ROLLUP: Trump’s DeFi Project | CFTC vs. Uniswap | Brazil Bans Twitter | Coinbase AI | Polymarket & Bloomberg

Bankless Nation, it is the first week of September. It is time for the Bankless Weekly Roll Up. This is Back to School edition on Bankless. Uh kids are back to school, so I feel like uh we should be getting back to school. Back to work. Summer's over. Prices can go up. All these things.

Oh my god. As somebody who doesn't have kids, thank you for reminding me that kids go back to school every now and then. All right, what are we covering this week, Ryan?

Uh we got uh number one, Trump's new DeFi project. Is it a grift? Or is it the most exciting thing to happen to crypto yet? We don't know.

First, the SEC comes for Uniswap. Now it's the CFTC's turn to go at Uniswap. What is going on? What did Uniswap do? If anything at all, we'll cover all that news. And Brazil banning Twitter. Some big moves in the world of authoritarianism versus freedom. We're gonna get some takes on that.

Also, uh, the markets are pretty important to talk about. The markets aren't feeling good right now. So the big question is is the four-year cycle dead? Yeah. Uh some investors think the four-year cycle is dead, David. So I want to bring you into that. And also, I've got three takes on why crypto performance, price performance is so lackluster. Three times. Not original, you know, borrowed, but I think good. Curated by Sean Adams.

All right, polymarket was added to the Bloomberg terminal. We're talking about that. And also, Coinbase is working to bank the robots, the first ever AI to AI transaction using crypto rails. A lot of big stuff happened this week. So we're gonna talk about all that and more. But first, a message from our friends and sponsors over at

All right, let's get to the market this week, David. Uh I've I'm feeling like we have a down week. Is that right? What are the charts telling us on Bitcoin? Yeah.

it's hard to have an up week when them on Monday the trad markets just got clobbered by some just like kind of bearish macro news, something about the jobs. We don't have that in the agenda this week, but as a result, uh crypto markets also not doing so great either. Bitcoin started the week at $60,000, down 6.2% this week, currently at 56,600. Uh so remember, okay, Ryan, last week we did this whole segment about how October was the most bullish set uh month for Bitcoin, like historically. It's the it's the month that Bitcoin goes up the most. October.

That's great.

What month is it right now?

It's not October. I know that. And uh we said.

It is actually September.

So it it it is actually September happens to be the most bearish month for Bitcoin. In the same way that October is the most bullish. So September is on average apparently the most bearish month. Uh so I don't know why we did that segment last week. Uh but since this month is September, uh, this is apparently allegedly the most uh bearish month that uh is has

Oh yeah. I mean our message was like basically just you know, don't look at prices for September and come back in October. And that remains true. So I'm look at that column for September. This is all the way Bitcoin price all the way back to uh 2011. And the rose the most red on the monthly any month is uh very very much September. The most blue is October. Well, actually, blue, yeah, October is a pretty good month. That makes sense.

'Cause then like October's just like the bounce back out of the September dump.

Yeah.

Yeah.

So I I don't know. I f I I thought September would be better, but um not starting out promising.

Kind of funny that the first day, the first Monday of September that the markets open, just everything just crashes. Again, in the trad markets, and then it carries over, spills over into the crypto markets. Ether, start of the week, $2,530 down 7%, currently at $2,390. Lost $150 on the week about. Also, the Ethereum ETF flows, Ryan, looking pretty abysmal. Not great. The ETF, the outflows, the net outflows every day has been somewhere in the single two double digits for the the month of August. There was one double digit outflow on the 26th, where we lost $13 million in total AUM. The first two days of trading on in September,

the 3rd of September, negative 47 million. And then the 4th of September, negative 37 million. So over 75 million dollars of outflows in the first two trading days of September. As bad as it gets.

Well actually, so before we get too depressed, uh if you look at these numbers, the vast majority, in fact almost all of it, um more than all in both cases, on September the third and September the fourth were actually from ETH E, which is nice.

So

yeah, right. It's just like some for some reason ETH just had just two big days.

Yeah.

Uh and then yesterday, man, yesterday there has been

some three million of the 40 million outflows went back into the grayscale ETH, which has the lowest fees, but zero million, zero million dollars went into all of the other ones. BlackRock didn't get anything, Fidelity didn't get anything, no inflows.

Yeah. So but basically everything else, the inflows are kind of flat, but ETH E continues to drain. That's kind of the story that we're looking at.

Exactly.

It's bleak, but it's just like not worst case scenario bleak. There are some diamond hints on the in uh institutional side.

Was outflowing, that would be a different story. That that would be worst case scenario.

That hasn't happened yet. Well wait wait for later in September maybe for that to happen.

Oh god.

Things could always get worse. Before they get better, uh the total crypto market caps, where are we at in the week?

2.07 trillion dollars hanging on by our fingernails above two trillion dollars.

All right, here's the big question. You know how crypto has traditionally gone in these uh four-year cycles, right? So we have the bull market, and then we have the bust all in one like nice four-year unit, and then we kind of repeat. And we've done this a few times in crypto, like, you know, three times at least. Um, you know, like uh some are calling this uh like the fourth cycle, but the four-year cycle is dead, according to some investors. This is a report from Outlier Ventures. And let me lay out the case for you here and get your response to this. Basically, the fact that following the 2024 havening, uh Bitcoin experienced the worst price performance uh more than 125 days after the the event. So the price is now so the halvening happened in April, right? It's April, uh, I believe. The price is now down eight percent compared to previous cycles. Last time, last few times this has happened, we had a 22% increase. So eight percent down compared to 22% uh up traditionally. And the report continues. We believe that 2016 was the last time the halvening had a significant fundamental impact on Bitcoin price action. Every halvening gets more muted in terms of the you know, like total percent of Bitcoin supply. So that would kind of make sense. And they're they're saying basically 2020, the reason that prices, Bitcoin prices went up in 2020, that was kind of just coincidence. It was more to do with COVID and the liquidity injection than it was to actually do with the halvening. So the conclusion is the argument that the four-year cycle still holds in 2024, uh, but that the Bitcoin ETF approval just pulled forward the demand is flawed. It's not true, this report says uh the Bitcoin ETF approval was demand driven and the halvening supply, uh the halvening is supply driven. Anyway, the basically the report is saying it goes on to kind of like offer some more data points here. The four year cycle is dead. It's not a thing anymore. What's your take on this?

I think that checks out. The four-year cycle is and always was going to die. Uh like you can't just have algorithmic four-year price increases. Like eventually that gets priced in. Like you know, markets are efficient. The fact that like this the claim that the 2020 uh cycle was a coincidence, I also think is very strong. We just had this idiosyncratic event called COVID. Uh idiosyncratic money printing happened to line up with the four year happening. Um, and uh the claim that just like the the reducing Bitcoin inflation is just getting uh becoming a smaller and smaller impact on the market, also just checks out. So I I believe it. It makes sense to me.

I'm not sure yet personally whether I'm uh ready to abandon the four the four year uh cycle. Um just

Currently being invalidated.

We're watching it being invalidated.

right now, but it's September, David. It's always darkest until the dawn. Um and and by the way, it's not because of Bitcoin having supply. It's more kind of the the global macro liquidity that Raul Paul Paul talks about so much, right? So the the tides of liquidity um ebb and flow. And uh that that tends to happen on these four year cycles as well. Anyway, that's something.

The four year cycles was supposed to be like internally to the crypto industry. That's like what we do. Yeah. I think if explaining it, justifying it due to exogenous factors, I think also is antagonistic to the idea of like the big the four year Bitcoin cycles, which the rest of the crypto industry follows.

I mean, this is the conclusion of the report. It's time for founders and investors trying to time the market to focus on more significant macro economic drivers rather than relying on the four-year cycle. Don't worry about the four years, just like go focus on other things that are happening in macro. Uh, David, I've got uh three takes for you on the lackluster price performance. I I want to run by you. These are like the answering the questions of why isn't crypto doing anything in this market? No, so here's the first one. Maybe we are in the show me phase of crypto. So

What's that?

My base case is still that we get a strong Q4 crypto rockets. 2025 is going to be good. Similar to you, you know, you did that episode with Ledger

on kind of like charts and what that looks like. And he's like, hey, this is just uh the calm before the big bull market in 2025. Um that's still my base case. But there is another theory, which is we might be in the show me phase of crypto. There's a fair chance that we don't get the new inflows, the new attention from uh investors. And we haven't seen retail come aboard this cycle like at all. It's all the old uh, you know, crusty people who've been in crypto for a while from last cycle were still do feel crusty.

I feel a little crusty too. Um, but until crypto actually shows the world the new apps, it won't actually get the new retail interest. And uh, like here's a here's a data point. You know, after the dot-com uh bubble and pop, it took Amazon 10 years to reach all-time high after that, like 1999 all the way to 2009. That's Amazon. Different rules apply for crypto. I'm not saying it's 10 years, but I am saying there could be this show me phase that the market expects from us this time around. They're like, hey, we don't believe it anymore. You can't get away on that kind of the hype train. We actually have to see something. So the first possible reason why we've had lackluster performance is maybe we're in the show me phase.

Okay. That I mean that that I kind of think checks out. The dot com bubble like

brought awareness about the internet to everyone. Uh and so like I think that's what happened in 2021. Like everyone knows about Bitcoin. Everyone knows about blockchains. Yeah. Like you everyone knows what crypto is now. Uh the it's no longer a mat like a lack of awareness.

And it was all

It's also pretty accessible.

it was all awes it's also been pretty accessible. Yeah.

So that checks out to me.

Okay, so that's the first one. The other is a Fiskandis take. Basically, crypto isn't the cool kid anymore. Okay. And this kind of pairs well with uh the first take. So he he says this another point on why pure narratives won't save us. Crypto is not the coolest kid on the tech block anymore. So it needs real products that people use. Uh this cycle, AI is firmly taking the spot as the cool kid on the block. As digital finance has nothing to do with a digital super intelligent god. Basically, retail and investors, they've pivoted to AI. You know, there was a time where there was kind of a gap. You know, we we'd gone through our mobile phone phase. We'd obviously prior to that gone on the internet. We stretched um all the web two type use cases, and blockchain was the next narrative big tech thing. Well, the world has moved to a different narrative, and that's AI. AI is getting all this AI is the cool kid on the block, no longer crypto. And so that's another reason for lackluster performance.

Also checks out. I also think that's right.

Okay, well and here is a a third take that is um maybe optimistic in a way depends on depends on what happens I I guess post November. But uh the poster says from split capital, a more unpopular take. Crypto has never had a product market fit problem. It has only had a regulation problem. If regulations were clear and flexible for new products to work at scale, financial institutions would integrate directly with on-chain uh products. So the take here is basically like um the other reason for lackluster performance is actually not product market fit. Like we do have the killer apps, the regulators just won't let us deploy them. They won't let us like uh legalize tokenization in a way that brings this to the masses. So until we get through that, we actually we have the product market fit, but they're just like holding the entire industry back. And this probably applies to

Checks out.

Okay, so those are the three reasons for lackluster performance, and all of those check out in your mind.

Yes. The bleak side of this is that all of those are very hard problems. Like, okay, in order to get out of the show me phase, we need real products. In order to get the real products, we need good regulation. Uh and good regulation, even with a more favorable administration in the White House, still will take time. Like we still need Congress to like draft good regulation and pass it.

So all of this might mean this cycle is going to take a little bit longer. I mean, that would be the conclusion here. I mean, things after November could possibly accelerate things. If you had the um regulatory uh tailwinds in our favor post November, maybe you get this faster. I think that's going to be important on the regulatory side. But to your point, it takes a while to build things. And the builters are doing things in the background. I mean, there's there's you know like poly market, there's great things going on in layer twos, um, but it'll take a while to build out the kind of the mainstream use cases, probably.

I do really like this last take though, where like crypto never has had a product market fit problem. Even though everyone's the memes like where are the users, like we do have a product market fit. That's kind of a contrarian take. I guess that's why he leaves with it being unpopular. But there is this idea that like if this is true, which I do kind of think like tokenization's super real, like Wall Street tromping it the bit in order to like make this work.