The Breakdown

Today on the Brief: The digital euro is closer than ever Checking in on European COVID-19 lockdowns Economic events this week that aren’t the election Our main discussion: Which U.S. election outcome is better for bitcoin? Poll: https://twitter.com/nlw/status/1320884275110137863 After a surprisingly close Twitter poll with more than 1,600 respondents answering the question “Is Trump or Biden better for bitcoin?”, NLW breaks down the most common themes, including: The Senate matters more Anti-encryption history And of course… Honey Badger Don’t Care

On this week’s Long Reads Sunday, NLW diverts from our normal opinion and long-form essay to pursue Grayscale’s recent investor reports. In its survey of investors, Grayscale found more interest in bitcoin investing than ever before, with a significant amount of the growth in interest being driven by economic and monetary policy following the coronavirus pandemic. scribd.com/document/481729535/Grayscale-2020-Bitcoin-Investor-Study

On this week’s weekly recap, NLW looks at: Bitcoin’s resilience in the face of a week where many investors went risk off, causing a drop in stocks and gold JPMorgan’s dramatic three-year attitude shift around bitcoin and crypto Iran stockpiling bitcoin to be able to pay for imports A new round of COVID-19 lockdowns and the stimulus that will follow

One of the most powerful aspects of bitcoin is its mythology. In this episode, NLW explores the 12th anniversary of the Bitcoin white paper and the choices that went into its release date. Whether it was something to do with the Reformation or an allusion to the longstanding pagan tradition of Samhain, the one thing that’s clear is the choice adds all the more mystique to bitcoin’s incredible origins.

Today on the Brief: FTX launches equities trading Avanti gets Wyoming bank charter France locks down and ECB intimates new stimulus Our main discussion: GDP growth report The Department of Commerce released its Q3 GDP numbers. Touted as record growth, this is actually a much more complicated story. In this episode, NLW breaks down what the numbers tell us and what they don’t, and why we should be more focused on understanding long-term consumer behavior shifts than short-term numbers.

Today on the Brief: Section 230 hearing with social media CEOs in Washington D.C. Bitwise now has more than $100 million AUM Trump website defaced with Monero request Our main discussion: Markets go risk-off. With rising fear of COVID-19 lockdowns, everything from stocks to oil to gold and, yes, even bitcoin is down on the day. The important question is whether this is a short-term volatility phenomenon or part of a larger systemic shift.

Today on the Brief: Stocks down; bitcoin up Consumer confidence shaky as baking supplies demand grows 3,400% Bank for International Settlements and Swiss central bank to test CBDC this year Our main discussion: JPM Coin. Initially announced in February 2019, JPMorgan’s JPM Coin is being launched for commercial use. In this episode, NLW looks at: The history of private currencies in the U.S. Why Libra was a starting gun for both governments and other private corporations How JPMorgan intends to make money from JPM Coin Why other investment banks might follow

Today on the Brief: Turkey’s real inflation rate 3x official number Hot new DeFi protocol Harvest Financial hacked Bitcoin whales hit largest number since 2016 Our main conversation is about the rise of a new wave of COVID-19 and the economic fallout we’re still trying to address. NLW discusses why we’re starting this next wave more emotionally drained, politically divided and economically fragile than we were in March.

For this week’s Long Reads Sunday, NLW reads two selections from CoinDesk’s op-ed section: CBDCs Are Evolution, not Revolution - Benoit Coeure The US Risks Getting Left Behind on CBDCs - JP Schnapper-Casteras & Misha Guttentag

On this week’s Breakdown weekly recap, NLW looks at: The initial price action that started the week Debates about whether BTC was thriving at the expense of alts and DeFi The PayPal news News of more public companies putting treasury reserves into BTC Paul Tudor Jones’ optimistic take on the human ingenuity driving bitcoin’s success

Today on the Brief: DOJ crypto enforcement a “disaster” for privacy Ant’s blockchain tools pre-IPO Better news around jobless claims Our main discussion: fiat failures, 2020 edition. In this episode, NLW looks at a raft of geographies in which bitcoin has recently reached all-time highs, priced in the local currency. The story, he says, is about fiats floundering more than mispriced local bitcoin. Special focus on economic happenings in Brazil, Argentina and Turkey.

Matt Stoller works with the American Economic Liberties Project and is the author of “Goliath: The 100-Year War Between Monopoly Power and Democracy” as well as the popular Substack newsletter “BIG.” In this conversation, he and NLW discuss the history of American antitrust sentiment and politics including: The origins of antitrust sentiment How the “Watergate Babies” generation of Democrats turned away from antitrust sentiment How the 1990s shifted power in favor of corporates and tech Why the 2008-2009 crisis was a seminal moment in our attitudes towards big finance The significance of the new antitrust case against Google Find our guest online: Twitter: @matthewstoller Web: mattstoller.com

Huge news broke this morning as PayPal announced it would be offering buying, selling and eventually merchant payments for bitcoin and other cryptos across its network. In this late-breaking Breakdown episode, NLW explores: The specifics of the news Why the scale, precedent and normalization are hugely bullish What some skeptics are saying Why it’s significant PayPal is focused on the coming central bank digital currency era

Today on the Brief: DOJ files biggest antitrust case in two decades against Google Goldman Sachs’ 1MDB settlement LINE’s new CBDC platform Our main discussion: bulls vs. bears as bitcoin passes $12K Someone recently tweeted, “Bitcoin price has never been this high with such bearish sentiment.” On this episode, NLW looks at the bullish case (growth in open interest on CME backed by strong macro narrative around stimulus) and bearish case ($12K sell wall and bleeding from alts and DeFi).

Today on the Brief: Chinese citizens less than impressed with DCEP trial Is Filecoin the “Titanic” of ICOs? Mnuchin, Pelosi go one more round on stimulus Our main discussion: A new Bretton Woods moment? In a recent speech, the International Monetary Fund argued that the time to fundamentally re-evaluate the global economic order is here. Goldbugs see the potential to return to the gold standard, bitcoiners anticipate ever-growing stimulus and macro observers are betting on massive disruptions in the wake of central bank digital currencies.

On this week’s Long Reads Sunday, NLW reads: “Capital Allocation & Risk Asset Ramifications in a 0% Interest Rate World” The piece examines how different asset classes – from stocks to bonds to bitcoin and beyond – fare in the context of a world where the Federal Reserve is determined to keep interest rates at or near zero for years to come.

On this edition of The Breakdown weekly recap, NLW looks at: Growth in the institutional investment space in crypto A new 10,000 BTC treasury announcement Reports from the Bank for International Settlements, G20, WEF, IMF and more around central bank digital currencies A National Security Council report labeling distributed ledger technology key for national security

Today’s Breakdown is a conversation with Andre Anjos – aka RAC, a Grammy Award-winning recording artist and music entrepreneur. He and NLW discuss: Starting the “Remix Artist Collective” as a business Evolving from remixing to performing artist The challenges and trade-offs of working with major labels How the music industry beat back technology innovation where other industries failed How NFTs, tokens and other crypto innovations are opening up truly free markets for music and culture Find our guest online: Twitter: @RAC Web: rac.fm

Today on the Brief: Initial jobless claims rise to highest level since August BTC as a DeFi reserve asset Twitter reactions as Filecoin goes live Our main discussion focuses on the convergence of the crypto and public markets. NLW looks at: Narratives of bitcoin’s correlations to stocks Growing overlap of retail and institutional traders SPACs and public crypto companies Bitcoin treasuries Geopolitical intrigue around ANT Financial

Today on the Brief: Bitcoin hashrate at all-time highs Record number of large companies lose money during the pandemic JPMorgan releases research note on bitcoin Our main discussion: Stone Ridge Holdings Group discloses $114 million in bitcoin treasury assets. NLW digs into what Stone Ridge is, why it spun off New York Digital Investments Group (NYDIG) and how the company has quietly built itself into a serious player in the institutional crypto asset space.

Today on the Brief: Is the “blue wave” Democrat victory narrative in the presidential election starting to shake up Wall Street? Johnson & Johnson pause COVID-19 vaccine trial 1000 Satoshi-era bitcoins are on the move Our main discussion: The world’s central banks are moving quickly on digital currencies. NLW looks at a slew of recent news showing how much of a priority CBDCs are becoming: A report from the Bank for International Settlements and seven other central banks setting design principles for CBDCs A G20 regulatory standards framework A forthcoming OECD tax reporting framework One need only look at the increasingly speedy rollout of China’s DCEP to understand why this has become a major priority for central banks everywhere.

Today on the Brief: Market rally to highest point in six weeks BTC and ETH up in part on Grayscale ETH trust becoming an SEC reporting company (Grayscale, like CoinDesk, is a unit of DCG.) CBDCs (and CBDC skepticism) on the rise Our main discussion: How markets are trading the U.S. presidential election in November. A look at what different stock and other market preferences suggests about who Wall Street expects to win, including: Energy Private prisons Student loans Health care Infrastructure Dollar Bitcoin

Today on Long Reads Sunday, a reading of Lyn Alden’s piece for CoinDesk: “Bitcoin Correlations Depend on What Phase It Is In” In it, Lyn argues that bitcoin’s correlation patterns are, in part, reliant on where bitcoin finds itself in its own cycles of expansion or consolidation.

On this week’s Breakdown weekly recap, NLW looks at a cross-section of regulatory news, including: CFTC and DOJ action against BitMEX and its leadership The U.K. Financial Conduct Authority’s ban of crypto derivative products for retail investors The DOJ’s new cryptocurrency enforcement framework NLW discusses why these might reflect a new moment in crypto history, what it means for current builders in bitcoin and DeFi, and why recruiting corporate allies like Square will become more important than ever.

Forbes called her “the newest superstar investor,” and it’s not hard to see why. Cathie Wood is radically disrupting the way money is allocated. Fighting the rise of passive – what she calls the “greatest misallocation of resources in history” – Wood’s funds are actively managed exchange-traded funds that give investors exposure to public companies in key areas of innovation. In this conversation, NLW and Wood discuss: Why she had conviction in Tesla before the market caught up Why her fund offered the first bitcoin investment opportunities to Wall Street Why it doesn’t hire traditional Wall Street analysts Why it gives away all research for free Why it shares the trades made in a completely open-source way ARK’s recent Bitcoin Investment Thesis white paper What the prospects are for innovation in 2021 Find our guest online: Twitter: @CathieDWood Web: ark-invest.com

A special breaking edition of The Breakdown follows the market’s reaction to Square’s surprise $50 million bitcoin investment. NLW breaks down the foundations for the investment, including: 2020’s alignment between the bitcoin narrative and structural economic realities An increase in bitcoin’s perceived resilience The precedent set by MicroStrategy He also discusses the market’s reaction, from the (potential) connection to Coinbase’s “apolitical” stance from last week to the notion of Square intentionally setting a framework others can follow.

Today on the Brief: Stimulus talk shutdown spooks markets House recommends antitrust actions but likely to get nowhere CBDC trial results from China Our main discussion is with trader and entrepreneur Qiao Wang. In this conversation, NLW and Qiao discuss: Bitcoin’s resilience in the face of a barrage of bad news Why DeFi is a natural next step from the foundation bitcoin has built How bitcoin could end up the reserve asset for DeFi Why regulation is the greatest threat to the space

Today on the Brief: John McAfee arrested in Spain BTC addresses added spikes to two-year high A new election-market narrative emerges Our main discussion: The U.K. has banned crypto derivatives. Just days after the U.S. announced significant action involving BitMEX, the U.K.’s Financial Conduct Authority has made its own move to stop crypto derivatives. In this episode, NLW breaks down what actually happened, and looks at the reactions from the crypto industry including: Accusations of hypocrisy Skepticism of enforceability Why it might actually be good for bitcoin

Today on the Brief: Markets gain as Pres. Trump’s condition stabilizes SEC Chairman Clayton sees future where all stocks are tokenized Uniswap had more volume than Coinbase in September Our main discussion: central bank coins and financial privacy. The EU recently released a new research paper on a possible digital euro. Like many other official central bank reports, it assumes there is no possibility of an anonymous digital bank currency. NLW dissects arguments from people including JP Koning and CoinCenter’s Jerry Brito on why this shouldn’t be true.

Today’s Long Reads Sunday selection is “How To Avoid Paying the Cruelest Tax: Inflation” from the Wall Street Journal. NLW argues the piece reflects a changing conversation in mainstream financial circles about the possibility of inflation on the other side of new Federal Reserve policy.

A recap of September, which NLW calls a transitional month between the post-lockdown excitement of the summer and the growing macro insecurity around second wave fears and election volatility. Featuring some of the most interesting insights from our guests, including: Luke Gromen on the four options for countries that can’t pay their debts Tavi Costa on the Fed’s new “mandate” to keep asset prices high Raoul Pal on why “monetary policy is over” Sven Henrich on the ever-weakening economic cycle Corey Hoffstein on the fundamental supply-demand mismatch that exacerbates exogenous shocks Michael Saylor on why he moved his company’s cash reserves to bitcoin

Today on the Brief: Market reaction to Pres.Trump contracting COVID-19 Subpar September jobs report Decentralized exchanges have third straight 100%+ growth month Our main discussion features Stephen Palley and Preston Byrne of Anderson Kill. Yesterday, BitMEX was targeted with both civil and criminal complaints, with the CTO being arrested for violation of the Bank Secrecy Act. In this conversation, NLW talks to two crypto legal experts to discuss: The specifics of the charges How long this investigation has been in the works Whether there was anything surprising to legal experts Why the criminal complaints represent an escalation of enforcement Whether there are implications for other industry areas, particularly decentralized finance Find our guests online: Stephen Palley: @stephendpalley Preston Byrne: @prestonjbyrne Anderson Kill: andersonkill.com

When popular finance writer Morgan Housel asked followers on Twitter to share the commonly held investing beliefs they most disagreed with, the internet responded with vigor. A thousand or so replies later, NLW ranks the top 10 investing ideas we should be questioning, including: Ignoring compounding interest in our 20s Buying homes rather than renting The idea US Treasury bonds are risk-free Listen to hear the full list.

Today on the Brief: Coinbase offers severance to employees who want to leave over new politics policy Long-term job cuts hamper any idea of V-shaped recovery Last chance for a stimulus package before the U.S. presidential election Our main discussion is a narrative shift from DeFi back to bitcoin. Over the summer, DeFi led the crypto charge. From growth in total value locked to narrative dominance to even leadership in the all important category of crypto drama, DeFi was it. Now, as a potentially turbulent macro environment rears its head, the narrative is shifting back to a focus on bitcoin.

Monday, Coinbase CEO Brian Armstrong published the innocuously titled “Coinbase Is a Mission-Driven Company.” While the post talked a lot about Coinbase’s core mission, its real goal seemed to be to make clear Coinbase would not be engaging with any other social or political issues beyond that, and to the extent employees wanted to do so they needed to do it on their own time. The reactions were intense, immediate and in many instances, totally opposite. In this episode, NLW breaks down the entire social media reaction and the arguments for and against this policy.

DeFi is one of the breakout crypto categories of 2020. Indeed, yield farming and the grand game of “money legos” has been so profitable that many are following every new protocol with rapt attention. This is all the more true for projects graced by YFI creator Andre Cronje. So when word got out about a new, pre-release game economy engine called “Eminence,” the DeFi degens took advantage of the permissionless nature of DeFi to pump $16 million or so into EMN. What happened next was arguably the first pre-release hack in DeFi’s history. This episode breaks down what happened and what it means for the fledgling field.

Today on the Brief: After four weeks down, bitcoin bounces back on suspicions that recent bearishness was overblown KuCoin exchange gets hacked for somewhere between $150 million and $280 million Jack Dorsey outlines Twitter’s blockchain and bitcoin beliefs during Oslo Freedom Forum appearance Our main discussion: Digging in to bitcoin’s 64-day run over $10,000 Bitcoin has been above $10,000 for longer than any time in its history. Its volatility is also at recent historic lows. In this episode, NLW puts this in the context of broader market movements and explains why new price floors are self-reinforcing.

This week’s Long Reads Sunday is a reading of “The Currency Cold War: Four Scenarios” by Jeff Wilsner – part of CoinDesk’s Internet 2030 series. In it, Wilsner talks to experts about four scenarios: A multi-currency scenario, where exchange is abstracted away via digital wallets A China-led scenario A U.S.-led scenario A bitcoin/non-state currency-led scenario In addition to reading, NLW gives his take on which scenario is most likely.

On this edition of The Breakdown weekly recap, NLW looks at the fourth painful week for traditional markets in a row. He discusses the factors contributing to the trouble, including: A normal correction from too-high valuations The return of COVID-19 lockdowns The end of easy recovery gains Diminishing likelihood of a stimulus bill Election volatility

Sven Henrich is the founder and lead market strategist at NorthmanTrader. Well known for his appearances on CNBC, CNN Business and MarketWatch, Sven is also the host of the Straight Talk podcast. In this conversation, he and NLW discuss: The ever-weakening economic cycle Why the Fed has boxed itself in Why the asset price bubble is contributing to wealth inequality How market capitalization-to-GDP reached all-time highs What the election means for markets Find our guest online: Twitter: NorthmanTrader Website: northmantrader.com

Today on the Brief: Initial U.S. jobless claims up to 870,000 Partial lockdowns begin in earnest in Europe and Israel The global demand for American stocks Our main discussion: Did corporate insiders perfectly time the market top? August saw the largest volume of insider selling since 2015, with more than 1000 corporate officers offloading $6.7B in stock. Subsequently, the market has seen a 10% decline since the S&P500 all time high of Sept. 2. What’s more, according to new statistics, insider selling is happening at the fastest pace since 2012. The question is: What do these executives know that the rest of the market doesn’t?

Corey Hoffstein is the founder and Chief Investment Officer of Newfound Research LLC, a quantitative research and investment fund. He is also the host of the “Flirting with Models” podcast. His most recent research is “Liquidity Cascades: The Coordinated Risk of Uncoordinated Market Participants.” In it, he examines three popular narratives about what is driving radical swings in markets, including: The increased role of the Fed The rise of passive and index investing The growth of volatility-correlated strategies He finds that, individually, none could explain the radical market shifts we’ve seen. However, when combined, they create a market incentive loop that is causing markets to move and react to exogenous shocks more quickly and aggressively than ever before. Find our guest online: Twitter: @choffstein Website: Newfound Research

Today on the Brief: Where the digital euro fits in Lagarde’s economic integration plans New stablecoin guidance from the OCC Mnuchin and Powell head to the Hill Our main discussion features Marty Bent. Marty is the author of one of the best known daily bitcoin newsletters, as well as the host of “Tales From The Crypt” podcast. He also is one of the leaders of Great American Mining, a new project using bitcoin mining to make big energy more efficient and profitable. In this discussion, we talk about how bitcoin and big energy are unlikely allies, how that alliance can bring more bitcoin mining back to America, and how it is working to reduce America’s energy dependence. Find our guest online: Twitter: @MartyBent Twitter: @GAMdotAI Website: https://gam.ai

Today on the Brief Stocks down, dollar up on COVID-19 resurgence fears People’s Bank of China says digital yuan needed to fight USD dominance 140,000 have claimed UNI tokens Judge stops Trump WeChat ban Nikola founder resigns Our main discussion: The FinCEN Files The FinCEN Files are a leaked cache of suspicious activity reports filed by banks with the U.S .Financial Crimes Enforcement Network. The more than 2,000 files, representing $2 trillion in transactions, were leaked to BuzzFeed News more than a year ago. BuzzFeed, in turn, shared them with the International Consortium of Investigative Journalists, who then helped distribute them to 108 publications in 88 countries. This episode provides an overview of the leaks and explains why they show that, despite lots of PR bluster, banks are happy to file their reports and then keep on banking likely money launderers.

On this week’s “Long Reads Sunday,” NLW reads macro analyst Lyn Alden’s latest: “A Century of Fiscal and Monetary Policy: Inflation vs Deflation” The article looks at: When monetary policy is effective versus when fiscal policy needs to take over How short-term debt cycles add up to long-term debt cycles that have very different remedies Why long-term debt cycles inevitably end in default or devaluation Why the conclusion of the last long-term debt cycle in the U.S. – the 1930s and 1940s – suggests that devaluation is the most likely outcome

On this edition of The Breakdown weekly recap, NLW looks at: DEXetition – Uniswap’s battle with SushiSwap heats up as the former dropped the UNI governance token in what some likened to a crypto stimulus check The Fed has no clothes – After another FOMC meeting of “nothing new,” the mirage of Federal Reserve omnipotence is fading TikTok and WeChat banned from U.S. app stores – Is it just a negotiating technique? Whatever the case, people are not happy Kraken becomes a bank – What it means now that Kraken has been approved for a Wyoming Special Purpose Depository Institution charter

MicroStrategy made waves when it announced in early August it was moving $500,000,000 in treasury reserves out of cash. At least $250 million were to be moved into bitcoin. Earlier this week, the company announced its final bitcoin purchases totaled $425 million. In this conversation with NLW, MicroStrategy CEO Michael Saylor explains: Why he’s always treated the company with a long time horizon Why the asset inflation rate is the real inflation rate How he became convinced that bitcoin is the best treasury asset in the world Why Michael believes some other companies will follow suit, but better do so quick Why the intensity of maximalists is actually part of the reason he grew conviction around the asset Why he would buy every bitcoin if he could

Raoul Pal is CEO and co-founder of Real Vision, a platform fundamentally disrupting macroeconomics and financial media. In this wide-ranging conversation, he and NLW discuss: Hot takes on the most recent Jerome Powell/Federal Reserve press conference Why central banks can’t do anything more until they merge with treasury departments Why stablecoins are disrupting how we think about global reserve assets Why traditional financial media missed an entire generation of investors Why all macro debates are boring

Today on the Brief: Kraken is the first crypto exchange to become a U.S. bank FTC preparing antitrust lawsuit against Facebook Gold-standard fan Judy Shelton doesn’t have the votes to be confirmed as Federal Reserve governor Our main discussion: The battle for the soul of finance. In this episode, NLW looks at the power competition between governments on the one hand and the decentralized network-driven finance alternatives that would reshape that power. Interestingly, in this competition corporations may play a role that benefits both sides at different times and in different ways.

Today on the Brief: MicroStrategy increases its bitcoin reserves by $175 million The Oracle-TikTok deal starts to smell fishy The SEC is investigating claims of fraud involving Nikola Corp. Our main discussion: The rise of zombie firms. A zombie firm is a company that can’t afford to service its debt from operating income. These companies are made possible by artificially low interest rates, and they drain resources from the economy. On today’s episode, NLW explains: Why there are more zombie companies than ever The negative impact they have on the economy How they could drive a new financial crisis