Transcript
Speaker: Hello and welcome to the Decrypting Crypto Podcast. It's March 6, 2025, and this is Off Chain, your weekly recap of the biggest stories in the crypto space. I'm Matthew House Barbie, and as always, I'm back after, wow I mean, it's been a few weeks, Austin.
Speaker: I'm here with Austin Knight. How's things? Man, it's been a wild ride since the last time we've talked. We got a lot to catch up on here. Oh my God. Yeah. I mean, I was like, I was thinking, cause we both individually had a bit of chaotic schedules. I've had a lot of travel and I know you haven't.
Speaker: ah So one of the last few times we caught up was when we were doing some of our prediction episodes. And as I was just, I was thinking about this, you know, was like but some of my yearly predictions have already been blown out of the water.
Speaker: yeah, Yeah. Well, what we're going to do today is we're going to have a an episode. We'll try and keep this somewhat concise, but we'll just give a bit of an update on the markets. I'm sure everyone here is probably fed up of hearing about the state of the markets, but we want to give a bit of a zoom out what's happened so far, because I feel like every every week feels like a month right now with everything that's going on.
Speaker: And then we're going to talk about the strategic crypto reserve and what potentially to expect in the announcement coming tomorrow.
Speaker: So well we'll kick things off ah with a quick update on the markets.
Speaker: Well, it's been quiet. That's the nice thing.
Speaker: Quiet like an atom bomb. My God. what what a What a wild last few weeks. Where to begin? but Let's just begin with the fact that one of my predictions in our ah yearly predictions was that Trump would not follow through on his tariffs and they would be significantly watered down.
Speaker: Wow. I thought the same thing. He must have listened to the episode and I must have really riled him up because shit, that that, that has just been the most erratic, chaotic, uh,
Speaker: confusing um series of weeks, very short number of weeks, I might add. yeah You know, with we're about one and a half months in from Inauguration Day.
Speaker: Feels like a year has gone by. it does, yeah. But, i you know, I remember feeling that way in 2016, 2017 well. know, twenty seventeen as well like you know Just looking, you would have periods of time where you're like, you you look back on a few weeks and you're like, man, this felt like an eternity because so much is happening.
Speaker: And I guess that that does typically happen at the beginning of a presidency, right? Like there's a million executive orders that get signed. There's all kinds of news that breaks. And then it it slows down after that, especially after the midterms when, you know.
Speaker: A lot of the time things start to kind of gridlock. But the the tariffs thing is interesting because I thought the same thing as you, Matt. I thought like this is mostly just a lot of talk.
Speaker: um He's trying to get a good bargaining position, but there won't be a ton of action from this. And, you know, that's not i like I do think that as a leader, you you have to take action at times. Otherwise, everybody's going to call your bluff. So it's not to say that I thought literally there would never be any tariffs, but no rather that, you know, what whatever was initially discussed would be negotiated to a a much more reduced position.
Speaker: Which is what it kind of seemed like was going to actually happen with those first yeah Mexico and Canada ah tariffs. And then like, you know, there was almost nothing really done. It was like symbolically, yeah, we've added more border police, which they already were kind of doing.
Speaker: it was like, okay, we'll pause it for a month. And then I think markets were like, all right, yeah we'll give you this one. ah i guess maybe tariffs actually are going to be a bit more chill and...
Speaker: Yeah, no, they have not. Yeah, so I was just thinking like, okay, what is the current status with the tariffs? Because it's been a bit difficult to keep track of all of it.
Speaker: um Speaking of Canada and Mexico, that was initially announced as 25% tariffs on most goods with a 10% rate on Canadian energy because there are several states in the US that depend pretty heavily on Canadian energy.
Speaker: And these were set to start February 4th of this year. There were some negotiations and they deferred that to March 4th just a couple days ago. And then they recently extended it again to April 2nd, but just for autos and a few other goods.
Speaker: So there is some negotiation that's happening there. yeah And then we also have China. Which has a 10% tariff on all Chinese goods, including those coming out of Hong Kong, which went into effect on February 4th and then escalates to ah escalated to 20% on March 4th. So just a couple days ago. don't see Did you see the quote from Xi Jinping from, I think it was yesterday?
Speaker: where he said, um we are ready to go to any kind of war with the United States. I don't think that came from Xi himself. I think it came from the Chinese embassy ae in the United States. But that's serious.
Speaker: like That's a big statement. I saw the headline um and i was like, whoa. Yeah, yeah. I haven't had words like that from China in a long time.
Speaker: that That was one of those moments where I was like, I i saw the headline as well. And i was like, okay, let me go ahead and like find the lie here. Because there's no way that they would actually say that.
Speaker: And then actually it's true. um The Chinese embassy tweeted like, we're ready for a trade war. We're were're ready for a tariff war. We're ready for any kind of war, which I think is like, almost feels like a threat.
Speaker: it's um it's it's theres They didn't mince their words. Yeah. Yeah. Now, you know, China does tend to, um they they have like a lot of these, you know, drills that they go through and periods where Xi will say like, we need to prepare for war and stuff like that. And it's a lot of like fist but fist to chest pounding, I would say.
Speaker: um That one definitely felt different to me, um you know, and I guess given... the broader context of like what's happening with Russia, what's happening with, you know, we we definitely are souring our relationship with Canada.
Speaker: ah Everything that happened with Ukraine, although that's a very evolving situation, um And then, you know, you saw with TSMC, I think that G probably didn't like the fact that TSMC is investing heavily in building advanced chipsets in United States. 100 billion into the Arizona plant? Yeah. Three new Arizona...
Speaker: ah production facilities, I think, um for like some of their most advanced chipsets. I think it's a combined... i heard I was listening on Bloomberg yesterday to Lutnik speaking, and um and Jonathan Varro from Bloomberg put to Lutnik, he was like...
Speaker: ah he basically kind of said, you know, how, how do you feel about all of the uncertainty that's been created from this? if Like a lot of the, a lot of what we're hearing from companies in the U S is that, you know,
Speaker: they they're kind of putting big decisions on on pause. They don't know what to expect. And Lutnik kind of said, started laughing. He was like, i don't know what you're talking about. you know TSMC are coming over 100 billion.
Speaker: ah they've They've got ah Apple um making an enormous investment, i think creating like 200,000 jobs. um i think in total the kind of number they have right now of, because SoftBank, I think was, what was that? 200 billion. and um The total number is over trillion dollars now.
Speaker: And, you know, I'll be the first to kind of be on the more skeptical, critical side, but at the same time, they're they're getting numbers here that are pretty juicy.
Speaker: and I will tell you, like, you know, when whenever whenever you're and a bad situation or, or maybe even in some cases, uh, uh, you know, deteriorating or disadvantaged position, um, change is going to be a little rough.
Speaker: Like there's going there, you know, to write the ship is going to bring a rough period. There were many times during Trump's first presidency where I, you know, I saw what he was doing with tariffs and taxes and stuff like that. And i was like, what is the fricking plan there?
Speaker: You know? And then it started to work. Like, um You know, you saw the the initial round of tariffs on China. I'll never forget my one of my best friends who works at Apple at the time. You know, i was speaking pretty negatively about that that initial round of tariffs on China. And he said, you realize like we are moving our almost all of our manufacturing out of China on on the long tail as a result of this. Like we're going to Vietnam, we're going to India or even going to the U.S.,
Speaker: Now, that's going to take a long time to materialize, but a lot of it already has. So yeah it's a shift into Vietnam, actually, yeah the back of this, a further shift, which often happens. Right. Same in Malaysia, etc. Yeah.
Speaker: So, you know, there's work. And I think that this time around, Trump cares a lot less about the stock market ah than he did in the first term. So he's he's willing to take some pain.
Speaker: there ah But just to to round out the tariffs thing, there is another set of tariffs, which is the steel and aluminum tariffs that were announced on February 10th. And that's a 25% tariff on steel and aluminum imports. That went that will go into effect on March 12th under Section 232. And there are no country exemptions for this because what they're trying to do with that is boost domestic production. I do believe that there is an exit path.
Speaker: which is something like once we have, um we hit like an 80% threshold, um those tariffs will will start to be wound down. But yeah, As far as like the big tariffs go, that is the you know those are the big headlines.
Speaker: The steel one, you know i you can make arguments like for for a lot tariffs. One that I will never understand is is the steel tariff because and I feel like we could have a whole podcast episode about this, but it's an exclusively...
Speaker: American political sensitive um topic. Right. And it's so interesting. It's kind of like, you know, the ah the the mid 70s coal industry of the UK.
Speaker: It's just like one of those industries that if you... um You can keep propping this thing up, but the downstream impacts of doing that are pretty catastrophic and it only ends one way.
Speaker: I saw an unbelievable- You're talking about like environmental impact? No, like actually like on industry, right? So it's like, okay, you you you pump up a load of tariffs onto steel.
Speaker: You make it much, much harder for- ah imports to come in, but you obviously create like price inflation um across like all of the downstream buyers internally in the US of steel, because they'll have to go towards US steel that is much more expensive.
Speaker: As a result, what you then find is that either prices get passed on or, right, so let's say the the auto industry, great example, right, huge buyers of steel um and and many other industries.
Speaker: You could say, okay, well, a load of this price can be passed on to consumers. I don't think that's fully realistic. We've seen that consumers aren't willing to take on the full burden of that. So where you see this come into effect is in the margins of the downstream buyers of of industry, right? Like the companies that rely on this.
Speaker: um And one statistic has shown, and and I really wish, I think it was from the Financial Times, they did a whole deep dive into this, it was quite it as fascinating. um That for every one job created in the steel industry, like directly focused on like the production of steel, 80 jobs are lost downstream in like the the the like manufacturing subsets of ah of steel, the the manufacturing industries that lose steel.
Speaker: But it's just such an intense political topic and area to keep the US steel industry going. It's like a you know a bastion of industry so heavily entrenched into, very importantly, key swing states in the US. And I think you know and i think there's just like it's all wrapped up. We could go like down a huge rabbit hole here. But I think like to to zoom out a little bit,
Speaker: and if we just like park the whole steel piece because well i i have a thought on i have a thought go you go ahead you go ahead um i do think that there is a political aspect to it and i think there's an economic aspect to it as you were describing i think there's also a national security aspect to it um you know you look at yeah Matt, you lived in the United States for quite some time and and you lived in and you know in the part of the Rust Belt, actually, um yeah you know where where we used to have incredible manufacturing hubs. In fact, some of the best in the world.
Speaker: um And ah when you and I were working together, i think we we worked in an old shoe factory. and We did, yeah yeah. Beautiful building, actually. Yeah, it was a beautiful building and we weren't making shoes. um yeah were We were dressing up like hipsters and writing software.
Speaker: um Oh yeah, the real GDP value. We're doing real important work. um But you know all of this is to say, ah just like if you look across the United States, I mean, we have gutted our manufacturing base and the exact inverse is true.
Speaker: of China. um And if you're taking an increasingly isolationist approach, um you know, I just like, I think like if, if we were to actually get involved in some type of a hot war, would we be able to mobilize in the same way that we did and world war II?
Speaker: You know, I think too easily, we we look back at World War II and the successes that we had from ah manufacturing perspective, you know, spitting out P-51 Mustangs like they were yeah pencils. Completely pre-globalization, right? and And i think and and i agree. I think, you know, Trump has...
Speaker: clearly ah very focused on US protectionism at the you know the the grandest level. And with with his whole focus of you know owning as many end-to-end supply chains as possible across industries, whether I think it's necessary or not is irrelevant.
Speaker: um This is clearly his plan and he's executing towards it for for sure. Yeah. So um what about the crypto markets? um A lot has happened. We've had a ton of Bitcoin volatility. We hit a three month low of 79K and then rebounded to like 91K.
Speaker: Currently, last I checked, we're at like 89, almost 90K. But that 17% drop was the largest decline since June of 2022. So that was pretty serious. Yeah, and even more damaging a lot of the time is everyone thinks that talks about the drop a lot of the time, but the thing that's much more painful in markets is the chop, the sideways chop.
Speaker: um And actually, i was looking into some data ah with the the data team hearing Kraken. And we were going through like, you know, some of the different BTC volatility indexes that we often track. It's like typically when we're looking at, okay, what's going to influence trading volume?
Speaker: You know, you've got two levers, you've got BTC price, which is just a great proxy for it. And then BTC volatility, like higher the vol, higher the price, the, you know, the more volume is is going to be created.
Speaker: BTC volatility in mid-Feb was down to us ah to the lows of July last year. It's like unthinkable really.
Speaker: And um while that will no doubt rebound back up, we've just had a real slow grind. And this has been in the background to a lot of extremely bullish news in in crypto actually.
Speaker: um you know reckon we were the last of the announcements to have our SEC case thrown out, dismissed. So did Coinbase, ah Uniswap, Robinhood, trying to think who else. OpenSea, Gemini. OpenSea, Gemini, yeah. like Basically everyone.
Speaker: It's all getting thrown out, right? And they're like, hey, this is the new administration out with the old, like actually like really formalizing a focus around this. We've had, and we'll talk about this shortly, the strategic bit Bitcoin or strategic crypto reserve kind of announcements. And and it has only been, as I said, like, you know, six, seven weeks.
Speaker: So is there has actually been quite a lot positive news. I think it's just, it's really, markets are really struggling to commit capital, understandably.
Speaker: toward many narratives in the short term until we get a better sense of of macro. Because actually the piece that we didn't talk about in amongst all this is like tariffs keep getting the headline.
Speaker: um I actually think the biggest worry, which is somewhat symptomatic of some of this is, and And actually, I think what would be the single most detrimental ah outcome for this year, most bearish case, is if the US drops into stagflation.
Speaker: And I think this is the most concerning piece because actually, some of the last few batches of US economic data have not been looking very rosy.
Speaker: um On the other hand, as you you made the comment, Trump is less focused on the stock market, which I think is kind of a good thing because what he said is he's focused on getting rates down. That's his one big thing. he's like He's going to drive down interest rates.
Speaker: Now, the market went from when we had that first whipsaw of tariffs to going from bringing it down to an expectation of one rate cut to more recent economic data expecting three rate cuts happening by the end of this year.
Speaker: This is all predicated on the fact that inflation can maintain inflation. ah below a threshold that the Fed seems reasonable. We still see in high inflation with low economic growth, we're in a real bad place.
Speaker: think that for me is like the biggest risk. And I think for a lot of people with capital ready to deploy is what's giving the most pause. Yeah. That said, I mean, there have been some institutional moves like BlackRock added its spot Bitcoin ETF to model portfolios and yep Blockstream secured billions of dollars for new Bitcoin funds. So there is some growing institutional interest despite the volatility.
Speaker: But yeah, you do have like, you know, but i mean, there was a trading volume surge predictably. Centralized exchanges saw spot trading volumes at an all time high of $225 billion dollars on February 3rd. And that was like sell off and subsequent recovery that was causing that, right? Like the volatility caused that. But and then at the same time, something I thought was interesting is like, you look at El Salvador's Naib Bukele,
Speaker: he defied um IMF pressure and he bought more Bitcoin. yeah um And then respect like at the same time, Switzerland's central bank dismissed crypto as a niche phenomenon.
Speaker: It's almost like a- Bizarre for Switzerland to say that I thought of all time. Isn't Switzerland like the, you know, kind of the the center of like the old banking world?
Speaker: So like maybe they wouldn't like crypto? Yeah. Yeah, but there's there's quite a big um there's quite a big crypto community and in in Switzerland, actually. A huge amount of trading happens over there.
Speaker: um And yeah, then again, you know the the emerging you know financial scene versus the central bank is ah two different things. So yeah maybe. Yeah, that's true. It's it's important to note like that was Switzerland's central bank.
Speaker: And then there was this Bybit hack. A $1.5 billion dollars hack on the Bybit exchange, that shook markets lot. And I guess that was- almost forgot about that. That was like a few weeks ago. i was on a flight back from ah San Francisco and um the Wi-Fi wasn't working very well on the BA flight.
Speaker: I finally get Wi-Fi and holy shit. my like like I had like messages in my Slack, people trying to hit me up on Telegram, WhatsApp, like every single channel to just be like, Matt, are you available? Matt, are you available? And I was like, shit, this is not good. This is either really good or it's really bad.
Speaker: it is like It turned out it was really fucking bad. It was not a day to have extreme jet lag. But yeah, that sucked. However, um I will say, so just to be clear, this Bybit exploit that is worth saying is really an exploit of the... The safe wallet.
Speaker: safe ah the The safe, Genosis safe ah UI, right? um Less so. Bybit have a play to a part to play, but less so them.
Speaker: um It's not just the biggest ever crypto hack, it's the single largest ever like hack of of all time. Oh, is it really? wow Yeah, $1.3 billion. dollars Unbelievable.
Speaker: um And what's even more astonishing is that within 10 days after the exploit, Lazarus Group have successfully converted all of the ETH into BTC.
Speaker: Fuck. There's stuff going, man. that they are ah They are just like... You just sometimes you just got to look at a real evil squad and just say, you know what? I just got to take my hat off to this absolutely like horrendous crime that you are executing phenomenally well.
Speaker: ah it's It's unbelievable, really, um but was not ideal. But however, despite all of this, the market kind of shrugged it off.
Speaker: I was genuinely surprised. Like, this is like, ah you remember the scene in, um ah oh shit, what was the what was the film from, um uh, the guys that created South Park and, uh, Team America World Police. Team America, right. And they're like, it's 9-11 times a million. It's like, this is like FTX times a million. Right. And it's like people vomiting in the streets.
Speaker: And then we're just like, yeah, I guess, I guess it's fine. All right. Next day. let's go. tariff had more of an impact than this fucking Bybit exploit.
Speaker: So FTX times a million didn't really... yeah know We've become desensitized, right? Well, you know, you think that, but like I was really worried after this. was like, this is this is the first big one since all the institutions have came in, right? you know This is post-Bitcoin ETF. Everyone's like sunk in. This could be really bad. This is the kind of thing that...
Speaker: If this happened in middle of 2024, this would have plunged us into two to three years of bear market. And this is the one thing I would say that looks positive from the market perspective.
Speaker: What's holding back this market, this is my opinion, but I think it's like pretty much grounded in good data. What's holding back this market is the uncertainty in wider macro. It's trading very similar to the US equity market um in with a bit of a lag.
Speaker: And then you've had a few extra little bumps along the along the road. We also really rallied very hard a little earlier than some of the equity market as well. So there was a bit a cool off.
Speaker: But this thing feels like a coiled spring. you know we ripped ah we We dropped all the way down to 79K. One tweet about like potential crypto reserve, we rallied all the way back up to something like 96K in 24 hours and nothing material had happened.
Speaker: People are waiting for an excuse. ah And I do think if there is a very bullish announcement tomorrow around this Bitcoin strategic, crypto strategic reserve, it wouldn't surprise me if next week we're chatting and we're, we're pushing past like 100, 105K kind of situation. So yeah I agree.
Speaker: it's ah it's It's a tough one. I think where people have been hurting a little bit is that throughout all of this, alts basically anything outside of Bitcoin has been really, and like the dino coins like Cardano and XRP have been bleeding, bleeding out.
Speaker: date Yes. So I do have like a bit of updated thoughts on a prediction um to your point around, you know, this this question of what's going to happen tomorrow. March 7th, we have the White House crypto summit happening, which may clarify plans on the crypto strategic reserve.
Speaker: Should we give like a quick summary on on this of like what's happened so far yeah on the strategic reserve before we jump in? because i think there's a good Let's dig into it. um We'll do like a a real quick one on this, right? well and So so we can we can jump straight in.
Speaker: Okay, crypto strategic reserve. here's Here's the story so far. ah Monday of this week, Trump, what do what do I say when he shares on Truth Social? Does he truth?
Speaker: Does he truth? is he truth He truthed all over the shop. Yeah, he truthed out something on Truth Social. It's just sounding so bad.
Speaker: There was a truth released. ah And he said, he shared out, ah a US crypto reserve will elevate this critical industry after years of corrupt attacks by the Biden administration, which is my ah why my executive order on digital assets direct um digital assets directed the presidential working group to move forward on a crypto strategic reserve that includes XRP,
Speaker: Sol and ADA. So Cardano, Sol and XRP. I will make sure the US is the crypto capital of the world. We're making America great again. Now, a couple of things. And then he followed up very quickly with, and obviously BTC and ETH as other valuable cryptocurrencies will be at the heart of the reserve. I also love Bitcoin and Ethereum.
Speaker: So he he he tweets this out. um two things. Crypto strategic reserve. It's the first one, right? So we've always had this as Bitcoin strategic reserve.
Speaker: And all of a sudden, we've got some questionable additions to to this. XRP, Sol, Cardano, Solana, Cardano.
Speaker: Bitcoin I get, ETH I can get, but the rest I'm I don't know. And we've had some additional comments from Howard Lutnick. I think this was yesterday, actually.
Speaker: um why I'll quote Lutnick here because he says, the president definitely thinks there's a Bitcoin strategic reserve. Kind of confusing. ah Now there will be the question of how do we handle the other cryptocurrencies?
Speaker: And I think the model is going to be announced on Friday when we do that. And he follows up. He says, so Bitcoin is one thing. And then the other currencies, the other crypto tokens, I think, will be treated differently.
Speaker: Positively, but differently. So it kind of gives us two questions, right? it was like I think the first one is like, what's going to be in this crypto reserve? it going to be a Bitcoin reserve? it going to be ah crypto reserve.
Speaker: And then I think the second question really is how are they going to fund this? yeah And so, yeah, what's your what's your thoughts? um Well, the the US s government does have like a bunch of confiscated Bitcoin, something like $21 billion dollars worth of confiscated Bitcoin. 200,000 Bitcoin, I think it is. if i Okay, yeah. cool So, um I mean, I just assumed that they would find a legal path to funding part of this with that.
Speaker: There is also this proposal that Senator Cynthia Loomis has put forth with the Bitcoin Act of 2024. which proposes that the treasury acquire 1 million Bitcoin over five years, which would be 200,000 annually for something like $76 billion. dollars Obviously that price will fluctuate.
Speaker: saw Michael Saylor saying that as well. That's what he was saying. Okay, so he's he's basically saying the same thing. Yeah, well, he said, because he was on an interview with Fox News, and they were kind of putting a load of questions to him similar to this. and he And they were like, how how do you think they're going to fund this? And Saylor said, I think what they'll do is they'll try and acquire 1 million BTC over four years, he said, buying Bitcoin every day.
Speaker: That's what Saylor said. He's going to be there tomorrow, right? But it It didn't sound like, I don't think anyone knows, like the has the answer yet until this this meeting happens.
Speaker: Yeah. And I, as far as I can tell that Bitcoin act hasn't really gained significant traction in Congress either. So, I mean, maybe it doesn't matter. Maybe it's, it's all going to be clarified at this, this crypto summit.
Speaker: There's another interesting factor here, which is, This crypto reserve is happening at the federal level, right? But as with anything in the U S states also want to get involved with their own play and over 15 states, including Texas, Ohio, Pennsylvania, and others are actually exploring their own Bitcoin reserves with some estimating a collective 247,000 Bitcoin if enacted, which would actually outpace federal efforts.
Speaker: So saw a few of those fell through. i can't remember which states it was, but a few ah ah two or three of them got like shot down, I think yesterday or the day before.
Speaker: um So there was a little bit of like a downer on some of that, but I think there are still a few in play um alongside this. But it's going to be interesting to see that. And then I think the the big thing here, which was kind of the narrative before, is if the US do this,
Speaker: Other central banks around the world can't just sit by and watch this happen. you know they have to They have to start accumulating a reserve alongside this. Otherwise, they miss or risk that the US creates such a dominant position in what could become an important strategic asset ah moving forward.
Speaker: And and i think that's and when you see the Dubai of the Americas. Right. Right. And I think that's kind of the bet that is making. Right.
Speaker: And it's, um it's very, it's, it's very interesting. And I think ah this, this, This is kind of like the promise of a lot of this.
Speaker: What I'm very interested in is actually the makeup of the reserve. I think um as much as I would love my ETH bags to be pumped, ah ah God rest my ETH bags.
Speaker: And i would i actually, if if I could choose what this was, it would just be ah Bitcoin strategic reserve. I think that's what it should be.
Speaker: It's going to be this way too much confusion and It is. I agree. like i can kind of make the case for ETH because it's the second biggest, it's like and and there's an there's a good narrative around it.
Speaker: I cannot for the life of me understand Cardano, XRP. What do you think is the motive here? like is it Is it to prop up like a more diverse ecosystem?
Speaker: I guess that's the play, right? i My thinking here is you've got BTC, which is kind of the the digital gold. It is the the the bedrock of all of this. But what you're also trying to do is capture the the wider ecosystem.
Speaker: I just...
Speaker: Why do you need that in a strict strategic reserve? Because I think there's some valid questions that you could put to say, why do you need a strategic reserve of Bitcoin, right? Like you look at most strategic reserves, they focus a little bit more on building out a reserve in case of like a catastrophic situation or like something that comes up where maybe there's an enormous supply shock with something like oil, for example, um and you don't want to be left really caught out like a war happens.
Speaker: Is it the same with with Bitcoin? No, i don't think it is quite that. I think what this really is, is owning and, you know, the i think Saylor says this. I've heard him say a lot, a lot times, like planting the US flag, you know, down in what is the the kind of the new frontier of of of finance and where the next phase of economic power and influence is going to come from.
Speaker: I get it like that. and i think we're kind of framing this as strategic reserve. Is that going to be the case with all the other assets? It's like, i don't I don't think so. It doesn't make as much sense to me. yeah um I guess if Trump is like saying that he wants the US to be the crypto center of the world, then maybe he's he's trying to bolster some other projects. yeah um What do you think of this sort of, I guess it's practically a meme at this point to say this, but this idea that having a Bitcoin strategic reserve is going to undermine the dollar?
Speaker: Yeah.
Speaker: I don't know if it does necessarily undermine the dollar to to too much. um
Speaker: Well, first of all, I think the US, if something is going to undermine the dollar, right, like an asset like Bitcoin, um I don't necessarily think it needs a US strategic reserve to to do that.
Speaker: The US owning the a big chunk of the supply of of of Bitcoin ah puts them in a very strong position ah if if it were to kind of devalue the dollar.
Speaker: And at the end of the day, With the whole focus around US protectionism and supremacy, think a lot of the rest of the currencies, at least over the short to medium term, are going to be devalued against the the dollar anyway. we're so We're starting to see that. And Trump is actively trying to devalue the dollar as as a result.
Speaker: um But I don't necessarily think that that's too much of a play. I think the bigger question that we should actually ask from the crypto perspective is... If we just park how much this will kind of rally the price in the short term, short term being like the next few years, is this actually a good thing?
Speaker: Is this actually good for Bitcoin long term? Like, you know, a new administration comes in after Trump.
Speaker: They just sell it all off. Let's say that you know they've got this giant asset. They're not very bullish on this. The US has over the years sold somewhere in the region of 200 million, I think, bitcoins.
Speaker: Yeah. And I mean, look at, look at what Joe Biden did with our strategic oil reserve. He fricking emptied the thing to, to like try to lower gas prices. All the time. The yeah k the labor government did this in the early two thousands with the gold reserve and they sold it at like a discount. This stuff happens in times of duress.
Speaker: or with just a different strategic view, um you know there's a big burden. I mean, we talk about micro strategy owning, what is it? Like 6% is the second in supply.
Speaker: And that that for me is very concerning. ah Very concerning. The only reason why we're not super concerned about it today um is because it's Michael Saylor at the helm.
Speaker: And he's a major Bitcoin bull. and will there ever be another Michael Saylor?
Speaker: You have to handle the keys to this. what What happens when Saylor gets McAfee'd? you know Exactly. Exactly. you know ah i so I did see proposals um for for you know some type of programmatic rule around how the strategic reserve could be sold off and and having sort of like these lockup periods.
Speaker: where, you know, yeah that would try to prevent a new administration from coming in and selling it off. I don't know. It's only as enforceable as the next bill, you know? yeah And I think that's yeah kind of the the biggest problem in in all of this is like, you know, make no mistake in, in the eyes the,
Speaker: the rise of Bitcoin and everything that it stood for, this is making a deal with the devil. Right. And that's, that's actually no comment actually about Trump or anything.
Speaker: I'm talking like, it's just the, the enemy of decentralization and Financial freedom is centralized entities that have influence and power controlling the decentralized financial future of money.
Speaker: and Which would include like the ETFs as well, right? Yeah. ETFs. That's a big part. You know, we celebrate some of this because I'm like, I don't. um speaking in um I'm speaking somewhat abstractly right now because I understand why this is viable, right? it's like, it's a double-edged sword.
Speaker: You can remain niche kind of financial instrument that sits on the borders as everything as an alternative, or you can become the next financial system.
Speaker: But there is no way of doing both of those at the same time. yeah This requires integration. And this is one path. I'm not saying the only way to have BlackRock and the US government and everything, right? It's like this speedrun some of it. All your villains.
Speaker: Exactly right. it's It's like the worst Avengers movie ever. and It's like Larry Fink is ah Thanos. but um But, you know, there's there's also the fact that We're all a bit tired. It's been a long bear market. now Maybe the devil looks quite good right now.
Speaker: ah just just for Just a little bit of the devil, maybe. ah Are you saying that we're we're selling out our our idealism for Lambos? Austin, that is exactly why I got into this business. No, but I think, ah no, categorically, yes. I don't think that emy any any Bitcoin maximalist that's happy with any of this is um in complete contradictory direction.
Speaker: ah contradiction to their core kind of thesis and values. And that's I'm just like that's okay. It's okay to feel like that way. I'm just saying like, if you are staunchly on like on one side of the ah the coin, you can't have your cake in the air too.
Speaker: So there will be consequences to this later down the line. Will they outweigh the... the bad, uh, uh, like, uh, will they, sorry, will they outweigh the good?
Speaker: I don't know. Time will tell, but if this happens, potentially when it happens tomorrow, we're going to have the announcement and hopefully it's not an announcement of the announcement again. And we actually got something real concrete tomorrow.
Speaker: We're going to know, but the moment this, i wonder if there's an angle of like, you know, just thinking from a practical perspective, does this meet all of crypto's originating ideals as Satoshi intended?
Speaker: No. Is it a step change improvement on our traditional financial system?
Speaker: Yes. So it almost becomes like a more of a means to an end, you know, rather than an end itself. But nevertheless, an end that is significantly better than the status quo.
Speaker: I don't think that's enough to satisfy a Bitcoin maximalist. That's not what they set out and intending to do. But it's also not all doom and gloom for your for your average person. In fact, it should be an improvement.
Speaker: Yeah. And I think like there's there's so much and there's so many layers to to this, right? like very There's huge amounts of crypto that claim to be decentralized and and that they're not at all, really.
Speaker: um So there's a lot of contradiction in in this space as well. And that comes with some of the speculation that happens. But Jesse, ah I remember hearing him say ah a really good line when he talked a bit about like Kraken because the the role of like the centralized exchange. You remember when like centralized exchanges were the evil for like a long time and then we kind of had like this. When that was the big problem. Yeah, that that was the big problem. Now kind of like everyone's like, oh yeah, like I guess like we need centralized exchanges, right? And Jesse and kind of always talked about in Kraken where he's like, he said this line where was like, you know,
Speaker: you've got to build the bridge first before you burn it down, right? And like the the focus for Kraken, I'm sure this is the case for Coinbase, for okay it all the rest all the rest, like nobody wants centralized exchanges to have to exist.
Speaker: they They fundamentally have to exist right now because that's the structure that we we live in. The moment they're no longer needed, we burn it down, disrupt ourselves, and and and everything moves so decentralized on chain.
Speaker: And I think like... What I hope with these steps that we're taking with things like the ETF, with things like a strategic reserve, these are the bridges that we're building that we can burn down later down the line. And they're not you know fully set in stone. And and and you know it's it's a one-way street that we can never kind of turn back down.
Speaker: And I think that's the thing that's a bit of an unknown right now. And um time is only going to be the thing that tells. ah So we'll see how this all plays out.
Speaker: This is going to be a moment in time that we'll look back on and say, you know, if if this moves forward and this happens, this reserve, Crypto, like post ETFs, will move into then into another chapter that we will never be the same ah prior to it.
Speaker: um
Speaker: we'll We'll see how this all shakes out. I think my guess that's what's going to happen is that we're going to have a crypto re reserve. And I think it's going be heavily weighted towards Bitcoin, probably somewhere in the region of like...
Speaker: If I had to like, you know, gun to my head, I reckon it's going to be something like 80% Bitcoin, 10% ETH, and then a basket of like the rest in the final 10% that will probably contain more on that list.
Speaker: What I'm interested to know, what I really hope doesn't happen, is whether Trump coin will be added into that list. There's no way. That would be a total freaking PR disaster for them. I'm going to quote you on this now, Austin.
Speaker: And we're going to see tomorrow. Because if that gets announced, I'm going to clip this one quote. I'm just going to put it next to Donald's shipping out a truth with that front and center.
Speaker: Yeah. But man, the the conflict of interest there. What I have learned in the past six, seven weeks is that nothing is crazy of for for this. So I don't know.
Speaker: ah that's That's the wild card for me. I don't think markets will like that at all. I don't either. that so That would actually scare me. Yeah, 100%.
Speaker: But I think the most important thing actually outside of the assets is how the how the Bitcoin is going to be acquired. um And if it's strategic purchase is kind of like what Cynthia Loomis is proposing, that's probably the single most bullish outcome ah for this. Because I think we were we were gearing up we were thinking it's just going to be that they're not going to sell Bitcoin.
Speaker: the confiscated Bitcoins, right? And that's going to be the reserve. think that's like quite, that's on the much more bearish end of the news that we could have. The most bearish being and Trump coin being included and a load of other random stuff.
Speaker: um And then the most bearish being extremely or solely Bitcoin and strategic purchases up to a million Bitcoins four or five years every day. That would be pretty awesome.
Speaker: Yeah. Yeah. All right, let's wrap things up. We'll see how this shakes out tomorrow. And either way, it's going to be a busy day tomorrow for sure.
Speaker: It is. All right, man. It's been a pleasure. We'll catch up next week. And yeah, I'm sure we'll be talking about what's next. Yeah. Talk to you then, man. See ya.
Speaker: The contents of the Decrypting Crypto podcast should not be used and are not intended as investment advice. Please do your own due diligence before making any investment, cryptocurrency or otherwise.
