of of all-time highs. So overall up 1.5% on the week. Uh an okay week for Bitcoin. Ether price. Yes, Ether price is up 30% on the week to $2,560 on the 8 day. If we just extended seven days to 8 days, Ether is up 42% on the week. It touched at its

all-time high. It was a 51% gain over eight days from from peak to trough. Uh 80 50% on the week. The the new recent high is almost $2,700 Ether, but we are currently at $2,560. That is not something you see every week, is it? Like I don't think I've ever seen a 50% candle on Ethereum in a week. I mean, is there any there's no explanation for this, right? I haven't seen any kind of like other than it was time, which is the obvious explanation that that feels almost like a narrative. It was just like time, but we're not

really see one notable thing is we're not seeing an ETF flows really. So, this has to be some sort of it's not an institutional buyer buying an ETF suddenly. This is like more convicted crypto native types of buyers who are just saying, "Hey, like this number should not be this low. It should be much higher." And they're going and buying in size. I I think that's right. Yeah. I think there's a handful of like kind of narratives that you could uh put into this. Like one of them that I think is a minority of an explanation as to like why ETH uh did this is like everyone's looking for stable coin

exposure. And with $150 billion of stable coins on Ethereum, like ETH actually starts to look like that. But I think the real big thing is it was just oversold. 018 Bitcoin, which is where it started at, uh is just so goddamn low. It's so incredibly low. Uh, and so it went from 018 to 0.025 uh versus Bitcoin. Uh, and yeah, I mean it's still it's still a low price like $2,500 versus Bitcoin's $104,000. It's still very very low. Uh, and so I would

say that yeah, like the market decided that this was too low and and like there there were a lot of shorts going on ETH era at the time cuz when it goes down for two years straight, like it's easy to short it. And so this thing finally just rejected uh the low price to still be a low price. It's still low uh but now it's a higher low price. Yeah. If you want to get a sense for this, yeah, a few things that are interesting. One is the chart that I'm showing on the screen. I'll get to in a second. But but another just like the size of ETH in comparison to Bitcoin. F maybe let me do the size of ETH in comparison to Salana.

So this teleportation this like 40% teleportation that was basically one soul market cap worth in size. Like that's how large it was. is like $90 billion. So an entire soul's worth of like weekly price movement on Ether, right? So Ether is already much larger than Soul, but it is much smaller than Bitcoin. Okay, it's like one benchmark that's interesting when Bitcoin was priced at the market cap of Ether today. You know, 310 billion, something like that in that range. The last time uh

that was the case was November 2020. Remember that? So, Bitcoin would have been, I don't know, I want to say about 16K something at the time, less than that, more than that, something like that. And so, we're basically like, if you believe that Ether can do what Bitcoin has already done as a global store of value asset, then this is like buying Bitcoin in 2020. If you're bearish and you don't believe anything will ever be like Bitcoin again, then

it's a different story. And then here here here's a chart of uh Jake is putting this uh Brookman is putting this out. Bitcoin ETH and Salana market share reality. You can see look at the orange. Orange is all is so dominant. Bitcoin dominance is still so high. It is still so high in proportion to all of their crypto assets in particular to Ether and Salana right now. Mhm. Yeah. I think there's like two perspectives about this where you say like ETH added one Salana in a market cap in one week. That implies Ethereum's large. like it's

putting on a whole entire salana in market cap and then you look at it versus Bitcoin you see Bitcoin dominance like well ETH is small compared to Bitcoin and it's all it's all a matter of perspective like ETH is is both big and small at the same time. Yeah. As as always you can interpret uh these price moves however you like whatever your thesis says right uh total crypto market cap on the week we're flirting with 3.4 trillion 3.4 4 trillion. Yeah, healthily growing back up to that $4 trillion number which we have never touched but we are trying to touch. Yeah. All right.

So, movers of the week. Anything else uh move this week? Yeah. In addition to, you know, ETH 50% gain over 8 days. Coin. Coinbase is up 30% on the S&P 500 listing. We're going to talk about that. Etherfi up 120% in two weeks, maybe on the launch of their EtherFi credit card, which a lot of my friends have gotten their their new credit card. 3% cash back on a credit card that uh pulls from your onchain account so you can get yield on stable coins. That's awesome. Available in the US. That's right. Mhm. Uh Launchcoin is up a,000% in a new

week. We're also going to talk about this uh because that's the internet capital markets uh shenanigans. Then like Dog with Hat up 120%, uh Athena up 60%. So overall like there were some very big moves over the last seven days in the crypto market. It was actually one of the more exciting market days in crypto that I can remember in recent history, David. And there there's also some protocols that uh continue to ship and are hitting milestones. Uh someone in the background. So one of them was uh unis swap. So unis swap the kind of like the very first decks to actually reach some sort of uh critical mass and take

off just hit 3 trillion in alltime volume. So look at this chart here. all the way from uh January 2019 and just like an ascent up all the way past three trillion in value. So, this team obviously continues to ship, building a chain, doing all of these things. It's just like fantastic to see kind of some of these long-term games also being played. I know you're going to tell me about the short-term meme games, but long-term games are being played. Another team that continues to ship is a so a just passed 25 billion in total

value locked. So this is like these are the original DeFi primitives that got us so excited about crypto, right? The ability to to trade without a centralized intermediary, the ability to do lending and borrowing without a centralized intermediary, a at 25 billion right now. So if you if you were to kind of rank that, that places it at like number 83 in terms of the largest banks in the US. If you to give a bank aum benchmark, number 83, right? So like moving our way to top 10, moving our way

to like past Wells Fargo. Uh I think that's where A is going in the fullness of time and they're just quietly building the background to accomplish that. You got to really give a tip of the hat to A. It has just been this absolute like staple of Ethereum DeFi and just a massive foundation for so much of the onchain economy built on Ethereum. And you know, it's just rock solid. you know, it's had it's had its like minor incidents and they have all been minor. Like when's the last time anything big happened to a like almost never. Uh and so you really just got to

tip your hat to this incredible structure that a has built for the Ethereum economy. Yeah, totally agreed. Uh another layer 2 also joined the stage 1 club this week. That was Starknet. So look at this now, David. This this looks pretty nice. This is a table from L2B. We've got the top five layer 2s on Ethereum that have now achieved kind of stage one decentralization. This is basic protection for user user and property rights uh so that the kind of the centralized sequencer can't censor transactions or you know like rugpull

users. Uh so that is fantastic to see and I was just looking at this. Do you see this clock on some of uh like the um the names here? like bass has this um layer 2 clock and it says this project, this is on uh L2B. This project will be downgraded to stage zero in 74 days, 6 hours, 48 minutes, and 5 seconds. There's like a countdown timer. And this is L2 beat saying, "Hey, we're actually changing our criteria for this. We're enhancing it. We're adding some more detail. And right now, we won't consider

base a stage one. will revert it back to stage zero unless you uh meet this criteria. And the criteria is you uh not having compromising 75% of the security council uh as the only way other than bugs for a rollup to be uh indefinitely block an L1 to L uh like L2 to L1 message withdrawal or an invalid withdrawal. I was just looking at this and L2B has gotten so sophisticated with respect to it. It's sophisticated and clear. Sophisticated

and clear. And what it's doing is basically it's playing the role of a regulator. David, I know we've made this point before, but I'm seeing it now more than ever. They're just like creating objective criteria and then making it transparent for when different rollups achieve um various kind of like property rights guarantees, right? And they're publishing that. It's become a selling point for the community. This is it's basically like again I'm gonna say some good things about the SEC a little bit later, but this is kind of like what a regulator should do in crypto. This is

like sort of the SEC of crypto and it's a it's an underrated asset that Ethereum has all of this criteria. I look at all this stuff, right? You know, like look about like all these new requirements that L2B is like putting in place in the background. Mhm. Yeah. It's really and it's just it's there's a difference between enforcement and standards. The SEC is about enforcement. Layer 2B is all about standards and standards is this kind of like market-based bottom up optin phenomenon. But it's great that we have layer 2B like establishing

standards and then the community establishing norms around those standards and actually doing like social uh norm setting about like this is what's appropriate and this is what not is not appropriate. So David, do you see this? We'll we'll pivot to macro for a minute. Do you see this over the I I think it happened Sunday and then news broke Monday. What what are we looking at here the headline? Yeah, the the announcement that I think we first heard out of a truth social tweet that then started rocketing around Monday is the uh U US China uh trade war trade war ending turning into an an agreement.

Yes. And so there's a 90-day slashing of tariffs based on this a trade breakthrough and trade agreement and then Bitcoin didn't uh the only so this was announced on like Saturday or Sunday. during the weekend when markets were closed. And so then everyone like whether you're a Tradfi commentator or a crypto person started looking at Bitcoin to see how Bitcoin would react and Bitcoin did not react which was interesting. But nonetheless when the markets opened up on Monday, it opened up very very green and we've had a very green week ever since. Yeah, pretty much. So NASDAQ jumped uh 4% on that

news. S&P jumped about 3% and this was on the back of negotiations between China and the US. So Scott Bessant, Chinese representatives, they met in Geneva and both sides to agreed to lower reciprocal tariffs. It was like in the uh triple digits like 115% 145% something crazy to lower it back down to 30% and 10% respectively. And just some history like all this tariff stuff, it's just barely a month old, David. So April 2nd was liberation day. That's when that kind of the tariff shock started. And

then we had this back and forth between Trump administration and China doing this tit fortat game of like now I'm going to tear off you. I'm going to tear off you. No more more. And they went back and forth. And now it's kind of like reset back down to kind of a lower amounts at least for the next 90 days. So uh Mark Williams, chief Asia economist at capital you know economics says this is a substantial deescalation. And I think that's how the market is viewing it. So what do you think man? Do you think tariffs are over? Yeah, I think they are. I don't

really I'm not I'm not informed here, but I think I'm trying to like map Trump 1.0 to Trump 2.0. And Trump 1.0 started in this very big way where he elevated tariffs to be a very big deal. And then like after one year into his presidency, no one said the word tariffs anymore. And so it was just like a first first year negotiating tactic to get what he wanted. And so understanding that like yeah, I think slow tariffs will slowly approach becoming irrelevant over time. I think that is the the take. And so do do you remember two weeks ago I would I

I I say hey there's three things I have an eye on with respect to to macro. One is one is the tariffs and the possible recession that causes. Well you know number one the the tariff threat kind of went down. Poly market remember there's odds of US recession in 2025. That week it was at 66%. Now it's spiked down to below 40%. Okay. Still high. Still high. still high but like not that much higher I guess than like February. Uh so still high but significantly decreased. Um the second thing I was keeping an eye on was

was capital flight from uh from the US as a result of of these tariffs like foreigners exiting all their US assets. And the third thing was um global liquidity and I feel like um I got some answers on this actually. David tell me. Yeah. So there was there was two there's a lot of sources but there's two people um who had a big impact on where I think the market's going and you like their analysis was fantastic. One is uh Russell Napier. Have you heard of him? He's a Scottish monetary historian. He's kind of an investor. Okay. He's kind of

like a you know a money guy, money systems guy. He looks at the all this stuff through history. The the other person I know you know it's uh Mr. Arthur Hayes the uh crypto trader. You know Arthur? I know Arthur. Yeah. Yeah. So Arthur, of course, is a colorful character. Actually, um I recorded, you were out, you were traveling, and I recorded with him earlier this week. That episode's going to come out on Monday. And it's his kind of thesis for what happens. And I think between them, they're kind of right about this. So, uh what do you think Arthur's saying about all this right now? Uh Arthur I kind of

understand to be a perma bull. So, I'm going to guess that he was bullish. Yes. Okay. And that's all that's all I have. That's all I have. What am I looking at? Okay. You're looking at his most recent post. I I I said he was a colorful uh character. Some would say offensive. All right. So, he's starting this p he titled this post fatty fatty boom boom. I'm not going to get into why. I'm going to give you the meat of his thesis. All right. Because he he takes he takes uh monetary concepts and he really like turns them into kind of trader degen uh language, but he basically thinks that

this backtrack between with Trump and China, it's permanent. It's not a 90-day pause. He tariff season is completely over. Okay. Yeah. Okay. Sure. So, similar to you, uh he still thinks that there is a massive problem and a massive policy object uh objective that the Trump administration wants to make and this is they want to reduce the US trade deficit. Okay? And they have monetary system reasons for this national capitalism and re-industrialization. Okay? Remember those words. And then

also what they actually want to do. You know how the Treasury is the uh world reserve asset, basically treasuries, US treasuries. They don't want that to be the case anymore according to Arthur. Now, they're not going to say the quiet part out loud, but they're going to take actions to devalue the dollar and devalue treasuries to stop the whole, you remember the Triffin dilemma, to stop that whole thing and to stop the hollowing out of America's manufacturing. So, they found they tried tariffs. They tried to accomplish these

policy objectives via tariffs. They didn't work because there was um geopolitical blowback with allies and also it's not super politically popular, right? So, representatives in Congress said, "Trump, you keep doing this We're not going to get elected again." Okay? So, they had to back off that and now they're going to pivot, according to uh Arthur Hayes, to something different. And this is capital repression. So, capital controls, financial repression. Basically, Arthur thinks, and he

outlines why in this essay, he thinks that the Trump administration is going to through some sort of action, maybe executive uh order, something like this, slap a 2% tax on all for something like this on all foreign assets in the United States of America. Okay. So the monetary system we have right now right is basically uh America is is in like the debt we import all the things we kind of consume them. Asia supplies the cheap labor. What does Asia get in return?

They get dollars and treasuries. They store those treasuries uh inside their their central banks. The treasuries are great because it's it's petro dollar. It's linked to the to the dollar. It's the global reserve asset and they can buy things with them. So they get purchasing power. America gets cheap stuff but we become completely uh hollowed out by that. But as a result, all the dollars that they've acred, they pour back into our capital markets. They buy S&P 500, they buy NASDAQ, they buy even like more treasuries. Okay? And so that's the current system that we have going right now. And there's $33

trillion of foreign uh foreignowned capital assets in the US. And what Arthur Hayes thinks is that the Trump administration is going to be like, "Foreigners are going to pay for our taxes and he's going to put together a 2% tax on all of that." Okay? So, this is capital controls that is uh are going to be implemented in in order to uh get the dollar lower. So, that's his like that's his base thesis. Are you with me so far? Yeah, I'm I'm tracking this. This initially feels very aligned with

Ray Dalio's uh post that he's been putting out on Twitter where like China needs to stop being dependent on the United States dollar to fuel their manufacturing industry. And so because why do they need to stop being dependent on the dollar? Because we are about to devalue the dollar and all the bonds that they own. Uh and then vice versa, we need to stop being so dependent on Chinese manufacturing uh just because of national security issues. And so we need to bolster our own manufacturing in the United States. And so we need to sever the Triffin dilemma. We need to stop having the United States be the capital

center of planet Earth, which is going to be painful because the exorbitant American privilege comes from the fact that we get to buy things for free because we just print and export dollars for free. And I'm worried that I'm I'm scared about that. And then I'm also understanding that like this deal that we had where we would print dollars, we would sell them to the world, we would sell them to China, they would give us stuff and then they would reinvest their dollars back into our economy. It was great when they were buying treasuries,

but when they are investing in the S&P 500, when they are investing in the stock market, they are starting to buy American companies. And so this like process is gobbling itself up the fat tail to like okay it was one thing to buy our bonds which we can just inflate but it's one thing to reinvest in the S&P 500 and now you own now China owns x% of Apple or Google or all of our all of our companies and so ultimately China is the net winner here if they can just buy all the companies with the dollars

that we keep on giving them then all of a sudden they own us. uh and that is the concern but unwinding that all of that sounds very painful. Yeah, the the unwind could be interesting but it's painful based on what assets you own. You know the most toxic asset to own according to Arthur and and Russer bonds. Yeah, bonds. The solution here is just don't own bonds. But the question is like okay Besson is got to sell all these bonds. How does he do it? And the answer according to Arthur Hayes is money printing. The Fed just buys them. He sells it to the commercial banking in

the US. He sells it to the Fed basically and we have a whole round of money printing and then other countries need to buy store value assets rather than treasuries. What are they going to buy? And the answer is gold and Bitcoin non-stover so sovereign store values. Hopefully some other crypto assets down the pike. But that's the basis of Arthur Haye's bullcase for crypto and what he thinks is going to happen uh in in macro. And Russell Napier, he's not a crypto person, but he basically agrees.

They both agree bonds are tox toxic. Don't own any of them. Russell's like, you should have 25% gold and you should have 75% just like valuebased stocks that are throwing off cash. Now, he wouldn't say Bitcoin. We would say we would say crypto, right, in your allocation instead. But that I think is mo the most cohesive story for what might happen in the months to come under the kind of the next Trump administration move. So, we'll see how that plays out. That sounds like it's QE but being done on fiscally rather than

the Federal Reserve as in the government is just going to buy all of the bonds and buy and add add liquidity rather than the Federal Reserve because the Federal Reserve I think is going to keep interest rates high because this is going to be highly inflationary but I I think the government fiscal policy is going to override any sort of like high interest rates because they are just going to print the money and buy the buy the uh buy the bonds. Yeah, Arthur thinks it's going to be both QE probably under a different name. We can't say QE anymore, but actually the Fed buying actual bonds and then also also fiscal

stimulus. Okay, so there we go. It's a great setup if like, you know, unless you unless you own bonds like that's why Bitcoin is at all time high and gold's at even higher than alltime high. That's right. All right, so we're going to get to some crypto native news coming up. The the Coinbase news, both good and bad, as well as a bunch of other stuff. But first, before we get there, a moment to talk about some of these fantastic sponsors that make this show possible like UniS swap. It's a browser wallet. It's a mobile wallet. It's also the best place to do DeFi. Let's go hear from Uniswap right now. Unis swap is your gateway to a more efficient DeFi experience. With Uniswap swapping and bridging across 13 chains is simple,

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to start earning with FRAUSD and staked FRAUSD. And for bankless listeners, you can use fra.com/r/bankless when bridging to Fraal for exclusive Fraal perks and boosted rewards. An interesting video came out of Brian Armstrong's Twitter account this morning of him just talking to his phone uh just reading out a statement about a $20 million ransom that Coinbase is being held for. And if they don't pay this $20 million ransom, hackers are going to just release a bunch of customer data. Uh, let's go hear this video. We're going to play the first 30 seconds of this video and then

we're going to talk about it. Hey everyone, I want to make you aware of a disturbing email that we received recently at Coinbase. It was a ransom note demanding $20 million in Bitcoin in exchange for these attackers not releasing some information they claimed to have obtained on our customers. Now, we like to do things transparently here at Coinbase. And so, I'm going to respond publicly to these attackers by saying, "No, we are not going to pay your ransom." In fact, I have a few next

steps in mind that I'm going to share at the end of this video. No, we are not going to pay your ransom. Uh, David, but what were those next steps, by the way? What's he doing here? Yeah. So, some if you continued watching the video, which again will be linked in the show notes, they say that less than 1% of Coinbase's monthly transacting users were affected by this data breach. This breach did not involve passwords, private keys, or any funds. It was just like customers personal information like uh address, home, you know, email, telephone number,

stuff like that. Uh the attackers demanded $20 million ransom with which of course, as we heard, Coinbase is not going to pay. Instead, Brian Arfam is doing a reverse UNO card and they are offering a $20 million bounty for any information that leads to the arrest and the conviction of the perpetrators. So, there's a $20 million bounty out there for anyone who can help arrest these people. Uh, if a user and so this has been this has been plaguing Co Coinbase for years now. They Coinbase is losing something like 300 to$400 million per

year. Uh this is um numbers modeled out by Zack XPTt and other internet sleuths who are identifying just the incredible wave of fishing attacks on Coinbase customers who are getting them to like answer their phone saying, "Hey, um a transaction just got approved out of your Coinbase account to move all your funds. Um call us if you did not like approve this transaction." And so then users naturally like will say, I didn't approve any transaction. Let me go call this number. And then they call what is the actual attacker? what is the actual