Welcome back to The Breakdown with me, NLW.It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys?It is Friday, November 8th, and that means it's time for The Friday Five.
Before we get into that, however, if you are enjoying The Breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on The Breaker's Discord.
You can find a link in the show notes or go to bit.ly slash BreakdownPod. Alright friends, welcome back to The Breakdown.As you might imagine, this week's Friday Five is nearly entirely about the elections and the implications.
Hopefully we have some other things to talk about going forward, but obviously this week that's where all the attention and energy is.So without any further ado, let's dive into it.
What a week, gonna bring on NLW so we can discuss it.
As I've said a few times here, man, I'm just glad, regardless of the results, that it was a landslide clear victory and that this conversation is not about the cheating or what may come and what could happen.Now we get to talk about what is.
Yeah, I think that people were both braced for their preferred candidate losing, and they were also braced for it being unclear and the utter chaos that would ensue in one way or another.So everyone at least got half of that problem solved for them.
Yeah, I think that things will settle down in the coming weeks and months.I really do have an optimistic feeling that people will move on and that life will go back to normal and the world won't explode.
I will only do a very quick departure or detour into sort of like the American political landscape, because that's obviously not why we're here.
One of my big fears after something like this would be that the party that lost, in this case, the Democrats, sort of try to blame it on things that don't do introspection, right?Like you sort of blame it externally rather than thinking about things.
And certainly there's a bunch of that, but I actually, in the first few days at least, have been fairly pleased with how much
some prominent voices on the progressive side have really actually tried to dig into this being as their own fault, right, or something that they have to address.
So that makes me more optimistic for just sort of the American political landscape, because what you want in an election, again, regardless of your side, is for everyone to kind of better understand the electorate and what they missed about the electorate's needs in order to move faster.
So There are a lot of scenarios where I was a lot less optimistic about the future of the country on Friday after the election than I'm feeling today, again, regardless of sort of like specific candidate preferences.
So we're entering the week in a better place than I might have imagined.
Yeah, even amongst my parents' generation of, you know, lots of lifelong Democrats, there's a lot of, well, we blew it.Yeah. It's our own fault, you know, self-inflicted wounds.
And so I do think that that gives a real opportunity to improve things moving into the future.
Yeah, and certainly moving it back to the subject of our show, you know, I don't even know which different parts we're going to get into a different time.So, you know, we might be bouncing around a little bit.
But boy, when you talk about self-inflicted wounds, there are a lot of people even outside the crypto sphere that were identifying the decision to go after crypto as one of those big own goals that really cost Democrats huge.
I think Andrew Yang tweeted about what Kamala did wrong and what the Democrats did wrong.
And I think it was Paul Graham from Y Combinator who came out very vocally and said, actually, the stupidest thing they did was antagonizing crypto for no benefit.And certainly we saw, you know, the impacts of that.
But I think we'll get into all of that, you know, coming up.
Yeah, I mean, Elizabeth Island is the equivalent of Tom Hanks on an island with his little volleyball Wilson Wilson.She's out there on her own.She's going to need somebody to talk to.
But let's talk about the actual implications for crypto and Bitcoin of this election.Obviously, to me, this is the biggest one.Cynthia Lummis wasted no time tweeting.We are going to build a strategic Bitcoin reserve.
Of course, she's the one who actually proposed the bill and made that news public in Nashville right after Trump's speech. I think this can really happen.
I mean, is this, you know, a campaign promise that we should fear is not going to become a reality?Or do you think that this is something we can look forward to in a Trump presidency?
I think that it has the hallmarks of the type of thing that seems somewhat outlandish but actually could in some version make it in early policy.And so here's what I mean by that.
It's outlandish in the sense that it's not really on anyone's radar other than the people who are sort of proposing it.It's not like there's some huge sort of demand for this outside of perhaps our corner of the world.
But at the same time, the political cost to getting this done is fairly low, especially if it resolves closer to the version that Trump has endorsed versus the version that Lummis is going to the field with, right?
So what Cynthia Lummis wants to do is actually allocate and buy a specific amount of Bitcoin that they just sit on for X number of years, I think it's 20 years or something like that, in order to sort of eventually help pay down the debt.
That's sort of the plan there.Trump's version of this was just not selling the Bitcoin that gets seized or that has been seized.Right.So it's sort of like effectively turns what we have into a strategic reserve.
There's a lot of space between those two things.And ultimately, you know, A lot of early legislation and early policymaking at the beginning of an administration is about getting wins on the board in periods where you can.
And the tension that we'll have to see is how much political capital is going to be expended on big, huge initiatives that are going to take a lot of political will versus how many little things that are easy points on the board type victories are there space for.
this feels to me like it could be one of those easy points on the board, right?Like legislation that just says, hey, you know what?Like, let's hedge and not sell our Bitcoin.That feels like it could get through.
It would be like, you know, basically it would be popular with the people it's popular with.Wouldn't matter at all to the people that it's unpopular with.
And that kind of has the hallmark to me of something that like a lot of people could get behind and vote for fairly easily without a lot of consideration.
I agree.I mean, simply not selling the Silk Road Bitcoin is effectively a strategic reserve, even if they don't pass the legislation, even if by executive order or just not doing it and then actually sharing that narrative. Job is done, right?
That's a far cry, as you pointed out, from buying 5% or 10% of all the Bitcoin in existence.I'm not necessarily expecting that anytime soon, but I think you are correct.It's become politically unpalatable to be anti-crypto.
These things would pass relatively easily through a red Senate, Congress, and of course, through the president.And I think we're going to actually see some movement.Now, I wouldn't be surprised
as you sort of discussed, to not see these be standalone bills, to see a lot of sort of the crypto legislation or things that we're looking for be packaged into much bigger things, kind of like the Inflation Reduction Act, right?
We all know that it had nothing to do with inflation, and there were hundreds of different issues addressed there.So maybe some of the legislation we're looking for
self-custody language, CBDC language will end up wrapped into other things and not be standalone.But I do think in this case, we're going to continue to hear about these things.
And I think maybe the most impactful thing will be that we're just definitely not going to have Gary Gensler anymore.I mean, this guy is absolutely gone.Elizabeth Warren's not going to have the same amount of power.
I did speak with the Blockchain Association yesterday.They said, listen, she's still going to probably be the minority leader in Senate banking.She's going to have power.But
how much influence she's going to have or how much people are going to care about supporting her on this issue when it's so risky is unknown.But she's not choosing SEC chairs and White House chiefs of staff anymore.
Yeah, remember, she had artificial power.Her power wasn't just mandated by Democrats being in the leadership position in the Senate.
Her power was mediated by backroom deals where she was allowed to sort of be the financial ringleader for the Biden White House.
So again, even without her being gone, there's absolutely no way to sort of see her as anything less than, you know, significantly decreased in terms of her ability to influence what's going on.
When do you think we see Gary Gensler gone? I think in the last two administrations, Clayton resigned around December 20th, right before Christmas.I think previous to that, it was right around Inauguration Day in 2016.
But none of these SEC chairmen have stayed around long.They resign when there's regime change.I mean, the guy's gone.
Yeah, I think that some people have asked, I don't know how much of this is just post-traumatic stress, but some have wondered, is this guy going to go out in flames and try to light things on fire as he goes?
And he strikes me as fairly petty, but ultimately, he is also a political animal.And my guess is that the pettiness and the political rationale of getting the heck out of Dodge as fast as possible.
You know, and sort of I think that he's going to follow the similar pattern that we've seen with the past couple where they sort of leave and of their own volition so as to not make it some big fight.
There's just there's very little political upside for him sticking around and continuing to fight.You know, it's not going to change anything about what his future status is in any future potential Democratic administrations.
It would just, the optics would be so poor at this point to bring more enforcement orders that everybody expects to be dropped three months from now, right?
The optics, something else petty that I guess the government could do, not him necessarily, would be to sell that Silk Road Bitcoin before the inauguration so that there is no strategic Bitcoin reserve.
But these things, like you said, they have no real upside besides that utter pettiness.And listen, we do know that for all of his faults, Gary Gensler was
begrudgingly willing to approve the Bitcoin spot ETFs, even though he cried about it all the way to the car.I think he does understand that this is a lost battle and he can move on with his life.And he still wants to have another job somewhere.
It'd be really funny if he finally got that job at Binance that he was angling for all those years ago.
Yeah, I mean, listen, that Gensler is the most sort of career type of politician you'll see, which means he's going back to the private sector until the Democrats come back into power and then he'll be back over.
I mean, it's just going to be that pattern forever with this guy.
What's crazy, I literally just saw this article kind of as we're talking.A lot of people were floating Hester Peirce, obviously.She basically said she doesn't want the job of SEC chair.
I think Dan Gallagher, the head, obviously, lawyer for Robinhood and ex-SEC commissioner, is in the lead.But didn't see this, that there's a story here.SEC Commissioner Mark Guglielmo likely to become next chair under Trump.And this was yesterday.
Which would actually make a bit of sense because he never used to talk at all and all of a sudden he's been on a bit of a roadshow on the media in the past couple months speaking very aggressively against his own SEC.
Yeah, you know, I tend to think that that headline might be slightly overstating the case.But listen, the let's put it this way.We have absolutely zero indications, I think, from the Trump camp right now around appointments.
And in fact, it appears as though Trump has been extremely superstitious about trying to get too much into transition stuff before the election.And, you know, so I don't think that that's just a reflection of that tight ship.I think that they
other than who they want gone.
Ueda represents sort of, you know, there's a lot of logic there from the standpoint of he's careerist, he's been vocal against this current version, which sort of, you know, passes muster from the standpoint of wanting to make a real clear shift.
What he doesn't have is he's not sort of appointed from outside and on high by the new administration and by the transition team.So I think that there's a lot of ways it could play out.I think he would make a ton of sense.
I think he's got the experience for it.I think he certainly has sort of, you know, established his independence.But that doesn't to me, you know, sort of necessarily or a priori suggest that he's going to end up with the job.
I think we could talk about the election and the implications forever.But one of the biggest implications, obviously, is the price of our beloved crypto assets here at CoinMarketCap.Checks price, good price.
Bitcoin making a new all-time high, almost getting to 77,000.Now it's at 76,102.I believe it got about as high as 76,850 on some exchanges.But I think what's more maybe notable in the market at this moment is that altcoins liked it too. Right.
We've seen Bitcoin sort of going up and down.
And we've had debate as to why that's happening is if there's new money, if Bitcoin is going up and all coins are kind of going up more, it means that there's actually some new money and some new interest in the market.
And even Ethereum at this point has been outperforming for the past few days.I think that's a sign of things to come personally.But the market stocks and crypto clearly love this Trump victory so far.
Yeah, I mean, they called it and then they loved it, is sort of the TLDR on it.
I think that there's a sense that it's de-risked the crypto industry broadly, which is probably part of why you're seeing things beyond Bitcoin rally even more, is that when you think about the potential, there's a large sense that if you look at the analysis that was coming out before this,
The broad understanding was Bitcoin was likely to be fine.It was likely to go down in the short term or potentially going down in the short term with a Kamala win, or it was going to go up, but it was going to go up less.
That was sort of the consensus, right?There's a much bigger question and I think much bigger implications and ramifications for altcoins, right?Like, is Solana a security?Because in a lot of these lawsuits, it is right now.
And so it makes sense that with that sort of risk removed, those assets that are a little bit farther down the line are gonna rally even more.
So I think it's playing out pretty much exactly how I think many people would have anticipated it playing out.
Seeing a lot of the $100K by end of year, $150K, I think Tom Lee just said on some mainstream media show today or yesterday.Obviously, he's the Uberist of all Uber bowls.
But $100K is really not that far away, whether it happens by December 31st or after.I mean, we've got blue skies ahead, I think, for this industry and very few headwinds.
I have very little strong conviction around timeframe, but I think that we're just grokking the potential sort of bullishness here.I wouldn't be surprised if it actually chills a little bit and starts to hype up.
starts to hype up, you know, sort of as we get closer to inauguration and the first hundred days and stuff, you know, like, you know, it just wouldn't surprise me if it played out like that, you know, like markets don't actually ultimately care about end of year predictions, end of year predictions are entirely about sort of media and narrative making.
But Arbitrary day and time, obviously, whether it happens on January 2nd or December 30th, it doesn't really matter much to me.
If you take a look at the four-year cycle, it kind of confirms the theory you just laid out, which is that all coins really go nuts in 2025 and 2021 and 2017.So maybe Bitcoin kind of makes its move here, settles in, and then we see what happens.
The market is clearly saying that this is the time for crypto in the United States.
I think the bigger narrative maybe is well this is our time to prove that we're worth being here as an industry because we probably have a year and a half until midterm elections when almost
every single case in history, you end up getting the other side taking some control of the House or Senate and you get this mixed government again.
There's basically this sub two year guaranteed period for our industry to show what it can do without regulatory roadblocks.
Yeah, I mean, listen, I think that if I'm writing the agenda, it's actually getting comprehensive legislation on the books.We want that in this period with the people who are in power now.
Crypto can't continue to exist in this limbo state without rules.We have to have something articulated.Otherwise, it's just there's going to be huge headwinds for companies getting involved.You know, we've talked on the show before about
how much the sort of diminishment this cycle of certain parts of altcoins or DeFi has to do with the fact that we've sort of just run up against our limits in the United States to be degens without more clarity, right?
I mean, imagine if we actually got anything resembling Hester Peirce's sort of sandbox. that allowed these things to have security-like properties for a time, to be able to engage with them in different ways.
We can't do a full kind of financial system replacement unless it's actually allowed in some way.
And so I think that where the attention and emphasis should be not just so much on what can we do when people aren't paying attention, but let's get them to pay attention and write rules that are sort of aligned with what we hope to see for the industry.
Absolutely.And I think the next story that we have to dig into here, moving on from our industry specifically, is the Fed, right?
So we know, obviously, yesterday, the Fed followed through, which was basically 100% guaranteed, 25 bps more of rate cuts.
But we're in a really interesting situation now, going back to the election, where Donald Trump and Powell have had somewhat contentious relationship in the past.
I mean, I think there was a point where Trump was basically calling, trying to demand action by Powell and calling for him to resign. And now they're going to have to work together.And as it says here, Trump is stuck with the Fed's pal.
Will he make peace?The president-elect needs a respected central bank chair to help keep the bond vigilantes at bay.So I think there's a few things we could discuss here, which is, is the Fed's path correct?
We've seen yields skyrocket as the Fed's been cutting.So bond market clearly saying that the Fed is not correct.And now with Trump's
policies, if it really goes all in on tariffs and cutting taxes and all these things, how much does that meaningfully change what the Fed is likely to do or the plans that they've had based on the current economic policies?
It's a natural discussion to have.What would it look like?What would it do to macro conditions?What would the implications for inflation be should all these things get enacted?
But at the end of the day, the Fed has to deal with what's actually happening right now.It can't make policy overly predictive based on what the first 100 days of a Trump administration could like.
They're going to have to deal with that as it happens. This Fed in particular is extremely, if anything, they are behind the eight ball usually when it comes to responding to things.They want more rather than less data.
They're not trying to get out ahead of stuff.I mean, that's how we got a big part of the inflation in the first place is Powell being too slow, but it's an incredibly data-driven Fed.
So I personally don't anticipate any real changes based on the likelihood of certain policies.I think that incrementally, they're kind of more inclined to do less than they might otherwise have.
But I think that they were sort of already in that position anyways, where it's too unclear to do too much in any one direction anyways.There's just too many sort of mixed signals and not enough that's known going into this next period.
I think it's also hard to even discuss what the market reaction to this cut was in the context of the Trump victory effectively a day before.I think the election is dominating market movement at the moment.
Trump, you know, plainly said he was euphoric at the stock market's reaction to him being elected.So, you know, I think we're going to now need some time for him to actually get in office to see how all of this starts to play out longer term.
We're also we are starting to see speculation around who Trump might appoint as next Fed chair.And it's interesting watching sort of the commentary from that candidate.I'm blanking on his name, Scott Bessemer or something like that.
But basically, he's been doing the morning show circuit and and was asked about the Fed independence question.And it was interesting because we don't know how much, well, one, we don't know if he's actually sort of the next chair.
Two, we don't know how much he's speaking for himself versus sort of parroting what he's been told by Trump handlers.But his line on that was basically like, look, Trump understands that it's really important to have an independent Fed.
He just wants his voice to be heard as part of the consideration. Like that was sort of the new way that that was being presented.And if that's from the Trump camp, that is, he's hedged now.He's sort of post-election.
He's now in governing mode rather than winning elections mode.And so the rhetoric starts to shift to, you know, actually sort of operationalizing these plans.
You know, like I said, we have no idea of whether that's a message that's coming from this individual or from the Trump campaign, but it wouldn't be implausible to me that it was, you know, a shift and a space being created by the campaign itself.
Yeah, the ETFs really liked it as well.The election.BlackRock Fund powers US Bitcoin ETFs to a record daily inflow net 1.38 billion poured into the group of one dozen ETFs pro crypto.Trump's election win took Bitcoin to a record high.
Obviously, we all know that, but Trump wins for his ETF buying bonanza as traders pour in billions.
And on top of that, for something we haven't seen in quite a while, Bitcoin's Coinbase premium jumps a two-month high as prices top 74K amid Trump's early lead.So institutional buyers of Bitcoin, a.k.a.
people on Coinbase, at least those are Americans and those buying ETFs, willing to even pay a slight premium right now to rush into Bitcoin.
I mean, look, a lot of people woke up on Wednesday feeling pretty underexposed to Bitcoin and crypto.And rightly so.I mean, this was the trade that was most connected with the Trump victory.Trump victory happened.
And you have a lot of people trying to reposition.I think wasn't Coinbase up like 30% on Wednesday or something like that?It was enormous. And I think that that again, that reflects like, generally, where the hell's my exposure?
I think Dan Tapiero mentioned on Twitter that, you know, they have something a couple hundred funders who are, you know, invested in the various 10 T funds.
And they got calls from like, you know, 50 people asking for more exposure somehow some way on Wednesday morning, you know, and I don't think that experience was unique.
There are so many even retail people that I know who were sidelined and said, I don't see a reason to buy this until we have some clarity.Yep.Right.
And it's not I mean, it's anecdotal, but I'm not surprised that there would be a lot of institutions thinking, hey, do I get crypto exposure now?
If we may have four more years of this and lack of clarity, but I just wait a couple of days, weeks or months until we maybe have a president that allows me to do this in peace.Right.And so I think
What he's seeing is probably across the board, and there's no surprise that people were FOMOing in the second they could in anticipation of a huge bull market and much higher prices in the future.
Yep.Everyone finally living in our world, man.
Yeah. It's hard to even soak it in in the past few days, what's happening, you know, outside of all the other nonsense, just how huge this really is, at least for the crypto industry in the United States.
I mean, the final sort of story we had here is that Coinbase secures major win in Freedom of Information Act case against USFDIC.Paul Graywall, who's the lead counsel, obviously, for Coinbase.
Coinbase, in record time, the judge in our FDIC FOIA case has ordered the agency to produce the Operation Chokepoint 2.0 pause letters.We appreciate the court's consideration.Some much needed sunlight is on its way.
Does this mean we're actually going to get some proof of Operation Chokepoint 2.0?What does that mean for Coinbase?And certainly now, I think with this new administration, we may get a lot more clarity in general.
I mean, the short answer is, yes, we're going to get more proof when it comes to what it means for Coinbase and in general, what it means going forward.
I think that this is the type of thing that might have been an even bigger deal had the election gone the other way.You know, this came out on Monday.
The election was obviously Tuesday, but it's still going to sort of ensure that this set of policies were not just
reported by the crypto industry, we're going to start to have the receipts in a way that I think is meaningful and makes it harder for Operation Chokepoint 3.0 to happen the next time it comes around.
We're going to have the receipts on Operation Chokepoint 2.0.We might know who killed Kennedy.We may find out finally about aliens, and we could get the Diddy and Epstein lists.It's going to get weird and wild.It is going to get so weird and wild.
Listen, there were a whole lot of sort of honorable mentions around the election, but I think we generally covered it.The sentiment here is that it's all systems go for the crypto industry in the United States for the next few years.
And I don't think that could really be much bigger. And that should eventually lead to higher prices.What else is there to discuss?
Listen, you can already feel it.There's animal spirits coming back, untapped energy.I feel very strong.
I have super high conviction that Travis Kling's quiet quitting thesis, sort of where he basically argued that a lot of people have been in this industry for the last couple of years.
who were sort of just holding on because they were too invested to get out but really weren't paying attention day to day and were really waiting for the next phase to happen.I think that that's been true.
I think that you see it in subtle ways that are probably less visible to everyone.But you see it in terms of activity and marketing from big companies.You see it in terms of sponsorship dollars.You see it in terms of all sorts of different things.
And, uh, and I think that already, you know, three days on or whatever it is, it's going to come back and it's going to start roaring in a big way.
And, uh, there's a lot of pent up energy that's waiting to be unleashed and it's going to be pretty cool to see.
Absolutely.Well, this is going to become increasingly more fun to discuss an industry, hopefully in a bull market for the coming Fridays for hopefully a very, very long time.
And thank you so much, as always, for giving us all this insight into these stories and what's happening in the industry.Guys, follow NLW and listen to the breakdown.Otherwise, we will see you next Friday.Thanks, man.Right on.
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