ROLLUP: Memecoin Frenzy | BRC-20 Tokens | Brad Sherman

Bitcoin culture has shifted. The balance of power is shifting from the Bitcoin fundamentalists to the Bitcoin builders.

Bankless Nation, it is the second Friday of May. I hope you're ready. For what, David?

The Bankless Friday weekly roll up where we cover the entire weekly news in crypto. Say it with me. Which is always an ambitious endeavor. I almost forgot that line. Yet we persevere nonetheless into the frontier.

Make that a thing.

It's definitely a thing by

Always an ambitious endeavor, but we persevere nonetheless.

frontier. Yeah, nonetheless.

Topics of the week. We got meme coin season. I've been sleeping on this one, David, but you tell me why it's important.

Oh, I'm not sure if I'm the man to do that, but I will, anyways. Uh, crypto, can we not find product market fit? Well, let's just go back to trading memes. Uh, that was the theme of the week. Uh that meme was so powerful that even Bitcoin caught the shitcoin bug this week, uh, leading to a change in the balance of power in Bitcoin culture, which is actually a more significant topic that I do care about. Yeah. Uh, and then lastly, of the big news of the week, uh, even though there's so much more than this, Brad Sherman has a hot take for crypto. Did you see this one, Ryan?

I did. And you're gonna love it, Thankless Nation. Uh it's a perfect sound bite to encapsulate what's going on in our halls of Congress these days when they talk about this silly thing called crypto. All right, David, uh, tell me about a good time or a bad time in the markets. Let's get to the price of Bitcoin this week.

Uh we are experiencing, Ryan, as we recorded the saddest time of the week so far this week. Uh prices are the lowest at the time of recording, Thursday morning Eastern time. Uh Bitcoin is at the low, low price of $27,200. Started the week at $29,400. We are down 7.5%. Not a great week.

We lost all of our May gains, huh? We're back to April 23rd

or so.

We're back to April. Yeah.

I'm looking at this on the Kraken Pro charts, of course. How about ETH price? Is that a similar story or any good news here?

Down exactly 7.5%, just like Daddy Bitcoin. Yeah. So it started at 1950, currently at 1810.

Well, you know I'm gonna ask you what's going on. I think you've got some analysis here coming up, David, because uh I w I want your take on this. Uh take on the charts. But before we get there, Bitcoin

Ratio

to ETH the ratio

flat. No news there. How about uh crypto market cap?

1.16 down to 1.1 does not feel great. Uh I remember a couple weeks ago, three or four weeks ago, you were like, I'm ready to to start to be ready to wave the white flag on Triple Digit ETH. And I was like, hold on, this could be the middle of the year top. Uh so far, the middle of the year top thesis is correct for three weeks in a row. Um, yeah. This one's getting certain.

Uh

I mean, okay. Are you asking me, do I feel emotionally nervous? Like, almost never.

No.

Are there reasons to be concerned? Yeah. Yeah, there are reasons to be concerned. Yeah.

Okay.

I'm trying to separate, like,

I'm never nervous.

So, like, if you ask me if I'm nervous, like, and the answer is gonna be no. However, if I turn put on my short term hats, like, yeah, there's reasons to be concerned.

What's the probability that we get to that triple digit ETH again?

Well, as we've gotten so far, the 7.5% lower this week has increased that probability by a comparable amount. Um

I don't know how to answer that question, but I mean we're getting there.

Yeah, I mean, it's interesting because

you know, I was I I I was like 60% earlier that that it could happen again, that we'd revisit um triple digit. And then that kind of decreased, I think, with the beginning of this year, and we haven't seen the like the hit that we thought.

Getting further away from it, right?

But this is but this is also the thing I was most worried about is the kind of that apathy season of the market. Um what's interesting is we'll talk about this later. We're gonna talk about uh meme coins and whether that's just injecting new blood or whether that's injecting recycled capital. Um maybe we should talk about that in in a minute. But this number to me is interesting. We're still above a trillion, even despite this. And Brad Sherman hates that number. We'll get to that. He actually named a trillion dollars in in the video quote they're gonna play a little bit later. But um tell me about the market news, okay, David. Why are prices down

Prices are down because liquidity. Oh, first before we get there, uh Ryan, happy one year anniversary to the Terra Luna clash crash. Deploying more capital steady lads, that famous tweet that got tweeted out by Do Kwan that was one year ago this week. So happy anniversary to those who celebrate. I do not celebrate this.

like this?

You don't celebrate this. I do not celebrate this one.

Uh uh it's not a holiday in my

Well, either way, anniversary nonetheless. Uh okay, so uh the big reason as to what is going on in the market this week um is that the idea has circulated that both Jump and Jane Street, which are big market makers, have scaled back their market making operations in the crypto world. Uh and so here is a tweet that went viral and it's showing um a Binance liquidity order book liquidity, and you can just see the thinness of the order book in the narrow spreads, right? So the what we're looking at are very narrow snapshots of both uh Bitcoin price, um

Uh a long time ago, uh in January of this year, so not that long ago, versus now. Uh, and so the the the order books are thin um in the in so like it doesn't take as much money to move the markets. And we all have learned the lesson that when you pull liquidity out of the markets, asset prices go down. And so Jump and Jane Street, very big players, um, have been alleged. I don't think I we've seen a confirmation of this, but they are scaling back their market making operations as a result of regulatory fears. Uh, and so when liquidity exits the markets, uh, it's easier to push price down, it's easier to be fearful. Uh, and they also are having their own sell pressure. Liquidity, lack of liquidity is bearish. Uh, and so that is the thing that has happened. That that that's why the market seems to have entered a new phase lately. The market's behaving differently. Uh, and uh people are speculating that it's because liquidity has been pulled out.

And behaving differently in that it's like more volatile or more like little bumps in the night send it spiraling and you know positive.

Emphasis towards the downside, no momentum towards the upside. Any any uh positive price action just immediately gets sold off. Uh there was a there was a phase change in the market and it happened recently. Um and people are crediting the exiting of of market makers to this.

Interesting. This this may be the apathy market I was talking about earlier. What what is this showing us here?

Yeah, so uh this is a graph of liquidity in the market, which is the blue line, and you can see some events that have happened recently. So the silver gate bank failure was uh followed by a large decline in liquidity of Binance in Binance, Bitcoin to Unite it to Bitcoin to tether uh liquidity, uh, then followed by um the Binance CFTC charge, uh, and then also a Binance bot fees increase is what's indicated here. But really, it's it was a Silvergate bank. So that this is uh largely TradFi, the crypto banks, um, as uh who called them, Gary Gensler called them, the crypto banks, even though we use crypto banks to call it Coinbase and Kraken. The Trad banks that service crypto customers all crash and went under. And so these are the banking providers that also provide banking services to market makers. And so it's harder to market make in crypto these days. So liquidity is drying out of the system. And so I tweet out this tweet. Uh everyone knows who is a bankless listener. Everyone knows that I'm a huge fan of SpongeBob, bigger fan of Spongebob than you are, bankless listener. Uh, and so this is the water, Sandy. Water. Uh he needs water, like crypto markets. We need water, we need liquidity, otherwise, we're bearish.

So the state of the crypto markets right now is dry.

Aye.

We are dry. We are bone dry right now, which uh which does not bode well for price, right? There's not a lot of buyers um stepping in under this uh you know seventeen hundred dollar ETH price.

Right. Yeah, if you scroll down, I give a little bit of an autopsy, right? And so one year ago, Terra blew up $50 billion. Six months ago, FTX blew up $15 billion. Alameda, a market maker, ceased operations. One month ago, three crypto bank fails. This last week, the largest bank failure since 2008. Regional banks, which do offer services to crypto, the crypto industry, uh, are getting slammered. Meanwhile, we are the operation choke point 2.0, choke point. They're choking liquidity. Gary Gensler is pointing a gun at us. And I'm what I'm saying is like, we don't get bullishness until liquidity returns.

And then the crazy thing, Ryan, is somehow in the midst of all of this.

Uh fucking Pepecoin gets to 1.5 billion dollars. What the shit

is

That's not real. That's not outside money. That's not new buyers. That's all playing around. We'll we'll we'll talk about that in a minute. But okay, I think this is actually a big story, David. I think this is a theme of the apathy market. It's just bone dry. And I think this is probably something we'll be talking about a lot over the coming weeks and months is when is the liquidity going to come back? And how does it come back? Where are the net new buyers of our crypto assets? That's the big question right now. And I think that is the appropriate question at this stage of the market, where like the worst news, all of the kind of the like impact of SPF and Alameda and Terra and Celsius and three hours capital, that's all hit us. And now we're on the other side of that. And we're just like, well, we still don't have the use cases to attract new buyers, and so it's quiet. You know, like that's what's going on.

the uh the trillions of dollars of latent capital that's still out there,

which we need, and we are doing pepe coin.

You mean they're not buying this stuff, huh? Um

No,

somebody

looking at us and like, oh, the cryptocurrency industry which needs to professionalize and come into the light and like provide good products and services. They just created Pepecoin, and Elon Musk is tweeting out about Melades. Like,