This episode unpacks the explosive market dynamics driven by a U.S.-China tariff truce and a surging Ether price, signaling a potential macro shift favorable to crypto assets and a more crypto-positive regulatory environment.
Eric Adams and NYC's Crypto Embrace
- New York Mayor Eric Adams, who famously converted his first three paychecks into crypto in 2022, continues to champion the digital asset space.
- David highlights Adams' consistent crypto advocacy, noting, "Eric Adams is one of us."
- Adams is reportedly hosting a New York City crypto conference, further cementing his pro-crypto stance.
- Ryan mentions the need to remove the BitLicense in New York State, a move beyond the mayor's direct power but indicative of the desired regulatory direction.
Macro Shifts: The U.S.-China Tariff Truce and Market Reactions
- A significant development this week was the U.S. and China agreeing to a 90-day pause on tariffs, leading to positive market reactions.
- The tariff truce involves a temporary reduction in reciprocal tariffs, with the U.S. and Chinese representatives meeting in Geneva to broker the agreement. This marks a de-escalation from the "tariff shock" that began on April 2nd.
- Markets responded positively: NASDAQ jumped 4%, and the S&P 500 rose about 3% on the news.
- Bitcoin, interestingly, did not show an immediate reaction over the weekend when the news broke, but traditional markets opened strong on Monday.
- Ryan notes that the odds of a U.S. recession in 2025, according to PolyMarket, dropped from 66% to below 40% following this news, though still considered high.
Deep Dive into Macro: Arthur Hayes and Russell Napier's Theses
- Ryan shares insights from monetary historian Russell Napier and crypto trader Arthur Hayes, suggesting a cohesive outlook on the evolving macro landscape.
- Arthur Hayes, in his post "Fatty Fatty Boom Boom," posits that the tariff backtrack is permanent. He believes the Trump administration aims to reduce the U.S. trade deficit and devalue the dollar and U.S. Treasuries, moving away from the Triffin dilemma (the conflict of interest arising from a country's national monetary policy objectives and its international obligations as the issuer of the world's reserve currency).
- Hayes predicts a shift from tariffs to capital controls, potentially a 2% tax on foreign-owned assets in the U.S. (currently around $33 trillion). This is seen as a form of financial repression, where policies are enacted to channel funds to the government that, in a deregulated market, would go elsewhere.
- David connects this to Ray Dalio's views on China reducing dollar dependency and the U.S. bolstering domestic manufacturing.
- The implication, according to Hayes and Napier, is that bonds will become toxic assets. The solution involves the Federal Reserve buying these bonds (a form of Quantitative Easing (QE), or money printing) and fiscal stimulus.
- This environment is expected to drive investors towards non-sovereign store-of-value assets like gold and Bitcoin. Ryan states, "The solution here is just don't own bonds."
Crypto Market Price Action: ETH Leads the Charge
- The crypto markets experienced significant volatility, with Ether (ETH) seeing a dramatic price increase.
- Bitcoin (BTC) rose 1.5% on the week to $103,000, nearing its all-time high of around $106,000-$107,000.
- Ether (ETH) surged an astonishing 30% on the week to $2,560, and over an 8-day period, it was up 42%, even touching a 51% gain from peak to trough. David remarked, "That is not something you see every week, is it?"
- Ryan attributes ETH's rally partly to being "oversold" against Bitcoin, moving from a 0.018 ETH/BTC ratio to 0.025. He emphasizes that even at $2,500, ETH is still relatively low compared to Bitcoin's $104,000.
- The speakers note that this ETH rally doesn't seem driven by ETF inflows, suggesting more convicted, crypto-native buyers.
- Total crypto market cap is flirting with $3.4 trillion.
Other Notable Market Movers and Protocol Milestones
- Coinbase (COIN): Up 30% on news of its S&P 500 listing.
- Ether.fi (ETHFI): Up 120% in two weeks, possibly linked to the launch of their credit card offering 3% cashback.
- Launchcoin: Up 1,000% in a week, tied to the "internet capital markets" discussion.
- Uniswap: The decentralized exchange (DEX) surpassed $3 trillion in all-time trading volume. DEX (Decentralized Exchange) allows peer-to-peer trading of cryptocurrencies without a central intermediary.
- Aave: The lending and borrowing protocol passed $25 billion in Total Value Locked (TVL). TVL (Total Value Locked) represents the total value of assets deposited in a DeFi protocol. Aave's TVL would rank it around the 83rd largest bank in the U.S.
Layer 2 Developments and L2BEAT's Role
- The Layer 2 ecosystem continues to mature, with Starknet achieving Stage 1 decentralization.
- Layer 2 (L2) solutions are protocols built on top of a base blockchain (Layer 1, like Ethereum) to improve scalability and reduce transaction costs.
- Starknet joins Arbitrum, OP Mainnet, zkSync Era, and Base as L2s reaching Stage 1 decentralization as defined by L2BEAT. This stage offers basic protections for user funds against centralized sequencer misbehavior.
- Ryan highlights L2BEAT's sophisticated and clear criteria, acting like a market-based standards-setter. He notes, "This is kind of like what a regulator should do in crypto." L2BEAT is even implementing countdown timers for projects to meet enhanced criteria or face downgrades.
Coinbase Faces Data Breach and Ransom Demand
- Coinbase experienced a significant customer data leak, with hackers demanding a $20 million ransom.
- Brian Armstrong, Coinbase CEO, publicly refused to pay the ransom. Instead, Coinbase is offering a $20 million bounty for information leading to the attackers' arrest and conviction.
- The breach affected less than 1% of monthly transacting users and did not involve passwords, private keys, or funds. Leaked data included personal information like addresses, emails, and phone numbers, which could be used for sophisticated phishing attacks.
- The breach reportedly originated from bribed individuals on Coinbase's third-party support team.
- David points out the systemic issue: "AML KYC makes it such that...they have to collect your government ID...and they create these honeypots." He suggests zkProofs (Zero-Knowledge Proofs) as a cryptographic solution for privacy-preserving verification. zkProofs allow one party to prove to another that a statement is true without revealing any information beyond the validity of the statement itself.
Coinbase Joins the S&P 500
- In positive news for the company, Coinbase became the first crypto company to be included in the S&P 500 index.
- The S&P 500 is an index tracking the 500 largest publicly traded U.S. companies. Inclusion requires criteria like U.S. domicile, major exchange listing, a market cap of at least $20 billion, and positive earnings.
- Coinbase replaced Discover Financial and entered the index around rank 139.
- The stock (COIN) jumped 9% on the announcement, ending the week up around 22%.
- Ryan notes the significance: "If you put in $500 into your 401k every single week, you are buying Coinbase." This provides a perpetual bid for the stock.
The "Internet Capital Markets" Meta
- A new trend emerged involving memecoins launched alongside consumer applications, dubbed the "internet capital markets" meta.
- The discussion was sparked by "Jelly Jelly," a memecoin launched with a consumer app, which saw a rapid price spike to $280 million market cap before crashing.
- Believe.app is a new token launchpad, similar to Pump.fun, but focused on launching memecoins associated with actual startups or apps (e.g., Yapper for AI deepfake videos, Noodle.gg, a worm-like game).
- The narrative is that these memecoins can fund early-stage startups, bypassing traditional VC funding, with revenue generated from memecoin trading fees. Noodle.app reportedly makes $40,000 a month from these fees.
- David expresses skepticism, stating, "My opinion here is that the real internet capital markets comes when developers can issue equity coins that have real claims on real cash flows and everything else is just a bootloader to get there."
- Ryan views this as a new cohort (Web2 app developers) discovering memecoins, similar to how crypto natives have, without necessarily needing a direct revenue link to the app itself.
Robinhood Expands Crypto Footprint with WonderFi Acquisition
- Robinhood is acquiring WonderFi, a Canadian crypto company backed by Kevin O'Leary, for approximately $180 million USD.
- WonderFi operates Bitbuy and Coinsquare, two regulated Canadian crypto exchanges with $2 billion in client assets.
- The acquisition also includes WonderChain, an Ethereum Layer 2 being built on Matter Labs' ZK Stack, and the non-custodial Wonderfy wallet.
- This move signals Robinhood's deepening commitment to the crypto space, following its acquisition of Bitstamp last year.
CryptoPunks IP Finds a New Home
- The intellectual property (IP) for the CryptoPunks NFT collection is being transferred from Yuga Labs to the Node Foundation.
- The Node Foundation is described as a nonprofit dedicated to preserving and expanding contemporary digital art.
- Yuga Labs representatives will join as advisors.
- David, a CryptoPunks owner, commented, "I've never really thought that the IP of CryptoPunks is significant because like I don't really care who owns the IP...I own my CryptoPunk as according to the Ethereum blockchain."
- Punks, still the most valuable NFT collection, saw a 5% price increase on the news.
A More Favorable SEC?
- The hosts discussed a perceived shift towards a more crypto-positive stance from the U.S. Securities and Exchange Commission (SEC).
- Paul Atkins, touted as the potential new SEC Chair, emphasized developing a "rational regulatory framework for crypto asset markets that establishes clear rules of the road."
- The official SEC Twitter account posted a surprisingly bullish thread, comparing the movement of securities to on-chain systems with the music industry's transition to digital formats, stating it "has the potential to remodel aspects of the securities market."
- Hester Peirce, an SEC Commissioner known for her pro-innovation stance, continues to advocate for ideas like a regulatory sandbox for tokenized stocks.
- This perceived shift is seen as highly positive for the industry, potentially paving the way for products like an ETH staking ETF. David believes an ETH staking ETF is "inevitable."
Superstate Launches Tokenized Stock Platform
- Robert Leshner's (founder of Compound) company, Superstate, is launching OpenBell, a platform for issuing tokenized stocks on-chain.
- OpenBell aims to make stocks "fully transferable, programmable, and integrated into DeFi."
- Their first client is Soul Strategies, a Canadian public company focused on being a "MicroStrategy for Solana."
- This development aligns with the vision of "real" internet capital markets, where traditional financial assets are brought onto blockchains.
Political Tailwinds and Big Tech Interest
- Further positive signals for crypto include growing political engagement and renewed interest from major tech companies.
- JD Vance, a U.S. Vice President and Bitcoin holder, is scheduled to attend the Bitcoin 2025 conference, marking a significant moment for crypto's political acceptance.
- Mark Zuckerberg's Meta is reportedly re-evaluating stablecoin integration, particularly with WhatsApp, and has hired a former Stellar executive to lead these efforts. David notes, "It's hard to be bearish right now."
Conclusion: Bullish Convergences Signal Market Shift
- This episode highlights a confluence of bullish macro trends, regulatory thawing, and crypto-native innovation, suggesting a significant market upswing. Investors and researchers should monitor the SEC's evolving stance and the development of "real" internet capital markets via tokenized traditional assets.
