Bitcoin Below $60K: Michael Saylor Is Running Out of Moves

Transcript

Banklist Nation, it's time for the weekly roll up. It is the last week of June and for what feels like the third time this month, three three out of the four weeks, there is just blood in the streets. We got Ryan back this week. Back from vacation. You picked a bad time to come back from vacation. You should actually just go back on vacation. >> I came to find >> I came to find out if Michael Sailor is death death spiraling because that's what I heard. the whole micro strategy ecosystem. >> We are currently death spiraling, but like you don't really know how far it goes. Maybe it's just a baby death spiral. Anyways, uh Bitcoin is trading below $60,000. Uh Master Micro Strategy is trading below $100 for the first time since March of 2024. And Stretch is trading at $74,

billions of dollars off of where it ought to be trading at $100. Uh, so strategies, they've got $1.7 billion in preferred dividends obligations in like like nine 10 months of coverage left. So we're gonna ask the question, is it all over for Michael Sale? >> I think that means just nine months and then we'll be in a bull market. I think he planned this perfectly, >> dude. I think if Bitcoin, we'll talk about this, but the easiest solution is that Bitcoin just goes up and then Michael Sailor's just free and clear. >> Not going to be a problem at all. Um, also I I saw this David on the week. ETH Labs has just been announced. People are asking if this is the new Ethereum Foundation. It is not quite a fork, but is started by some former EF members.

We'll talk about that. Also, the Ethereum Foundation itself reducing headcount quite significantly, like something like 20 to 40%. So, is this a restructuring? Is this a crisis? What does Vitalic think about this? And um, there was an executive order as well coming to the White House this week. It caught my attention because they were talking about quantum. Apparently the US wants to build a quantum computer and get this >> they think um they think quantum relevant cryptorelevant computers might come. Yeah, cryptography according to Donald Trump. We got to watch cryptography. Uh though um the cryptography relevant quantum computers could come as early as 2031 and they want all systems to be ready for that.

So, we'll talk about what that means for the US, what that means for our crypto protocols as well. David, before we get in, you got a a shout out to make to our friends over at OKX. >> Yeah. OKX. Uh, so the ICE, the Intercontinental Exchange, parent company of different the the markets oriented ICE, >> uh, which is a parent company of the New York Stock Exchange. They backed uh OKX at a $25 billion valuation because they want to launch tokenized New York Stock Exchange stocks and derivatives later this year on OKX specifically. This is Tradfi on one side coming to DeFi on the other. All in the same app. This is the new money app from uh from OKX. Trusted

by over 120 million users globally. OKX is bringing products to the United States. This is now a US company that Wall Street has been talking about for years. And so if you are not on OKX, they are offering you a 6% deposit match using the link in the show notes. So click that and get onboarded to OKX and get your 6%. Uh unless you are in New York or Texas is not available to you. Sad. Sorry. Sorry. New York. It's weird that it's Texas as well. >> Usually you don't usually New York's common. Texas is not so common over there. >> It is good to have another exchange available in the US. Like more options are better. Specifically coming from um the people behind the New York Stock Exchange. But David, let's get into the blood in the streets. Yeah. That you were you were teasing about. So, show us

some blood. This is Bitcoin >> and on the US price chart. I think you have a a moving average line here. >> Yeah. So, these are 4hour candles. This blue line going across my screen is the 200WE moving average, which historically Bitcoin just does not stay below the moving average, 200E moving average very often. We're currently 5% below the 200E moving average. I I will say it did for a while. For a good bit, several months, many months in uh 2022, 2023 bear. >> Yeah. Okay, let's zoom all the way out. I will say I think we I think we talked about that last summer. Like it has spent maybe 5% of its time below the 200E moving average and it's dominantly >> in the 300 days in right after FTX. The

300 days after FTX is when it spent basically all of its time below the 200E moving average. >> So, how many days will we spend below the moving average? What number is that? 62 uh >> right now $62,400 and Bitcoin is trading at $59,500 right now. >> Yeah, we're in the 50s. We're officially in the 50s. Um is some of that on the week due to some of the concern around the Michael Sailor universe? This is a a question I have is how big of a deal is Michael Sailor as it relates to the Bitcoin price or does Bitcoin not care and Bitcoin happens to Michael Sailor? But Michael Sailor does not happen to Bitcoin.

>> I don't know the answer to that. >> They're two gravitational objects, right? Bitcoin is clearly the bigger one, but Michael Sailor is maybe a planet orbiting that star. Maybe he's a really big planet. Maybe also maybe this is a binary um star system too. >> If it's a binary star system, Ryan, that means that Bitcoin is dependent on Michael Sailor, which in my mind means the Bitcoin project has failed. >> That's sacrilege. Okay. >> Yeah. Yeah. I mean, they have strategy has 800,000 850,000 Bitcoin. >> Yeah. >> Quite material. Yeah. >> Still in the broad schemes of things, it's it's what what percentage is that of total Bitcoin supply?

>> I don't know. Three, something like that. >> God, that's a lot. Okay. But like he but like yeah I mean fair point but he is kind of the marginal buyer and he is the um the bull of all bulls right he's sit on the throne of being you know chief bull officer of the bitcoin ecosystem but what's happening over in micro strate because you teased in the intro that um >> yeah let's just look at this >> strategy was actually down uh what is it down >> what chart does this remind you of Ryan >> down let me see down seven >> 25% 25% off of it doesn't have a peg okay >> but I call it par It's supposed to trade.

>> Oh, this is stretch you're showing stretch. >> This is not uh MSTR, right? >> Yeah. Well, I'll show MSTR in a second. Stretch. >> Can you remind people what Stretch actually is and why this is significant that it's down so much? >> Stretch is actually I'll just show you this ad. Um, do you remember this ad, Ryan? >> Mhm. >> This is a AI ad of some babe in a pool in the Bahamas or like in in Asia drinking a margarita. and she goes, "I'm not meant to live a comfortable life. I put all of my savings into Stretch."

What is Stretch? Stretcher is a stock that pays me 11% a year in dividends for holding Stretch. 11.5% paid monthly. So that's what Stretch is. It's meant to trade at $100. Uh because when it's trading above $100, Strategy just gets to hammer the ATM and they mint more Stretch and they pocket the cash and then they can buy Bitcoin with the cash. They pay out also with the cash that they have. They pay out the dividends and the supply of stretch has grown so large that they have annual dividend obligations of $1.7 billion a year. And then they also have in reserve $1.4 billion.

And so they have and they also have debt obligations elsewhere as well. And so they have about 10 months, this is on their website, they have 10 months of dividend coverage for a stretch. But there is simply three things are going down all at once. So the Bitcoin price is going down. >> Uh MSTR I'll pull up MSTR now. MSTR is going down bad. Very bad. And then also Stretch is going down. And so MSTR from the very tippy top is down 84%. From the tippy top of where whereas Bitcoin is down what like 50 60% >> 53% 53% >> 53%. Okay.

>> Yeah. So, all of all three of these things are down, which is really cornering strategies, Michael Sailor's options. >> Sure. >> When all three go down, he just doesn't have a lot of options. He does have time. He has 9.8 months of dividend coverage, so he has time, but he does not have a lot of options right now. And I guess the reason why Stretch is trading at $75 even though it's in theory supposed to be trading at $100 is people are worried. It's like a lack of confidence of the solvency of Stretch. Because like say say Ryan, I tell you, hey Ryan, there's this company. It has amazing dividends. It pays you 11% dividends, but the company's going to go defunct in

10 months. Like what's that company worth? Not $100 a share. Yeah, I think I would ask like what is the probability of um the company to pay me back, right? So, how much cash do they have? And then like cash in dollars cuz I'm getting paid in dollars. So, same unit of account. >> And then I would say what else does the company have in terms of their balance sheet to be able to sell to go pay me back, right? And of course, if you look at strategy, >> there's a lot of things they could sell. It's called Bitcoin, and there's tens of billions of it. and they could just sell some Bitcoin and pay me back. But of course, you know, that that in in the three bodies that you described that,

you know, a market sale of of Bitcoin at some level that that kind of tanks the Bitcoin price, which isn't good for MSTR, isn't good for >> He did sell 32 bitcoins. Bitcoin, the Bitcoin price did not respond positively. Yeah, >> he did sell this week uh a bunch of MSTR. So, he sold MSTR. It was trading earlier this week at like 1.3 nav uh nav value. So like >> premium to nav is just barely barely a premium to nav. Barely above. >> It's 30% premium. It's not bad. >> Yeah, but it's barely a premium to nav. 1.03, which is where MSTR is today. The fact that it's still positive is actually incredible.

>> But it was 1.05 at the time of at when I woke up this morning. So it's down to 1.03. >> Wait, but wait. Okay. strategy is still at a premium to NAV. It's it's not under >> it's a 3% premium to NAV. >> Okay. So, >> so what does this mean? Is that the value of all of the Bitcoin that strategy has, which is $50 billion is what strategy is worth. $50 billion. >> The stock basically the stock. >> So, he can't do any more ATM. He can't mint very much. >> 3% more.

>> Well, no, no, he could do he could go below if he wants. He can alone, >> but every time he does that, >> that's breaking a social contract. >> Well, yeah. I mean, every time he does that, I we've talked about the way DATs are are structured, right? Every time he like Bitcoin is scarce, but strategy stock is not scarce. So, it does have a money printer, and the money printer has a name. His name is Michael Sailor because Michael Sailor owns massive amounts of of of strategy. So, he's basically governance for strategy. So, he can just continue to dilute MSTR holders and MSTR can get punished.

That's why MSTR is down what 83%. And a Bitcoin is only down like 53%. Also, MSTR had a ridiculous MNAV premium previously. It was like 2 3x something like that. Four at one time. It was insane. That couldn't last forever. >> But anyway, now >> he's right on the cusp of like what does he do next >> type of question, right? It's like >> he's running out of tricks. He's running out of cards in the sleeve to pull out and just be like, ah, I've got another bail out. And he also this week, make this make sense, he's still buying Bitcoin right D?

>> So, it's it started the week, the MNAV of uh of Strategy started the week at 1.3. It's now down to 1.03 because they sold they sold a bunch of strategy to finance $30 more million to add to the USD reserve, which is why they're at 1.4 billion. And then they also bought 520 Bitcoin for 35 million. So they still buying Bitcoin. Is he still buying Bitcoin? >> Not much. It's a little bit uh revealing that they bolstered the USD reserve by 300 million and only bought $35 million of Bitcoin. Like feels a little bit like a token buy of Bitcoin. Yeah. You you said the word the three bodies. We're invoking the this three body problem idea which I like got from Twitter. Uh

and this is a tweet from from Penttosh. He said, "I kind of feel like the market keeps telling Sailor he can't keep all three things. stretch MSTR and Bitcoin. Uh there's just like three different incentives for three different groups and you can't you can't juggle all of them because there's three social contracts here and in the under duress sailor has to break one. So what what are the three social contracts? He can't sell, he can't mint new MSTR below an MNAV of one because the whole point of owning MSTR is that your Bitcoin per share always goes up. And if he mints MS MCR equity below MNAV of one, you're

breaking that social contract. Like why own MSCR when you can just own own Bitcoin at that point? >> You can't sell Bitcoin because that's the social contract of bit. That's the whole deal. You are the Bitcoin buy guy. You don't get to sell Bitcoin. That's another social contract. You only buy and you have a social contract to pay the dividends of your stretch equity preferred offering which he only has 10 more months of. And so under duress, Sailor has to break a social contract. And I think when Stretch trades at a 25% off of the par off of the $100 peg, I think that is the market saying that they think that they might get the short end of the stick.

>> Sure. I mean, Jeff Dorman had a take, which is basically like um what probably the 70% probability is Michael Mailor will continue to do what he's doing, which is continue to ATM mint strategy as long as he can every month and just hope things get better with the Bitcoin price. Yeah. >> And that's what he's doing. That's the course that he's playing so far. And maybe he'll be able to build enough runway so that some of these other bodies in the three body problem don't don't spin off and and cause him uh bigger issues. But there is always the possibility here and he knows he has this card to rip off the band-aid, sell 3 to 4 billion of Bitcoin and then just, you know, be like, "Hey stretchers, see

we have it." Maybe he could use some of that cash to actually buy some SDRC. Yeah, >> that could be value accredited if he gets that at a discount to MSDR holders. And like that's probably what's going to happen. One of those two options. >> I don't think he is like I don't think unless this goes on for a long time. I don't see a death spiral scenario here. Unless Bitcoin death spirals down, of course, or like the more probable scenario if you're kind of like bearish on market conditions is that it's just like a slow melting ice cube. I think Austin Campbell made this remark in a recent post I saw which is just like over 5 years this whole thing could like melt away if Bitcoin doesn't get the

creative price performance that >> all investors expect and that quite frankly you and I expect. So I don't see the Teraluna death spiral still. >> I definitely don't see that. But like if I you know there is the possibility that he burns his bridges with the preferred share STRC type of instrument and that um those like holders get pissed and you get that >> I don't I don't think they'll get wiped out but they can't be happy. They're not happy now. No, >> I mean >> no way. >> Is anyone happy with this trading like 24% off of the >> No. Not when I saw Not when I saw this babe this babe drinking this margarita and she's asking answering the question

why is her lifestyle so good and her answer is I bought stress. No, anyone who listened to this ad's not happy. >> Yeah, that's right. And uh of course there's bears like Peter Schiff um I see all over Twitter warning that this is the Bitcoin bubble that you know it's going to like basically um uh dancing with glee that this is happening and I kind of prepared for it in my head is like Peter Schiff is getting lit right now. >> I I will say that like there like I think Michael Sailor's backed up against a corner with Stretch because he truly can't like the idea with Stretch is like yeah in theory they have no claim on the Bitcoin. we don't have to sell the Bitcoin. In theory, they could be wiped out. They have no legal claim. But then you have like this the AI ad of the the

babe drinking the margarita. I'm like, dude, that is a lawsuit waiting to happen. >> Sure. >> And so he legally speaking, he probably doesn't want to go down that route, even though he might technically check out. Like, it's still going to be messy. And I I the thing that he's been doing, which is minting and hammering the ATM at MSTR, seems to be the the path of least resistance. >> Yeah. I still think it's gonna work out. I >> I like I kind of think it's still gonna be okay. >> Maybe not. Maybe not. And it depends what it all depends on what Bitcoin price does really. Right. Um right.

Speaking of that, uh what's the poly market saying on the week about price predictions? It's been a while since we looked at this. >> Uh Bitcoin Poly Market is giving Bitcoin a 48% chance of hitting $45,000, a 31% chance of hitting $40,000. And it basically stops there. >> Yeah. Yeah. What What about the upside? >> The upside, uh, let's see. We have a 50% chance that it hits $75,000. And this is all in this year, this year, 2026. So, there's equal probability that Bitcoin hits 75,000 as it does 45,000.

>> Yeah, the bearish numbers are growing. Uh, should we check in on our little friend ETH David? >> Yeah. Yeah, let's check out Let's check. Let's check that out. Uh, ETH is not looking great. ETH is not looking great. >> Is that blue line the 200 week as well? >> Yes. Yeah, the blue line. well below the blue line. >> The what's notable to me is that the blue line the 200E moving average is not going up. Like that's just >> it's an ugly 200 week. >> Yeah, it's a flat it's been flat for over a year. So >> ETH is now 36% below the 200E moving average which it it never been. >> It spent some time below though in 2025, right? The whole tariff thing, >> right? Right. Oh yes. And it was it was it was here and then Tom Lee came in and

hammered $18 billion into ETH and ETH hit all-time high and we're kind of back to that same price range again. >> Okay. Well, more on Tom Lee a bit later in the episode. How are regular markets doing? How the tread market? >> Yeah, let's look at the let's look at the indices. Uh there's been a little bit of a toiness in the indices. Like you can kind of see it like rolling over at the top. This is the S&P. Uh but really it's in the grand scheme of things is fine. like we're down 3% from the top uh at the of the S&P. The NASDAQ's doing the same thing. Um there's definitely been a lot of market volatility. You might have noticed, Ryan, that your portfolio got absolutely obliterated in overnight trading on Tuesday of this week.

>> Yeah. >> Uh this happened because uh South Korea South Korea regulators made some comments about uh cautioning retail investors on leveraged ETFs. Apparently leveraged ETFs. you're gonna get you're I wonder I wonder what ETFs semiconductor ETFs leverage semiconductor ETFs in South Korea uh regulators were like warning about them and then as a result of that the South Korea's benchmark KOSPI index plunged 10% they triggered a 20-minute halt people got liquidated you know people got carried out was a very brutal day and then it carried over into our market so on Tuesday that's why the NASDAQ fell 2.2% and the S&P dropped 1.4% 4%. But then Ryan, you know what saved the day?

You know what the entire what the new Nvidia is? >> What's Microsoft? >> MU MU earnings got posted yesterday and they just obliterated earnings. So they had $41 billion in revenue which beat an estimate of $ 36 billion. >> Incredible. >> Wild. And then their their Q3 revenue is up 75% from Q2. Wild. This is the thing that's already trading like well over a billion dollars. This thing if you bought MU Ryan on January 1st of this year, you would be up 330%.

>> Don't tell me that. I don't want >> 330%. >> That's amazing. Incredible. So MU earnings came in yesterday and it was very very good and it and like every single day, every single week the market is like >> is the bubble is the bubble popped? You know, is the memory trunks over? Like is the AI trade over? And it seemingly every single week we have something like this and it's like no throw the dice again. We're back. >> We got more. We got more. We got more. >> I have a take on this. I have I have three reasons why I think crypto the crypto market is down. when I when I zoom out when I've been thinking about this over the past couple weeks. You ready for it?

>> Sure. >> All right. The first reason is basically exactly what you said. All the attention, all the auction in the markets, all the capital >> is in AI. And so crypto is very much an attention economy. I mean, I think a store of value asset of which like Bitcoin is the predominantly most of the crypto economy and then ether another store of value is still the underpinning of the crypto market cap, right? And that is very much an attention asset. It's very much a mimemetic. Like gold is too, but gold has 5,000 years of history here.

>> Yeah. You don't need as much attent attention on gold. >> You don't need cuz it's always been here. There's always the gold bugs there. There there always will be at some level, but um crypto is really suffering from the attention shifting to AI. That's the first one. It's probably pretty obvious. Yeah. Everyone's looking at Micron and Nvidia and they've moved their capital and attention from crypto. But I think it it you know bears repeating. The second is uh the debasement trade is on pause and um we could see evidence of this in the gold price. So gold is creeping closer to $4,000 per ounce. Do you remember >> which is down right?

>> It's down right. It was uh 5,300 or so at the highs when Peter Schiff was dancing on the other side. It's down significantly since. Michael Howell actually had a great post on this and he talks about the reason why it's on pause and it's because over the past few months China has really paused on kind of their their their their money printing uh printer and so liquidity has actually reversed coming out of the POC. He's not actually sure why. People aren't sure why. Some um you know he points to maybe the uh Iran conflict causing China to just be like oh pause we don't want more production. We don't want to consume more oil. But for whatever reason they have paused liquidity. The dollar is strong. You know the Fed isn't printing much more liquidity. So liquidity cycle has

changed and he thinks this will be temporary. But as long as that is happening the debasement trade is not gone but it's just on pause. It will resume because it has to resume because you've seen the charts. You've seen uh US debt to GDP ratios. Um, China's in a similar situation from real estate, all sorts of things where they need to print their way out too. All >> the worst thing for liquidity was the Trump administration doing their damnedest attempt to doge the government and then the spending just linearly increasing upwards.

>> Yeah, but people are like, "Oh, the debasement trades it's over, right? Gold is going. Bitcoin's going. It's not over. It's just on pause right now." And that's how it was always going to work. It would pause and then resume. So, but this paused right now. The the the third reason is this. It's just the four-year cycle, David. Yeah. >> And um Michael Nato uh >> four year cycle un unfased. >> It's unfased. And Michael Nato wrote a post this week that I thought was really good. He was just talking about what we have to do every four years. He talked about the reason why is we have to delever. And so this is the realized price here. 1.9 trill trillion in Bitcoin. This is the valuation we got to in the last bull cycle. 2.5 trillion.

that premium from the realized uh price, the amount everyone, you know, bought in at effectively and the the valuation that $1.5 trillion premium that was all a lot of credit. It was per you know, DeFi loans, stable coin loans, centralized loan, all of these loans on top of that. And every single four years, we have to purge the credit, the excess credit. >> Is that what we're doing right now? We are purging. >> That's what we're doing. We're purging all of that credit. >> Michael Sailor's got to cough something up, dude. Well, he took on some leverage. Like, leverage is sin, right?

So, he took on some leverage. He didn't take on a lot, but like I guess he did take on much more than he has in previous markets. So, maybe he'll have to cough it up. Maybe he won't. But this purple uh, you know, graph right here might have to get close to the blue graph. Might have to even get below it. And in previous cycles, it's gotten about, you know, 20 to 30% below it. This is realized price >> below it. This is this if you want to translate this to Bitcoin price below 54K. >> Okay, >> so those three things are happening. We have AI attention dominating. Unless AI attention slows, it's hard for crypto to get a run, you know. Uh secondly, debasement trade on pause. You could see this in the in the global liquidity. And

then third, it's the 4-year uh uh deleveraging cycle that we're seeing. So some of this has to get washed out and deleveraged. No, I don't think crypto is over. >> No, I don't think it's like the end. This is just the point in the kind of the the big meta cycle that we're in. >> Do you listen to my episode with Arthur Hayes? >> Not yet. No. >> Uh he's he's he's got a interesting brand right now in crypto land. >> I think some of his brand is like uh Grifter Schiller and dump like pump and dump type of brand. That's what >> Yeah. Yeah. Yeah.

>> Is there a little bit of that? >> That's not what I talked to him about. What I I just I kind of moved on to just like he has this broader idea of you want to sell the AI top to buy the crypto bottom and those things will happen at the roughly around the same time potentially. Potentially >> uh >> in he he gave a bunch of reasons as to why it will be a bubble. Okay. and then why it will pop and then and then in like classic Arthur fashion he's like this credit event is going to be bigger than 2008 and the government is going to start printing and that's when you want to buy Bitcoin. But like I like the details of that I'm sure are going to be incorrect but directionally I find it very interesting of just like there's

going to be AI the AI trade is going to get wiped out at some point like some some people made way too much money way too quickly and they're going to get wiped out. >> Sure. And the it seems like there could be a timing there of like crypto can't live until AI dies. >> I think that's right. >> I I think I it's a it's a narrative. >> I don't want AI to die either. >> I don't want AI to die, but like it's a narrative that I am interested in tracking. >> Yeah. Meanwhile, the only crypto asset that is pumping, you call this chart into the agenda is something called cards. Is this a real world asset for Pokemon cards, David?

>> That might actually be what it is. Uh Pokemon cards. The whole gotacha universe is pumping right now. >> What's the gotacha universe? >> That's like it's like I I I don't know why it's called that. Uh but it's the it's the it's the trading card ecosystem. >> Okay. For Pokemon cards. >> Pokemon cards. There's like there's one piece cards. There's other cards out there that are trading. >> Okay. >> Uh but dude, these are just like altcoins for millennials, but they're real Pokemon cards. And like there's a huge tradet like non-crypto trading card ecosystem happening kind of like how people are like buying and selling Rolexes and co.

>> Yeah. >> Some of it is making it onchain and cards is that cards is like a virtual platform for buying and selling Pokemon. never thought about this, but it'd be interesting to go deep deep dive in the Pokemon cards ecosystem and just understand how the the central fiat issuers of Pokemon cards, how they like manage supply, >> like how they make sure that they don't print too many Pokemon cards or like what that cuz it's an economy that they build in the >> building. I there there there is a little bit of that and I asked Andy Andy 8052 he has he's running Monster and it's it's literally just like a virtual you can open up Pokemon cards virtually and he literally has a treasury of Pokemon cards and he said that like

Pokemon as a brand they did a very good job maintaining the brand and preserving the value of the OG OG cards >> while still minting new cards that are different. And a brand that failed at that was Yu-Gi-Oh where they just >> hammered the ATM, if you will, and they they overinflated their cards and they destroyed the value for all the collectors. So, there's a little bit of an art to the issuance of new additions of cards because you still need to preserve the value of all your old cards. >> I swear seeing Pokemon cards going to terror makes gives me some optimism for NFTs again. The rise of NFTs. These are just NFTs.

>> These are just NFTs. >> They're real world NFTs. David, we got more to talk about. Um the the EF is cutting back, but ETH Labs is stepping in. What does this mean for Ethereum, all that number of other topics we'll see in a minute, but before we do, we want to thank the sponsors that made this possible. $100,000 is up for grabs. MetaMask and Ono are giving it away in the Ono trading competition. 5 weeks, three tiers. Whoever earns the best percentage return in each tier wins the biggest cut. Pick from 260 ono tokenized stocks, funds, and commodities to swap inside MetaMask and let your portfolio do the talking. If you think you can outrade everyone else, this is your chance to prove it. From now until June 18th, click the link in the description below and opt in on MetaMask Mobile.

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The Ethereum Foundation, Uniswap, and AWS are already building on it. And now it's live inside the United States. And new users who deposit and trade can get up to $500 in Bitcoin through the bagless link. The link is in the show notes to learn more. not investment advice, not available in New York or Texas. The center of gravity of Ethereum stewardship is uh shifting pretty formally I would say this week. Uh so this week we had we had two announcements. Uh the EF cut its budget by 40%. And its staff by roughly 20% which was 54 people. So 54 people no longer work at the EF which means that the EF is like 200 people still to this day. That's pretty big still.

>> That's pretty big. um there's a restructuring into five clusters. So there's now clusters at the EF and it's the EF is now kind of just intentionally framing itself as just one node among many when it comes to like the stewardship and direction of Ethereum. On the other side of the aisle, ETH Labs was launched as a new independent nonprofit research and development lab with a just a kind of a different emphasis than the EF like ETH as an asset and Ethereum the network being co-developed placing Ethereum to be the settlement layer of the global economy.

Uh putting points on the board for Ethereum trying to win. Uh and so ETHLabs is entirely compromised of former EF technical talent. uh some very big names. Onsgar, Casper, Barnaby, Josh Rudolph, Julian Ma. If you're in the Ethereum world, you you recognize these names. So, kind a little bit of a tale of two cities going on here. >> Yeah, I guess maybe let's um let's talk about the EF they're structured and getting smaller. So, Vitalic uh put together a post. He actually ends this post um and said this, the past years have been challenging era for Ethereum.

I think a lot of ETH investors certainly feel that. A lot of people in the Ethereum ecosystem feel that too. Um, good to see him put that into words. Um, he said, "I personally favor when talking about like this post was revealing because there's a number of, you know, vitalic thoughts which are always very important for the stewardship of Ethereum on oification of the Ethereum protocol." He says this, "I personally favor a soft lean and done approach to Ethereum once the straw map is completed." That's the current Ethereum road map. generally stick to security fixes and small highv value changes and have a much higher bar for considering new features. So I think the idea here is that the current EF structure and funding gets it crops

that's censorship resistance it's open source privacy security those being kind of the the priorities and then once the straw map is done like the role of the EF shrinks even further still and so this post was I thought good for Vitalic I'm glad that somebody from the Ethereum Foundation publicly addressed this glad that Vitalic did because what we were seeing over the past 3 to 6 months was kind of a a leakage of what we thought were key people in the Ethereum Foundation. I mean, starting with Tamos, but then um Chawei, the other executive director, leaving a number of high-profile departures. Now, some of those have have joined this new org that we're going to talk about in a second.

But, you know, Vitalik has been pretty much >> pretty quiet on this until now. So, I guess it was all culminating in this. There was another post from Bastion who is the new current executive director of the EF uh making a probably a pretty clear post about what the scope of the EF is moving forward. So he he started with what the EF is not going to be for. The EF is not for going to be like important. The EF is not trying to make itself important. Is the EF is not for corporate.

>> That's clear. I mean I feel like that's been super clear for a long time but okay. Uh, the EF is not for corpo appeal or for ecosystem popularity. >> All right. >> We are not here to please short-term speculators or prop up TBTF neoies. I don't know what that is. What is that? >> A TBTF neoy. Let me look that up while you're going through it. >> And then also there the EF is not for marketing every app on Ethereum. What is the EF for is eliminating Ethereum weaknesses. So they want the EF to help defensively strengthen places where Ethereum is or still can become extractive totalizing or vulnerable to cartel or state capture. So crappy stuff like what what is the EF doing? It's

narrowing its focus onto crappy stuff. Something that he said was uh the EF exists to harden every surface of Ethereum. Crop is the centers of persistent >> um privacy, security, all that kind of stuff. Um, I was glad that they put some priorities here too. Privacy being one of them. Also, >> quantum resistance, >> quantum resistance, which is huge. We'll talk about that later. Now, with the dates, uh, you know, continuing to, I guess, you know, fall back for when we'll get a quantum um, breaking computer, that seems even higher priority. There's even some question whether Ethereum will be ready, let alone Bitcoin.

having that as a centerpiece. If the EF was just able to deliver that, that would be actually incredible. My favorite part of Bastion's post was actually this where he talked about um ETH the asset. Glad they said ETH the asset. Making ETH normal digital cash is how he put it. He defined it like this. a private dignity respecting uh debasement resistant and surveillance resistant medium of exchange and store of value as well as the native asset of private computation and private coordination for both humans and their agents. So good to see some emphasis on Ether the asset and not just Ethereum the network. Something that I

know you love to see and uh I love to see as well. >> Mhm. Mhm. Um >> so I do have a um a definition for TBTF. NEOF. >> Yes. >> Too big to fail is TBTF and CIF is a system uh systemically important financial institution. So it's big banks basically. So that was the departure from the EF. And then we had >> the downsizing and restructuring and narrowing of scope of over the EF. An important point about the EF is that they were consuming 15% of their treasury per year. that was in their intentional part of their treasury strategy as the run and maintain structure of the EF and now that is going down to 5% of the EF budget per

year. They're also I think just downsizing some mega projects. So this might be the last DevCon, the DevCon India Mumbai. So things like this. So, they're just really leaning up and kind of hunkering down, >> which needed to happen, right? Bobby from from Coin Gecko makes the point the organization was 270 people before they laid off 20% of their staff. And Telegram has a total team side purportedly of of like 50 people. >> Yeah. >> Um, Hyperlquid, I don't know, what are they like a dozen? >> 14. Yeah, 14. >> So, 270 is a lot of people for developing a crypto protocol, right? So maybe they just need to lean down as all organizations uh eventually do.

>> Should probably keep going. >> Tamos was pretty favorable towards this too. I don't know if you saw his post on this. You read this? >> Mm- Tell me. >> Yeah. He basically said this is generally the direction that I would have wanted the EF to go into. So he's pretty supportive. >> Okay. >> But he ends it with this. He says, "My biggest worry is about execution. If you look at the diagram, you know, this diagram of all the different seven areas, he said it's still pretty like um messy, pretty unclear the structure, you know, maybe it's too hierarchal rather than flat. And so he said this mostly likely reflects the team's challenges in controlling pressures for for people to keep titles, people keeping titles, general org stuff, right? Like the F is

not immune to the bureaucratic tendencies of of governments. And I think that's >> sort of some of the malaise that has that has befallen the structure over the past 10 years. >> I mean, my confidence in the EF like fixing itself and like becoming new again and being effective, like I've I just don't think that's where it's going to happen at the EF. And so, yeah, they're leaning up, but it doesn't mean that they're turning into this polished, well-run organization. And it kind of seems to be that this the lack of being wellrun is a little bit intentional by design because they don't want the EF to be like important maybe. I don't know. I it's this is

seems like a step in the right direction for sure. But let's talk about what at least I am more bullish on and I think you probably are too. Tell me about ETH Labs. So this is a net new entity. We got a blank canvas. >> We can do this thing right with this organization. What is Eth Labs? Who is behind it? I ETH Labs in my mind. This is my words, not theirs. I'm recording with Onsgar and Casper tomorrow. That episode will come out on on Monday. >> Some of our favorites from the EF. Yes. >> Yes. Yeah. The the I don't like to pick favorites but >> I really like Casper and Oscar.

>> Yeah. >> Uh I I'll say that like ETH Labs in contrast to the EF wants to be important. Uh here's here's a line out of Eth Labs that I really like. principles do not change the world until people benefit from them. And the reason why that's important to speak through the lines is like sure a lot of Ethereum's values, the crops, the decentralization, the censorship resistance is great. >> It doesn't matter if those things aren't relevant. And I think E Labs is trying to make Ethereum as relevant as possible. And so, uh, like I said, this is Onsgar, Casper, Barnaby, Julian Ma, again, some heavy hitters with funding from Bitmine, Sharplink, okay, a

handful, uh, and like a number of other just individual contributors. And so, this is where they're getting their funding from, a bunch of grants from organizations commercialities commercial entities. Um, and they have a whole they have a whole website. Uh and so this is think of this like as a small lean refined group of very competent protocol specialists who want to do things that the EF isn't going to do. Uh and this has to do with scaling. I think like layer 1 scaling is now kind of in the realm of ETH labs because I don't think the EF is taking on layer 1 scaling. And so ETH Labs is now doing layer 1 scaling. Uh, and they are I think

they're kind of still working on exactly what like step one, step two, step three is. Uh, but this is really about an organization that wants Ethereum to put points on the board. >> Yeah. >> The there's like this one central slot in the crypto world where they're single settlement layer for all of internet finance. Ethereum is the only ecosystem that fits in that slot and they want to make sure that Ethereum inhabits its spots to the best of that ability. And so this is this is the ETH is winning. Ethereum is winning or in my mind whereas the previous one was like we're indifferent to Ethereum.

>> I mean the hopeful vision here is this is like a bronze age mindset lean EF basically that wants to win. And I really did like their their thesis is you said part of it but they also said this we believe ETH matters. >> Yeah. >> The asset it's called ETH labs guys. It's not called Ethereum Labs. The most valuable programmable store values how they define it. a decade of broad distribution, deep liquidity, maximally trustless asset on Ethereum. Yes, that's exactly it. That is something I was never convinced the EF fully believed. I know Justin Drake, I know some members of the EF believed it. It was never convinced that the EF fully believed that or for that matter, Vitalic fully believed it. They also said this, we believe DeFi matters. Thank you. That's

the use case. That's one of the four points of the pillars of their thesis. And we believe adoption matters. I believe those three things, too. I wasn't sure that the EF prioritized those three things. So, it's good to see an organization spin up and do it >> funded by people with commercial interests in this too. So, this is a nonprofit, but commercial interests are funding it. So, um Tom Lee has got $300 million in staking revenue that he throws off of EF staking every year. How much does it cost to fund this team, do you think? Like, couple million million.

>> Not that much. And so what a great >> salaries that they're used to getting from the EF their expectations are probably pretty low. >> I'm glad. Now the question for me is like of course like any new or can they execute? Will they be able to and what parts of the road map will they execute on? Like if the will there be conflict? Will the Ethereum Foundation be like no you know like you can't work on single slot finality or whatever they try to work on because we've got that. I don't know how this is all going to be worked together, but like um good to see the blood stay in the Ethereum ecosystem and for us to have a new org to actually propel the platform and vision forward.

So, I'm bullish. I'm like cautiously bullish cuz it's a new or but like imagine these uh developers and uh protocol engineers like leaving the Ethereum ecosystem. >> Oh my god. joining in uh you know another blockchain company or something or >> or going to AI or whatever >> of and they didn't they stayed here and so I think the net story here is actually bullish uh Ethereum at least that's my interpretation of it but we'll see >> yeah the timing of the EF announcing their restructuring plus the launch of ETHLabs maybe maybe that's coincidental but I think it's very illustrative because now the EF is explicitly saying that they just want to be one node in a network and ETH labs is like hello we are also thank thank you for the

invitation into this network. We are also a node on this network. >> Power dynamics I think are TBD to be played out. >> The EF did not fund them. Notice that's what that's kind of interesting. I'm sure they had the option to fund them >> probably. But also like there the EF is in potentially a funding crisis. We'll talk about that in in a in a hot sec. Like maybe it's like oh like get get Tom Lee to do it. He's got plenty of money. Um but uh like who has the steering wheel? The there there's a huge synergy here in my mind where like the ETH labs is looking at the EF and being like you guys got crops and Vitalic is like yeah and Bastion is like yeah we got crops crops we are taking care of crops. So

now ETH Labs doesn't have to worry about crops because the EF's got it and the EF the ETH Labs is going to worry about like market adoption, scaling, you know, commercial relevance. >> And those two things are synergistic, >> but I do imagine there being like who who's got how many hands on this steering wheel and the thing is like Onsgar Casper Barnaby Julian Josh these people are very influential when it comes to the EIP process. Like they are earned legitimacy. >> They have earned legitimacy. And so I am hoping that we can take some of the >> power the leadership power of the EF and like orient it towards ETH Labs and that not to be not to be like dominant but

like let's give ETH Labs some like leadership over the direction of Ethereum. >> I think we will. I think that's exactly what's happening. I think this is part of kind of a new era for Ethereum that's just starting to build. But you you mentioned a a funding problem or funding crisis. I've heard other people talk about that. Um, is that Trent's take here? So, Trent was formerly >> um, EF of the Protocol Guild. I'm not sure if he's still in the Protocol Guild, but he had a post this week called succession after subtraction. What was he saying?

>> Yes, a handful of points here. His his first points, which kind of echoes what I was just talking about, is that legitimacy tends towards power law pooling and the EF still holds quite a lot of legitimacy. There's the Ethereum brand. Vitalic is at the EF. The EF has the premine treasury. They own Ethereum.org. They own Ethereum at Ethereum on Twitter. They have a decade of just Lindy. And there's a ton of just legitimacy pooling that all kind of concentrates there. And so he's illustrating it's difficult for new nodes on the network to emerge when the EF sucks up all of the oxygen, whether it wants to suck up the oxygen or not.

However, he is saying also at the same time that there is just like a funding crisis. So $30 million a year of core dev funding it costs the EF with their limited budget remaining. And so to some degree they are giving up um there is a open window of opportunity for a new organization with new funding to come in because there's that power vacuum being set up. But I think um what's Trent's real point is is that we need legitimacy to be spread away from the EF. That's the succession part, but also the difficulty in doing so. That's kind of the through line of the article.

>> I sort of I got transposed. I kind of disagree with parts of it because he talks about a funding crisis, but I think there's actually an execution crisis in Ethereum. >> It's like a shipping crisis. >> Yeah. >> What's the point of funding incompetent shipping? >> That's right. If you talk about 30 million a year and let's take that number. Let's say that that's 10% of what Tom Lee makes on ETH staking every year. >> Yeah. >> 10%. Could to fund the whole thing. You think he's not You think the ETH stakeholders are not willing to do something like that? >> Yeah. >> I I think they would do it to a competent organization that could execute that could actually like move the dial on Ethereum the asset. So I think that's where the EF has fallen short in some ways and I think this

legitimacy ship uh shift will happen so long as other organizations step up and are able to execute. So this is all good. This part of the process is just like taking way longer than uh I hoped it would. >> Can I give you a bit of a teaser for this? These are Onsgard's words that's part of the ETH Labs and a little bit of a teaser for the episode I'm about to record with him tomorrow. >> Okay. Yeah. ETHLabs wants to co-develop Ethereum and ETH. >> I don't know. Co-develop Ethereum and ETH.

>> Yeah. Yeah. They're an Ether Ethereum R&D lab. >> Yeah. >> I thought it was the hottest line ever. Why are you so muted? I was like, >> co-develop co-develop. >> They're going to develop Ethereum, but with >> Oh, the two things together. >> The to ETH and Ethereum together. They are going to co-develop Ethereum. Yes. Okay, >> that's hitting me different now. Thank you. Say it like that. The second time it hit me. Uh, David, we got more to discuss, including the Illinois governor signed the worst crypto tax I've ever seen. I can't believe this is real. I >> I saved for this part of the for when you were back. I didn't want to talk about this with Tom. I want to talk about >> This is going to be so fun to talk about. All right, we'll get to all that and more, but before we do, we want to

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and Ether, and where we are in the cycle. There's new episodes that are released every Wednesday. They're 30 minutes, they're short, they're punchy. I think this crypto cycle is harder to navigate than most. So, let's do it together. Go subscribe to this podcast. Search the DeFi Report wherever you get your podcast. YouTube, Apple, Spotify, or find a link in the show notes. There's a new episode waiting for you. Now, >> Ryan, I think everyone reasonable will say that the Donald Trump presidency is mixed. You know, maybe maybe there's some good things, but there's definitely some bad things. >> Sure.

>> One positive thing I will firmly say about the Donald Trump presidency is their approach to te technology is serious and correct. >> It's much better. >> It's much better. They're taking like structurally important technology very seriously and we're hitting the gas pedal. So this week out of the White House, a tweet that said, "Investing in American quantum leadership like never before. President Donald Trump signs executive orders on quantum, supercharging a national effort in innovation in quantum technologies, ensuring national security, and continuing American growth in a critical industry." Yes, correct. Full points.

Let's listen to this clip right now. >> Quantum Technologies represents the next generation of innovation across computing, sensing, and networking with enormous significance for our country's economic growth, scientific research, and cyber security. It's really a big deal that we're doing today and country is doing really well. As you know, in 2018, I signed the National Quantum Initiative Act into law, which led to doubling the federal government investment in quantum research and development. I think you all know about that. That helped unleash billions of dollars of private investment in America's quantum industrial base, promoting significant scientific and technological progress, like progress

like we've never seen before. Actually, we want to keep that positive momentum going in America with the orders that I'm signing today. And these will really have a I think place it a big step forward. We're already the leader by a lot and we're going to be now the leader by a lot more. >> Great job. Love it. Taking it seriously. That was a serious clip. Uh sorry, Ryan. I have one more clip that I want to play. This is a hilarious clip. And we're going to be investing in American quantum leadership like never before to stay ahead of the pack. We're way ahead right now. We'll keep it that way. The second order I'm signing directs federal agency to transition to what is called quantum

cryptography. Do anyone know what that is? >> Does anyone know what that is? >> Very soon. So, you're going to find it. >> Quantum cryptography. >> Cryptography. >> That's amazing. >> Does anyone know what that is? That's great. Well, uh, we know a little bit of what it is. Um, been talking about it on bank list for the past couple years. >> Just a little bit. Okay. Let me let me summarize everything in the executive order. >> Yeah. What's in this thing? >> Okay. So, uh, we are migrating the timeline forward for being quantum secure by four years from 2035 to 2031.

That's great. That's all agencies have to have quantum resistant crypto >> cryptograph >> cryptography algorithms by 20 uh 31 rather than 2035. That's a massive in like that's almost like that's like a 40% >> increase forward in timelines here. Uh we're also going to build a quantum computer. And so the the executive order establishes the quantum computer for application development and discovery science. And we are we the United States of America are aiming to build a powerful quantum computer for scientific discovery with a planned deployment at the Department of Energy facility and potential access for the broader scientific community. Reporting points

to a target mean a target targeting a meaningful capacity by 2028. By 2028, the United States government is going to have a crypto cryptography relevant quantum computer for for scientific discovery. Yeah. Um I think this is a really big deal. This is the US saying this is a a national priority. They're going to invest in it. I'm sure they are getting the tip off from the um the leading frontier labs in quantum in the US and and maybe and US allied uh countries like Google I'm sure is just being like hey we're making huge progress on this and this is all a national defense type thing because like imagine all the communications that that could be tapped into and hacked if

somebody had a a quantum computer. I mean, the US absolutely has to beat China to this in order to maintain its it kind of position in the world and and not to be a national security risk. >> But this is moving faster than I think anyone thought. Remember Justin Drake uh put out that post in March um 20 well in March of this year and he said that what did he give it a 10% chance by 2030. >> Is that it? >> Y >> that we would have quantum. >> Uhhuh. I now put the odds of Qday by 2032 at 50%. 10% by 2030 and um I I would expect his estimates have even like increased have fallen back

>> um you know since then. So this is happening very fast. Not sure that Bitcoin will be able to >> to make it in time. It's even unclear that Ethereum will be able to make it. >> Well, I mean the >> they'll figure it out. It just could be really bumpy if this happens within the next five to six years. >> Yeah, Bitcoin is not ready. They're they're just so not ready. Even like even Ethereum has so much to do. >> It's a lot of work. >> We have a lot to do between now and then. I mean, at least Ethereum's taking it seriously, but man, dude.

>> Yeah. Yeah. Um, let's finish with this, David. This Do you see the Illinois governor? You did see this. >> I did see this. I was talking about I saved it for you. >> Okay. This is a a 0.2% crypto transaction t uh tax on everything. This was signed by the governor of Illinois on June 16th. So, it's already signed. It's a law that has passed now. >> Wow. >> It's going to it's not effective yet. So, it's effective January 1st, 2027. So, within 6 months, it's going to be effective. And this is in play for anyone in Illinois. It's the first statewide transaction tax of its kind.

It is called the digital asset privilege. The digital asset privilege tax act. So implying that if you have digital assets, you are a privileged individual. And what it's doing is this is not a capital gains tax. >> What an assumption. >> I don't feel very privileged right now. >> This is not a profits t uh tax. This is a tax on movement. So, if you do anything to move your crypto assets from one place to another, there's a tax on it. 0.2%. Is the tax. There's a tax for uh keeping it in custody. 0.2%. Just like touching your crypto, there's a 0.2% chance. Uh tax, not for stocks, not for bonds, not for Bitcoin. It's unclear whether moving

crypto assets from a self-custodial account that you hold to another self-custodial account that that you hold also incurs this tax. It could the language is unclear and vague. And all of this happens in Illinois like place like Chicago. What if you're a listener bankless listener in Chicago? Like how livid are you right now? >> Do you just have to like go and drive over the state boundary? >> What's a state that's next to Illinois? >> No, I'm sure it's a residency type thing. Yeah. So, you'd have to like move to Florida for 6 months.

>> It's got to be illegal. >> It's state tax. It passed. It's It's law. >> It doesn't doesn't feel right. >> I mean, I think it will be challenged. So, a repeal bill was introduced within days. >> Um, I think it could be challenged in the court system, but for now, it's a law that's going into effect uh January 1st, 2027. And it's the worst tax I I've ever heard of. >> Un. It's just so confounding. It's just like that just in nukes everything. >> Yeah. Yeah. Um let's end with this. We haven't talked about this in a while, but David, I know you are buying some things in crypto. I don't know if you're bottom ticking anything right now. Um what's your portfolio looking like?

>> I I have a portfolio of hype, VVV, near and Zcash, which is like kind of like it's very trendy. It's very trendy. I will say like people were harping on me for like hopping on the trend. when I tweeted that like I I tweeted this one thing people I was like after I sold all my ETH I I bought those four things and then and then in the tweet I said and now I'm buying lit but people are like oh David bought Zcash all all of those positions I will say are in the green other than Zcash yes still >> wow >> still yes that's correct yeah lit is >> in the green relative to ETH >> no dollars dude >> okay yeah Zcash I bought it like 550 near 80 or something. So, that one's

kind of down bad. Uh, but like near near is still up and and oh no, Venice might not be up anymore. Venice might be down. Venice might be down. Um, anyways, Lit Lit is the token that I'm the most concentrated in. Uh, just because like it seems so damn cheap to me. You know, lit lighter, >> of course. Yeah, I I think it's a great founding team. It's uh basically an Ethereum app. You can think of it that way. Um, per huge. The question is it's like such a power law winning game, right, with hyperlquid like there could be a world where >> because how many exchanges have there been that are worth many billions of dollars?

>> Yeah, Coinbase, you know, um >> it's an exchange business. So, it is a DEX. It's a ZK layer 2 on Ethereum that is a DEX, a perp dex. It's got spot. It's got per. But like it's going to it's it's competing is trying to compete with the biggest exchanges out there. Not just Hyperlid, but also Coinbase and like Binance and OKX. And it just wants to have its like internal operations be ZK Circuits on an Ethereum layer 2. >> Yeah, I could see it. I mean, the architecture makes sense. The team is fantastic. It's can they can they uh run faster than some of the big competitors they're they're trying to execute against. Right. And did you know Vlad the founder is like on the CFTC like board of adviserss or something?

>> That's cool. Very cool. I mean >> he's in the right spots. So that's my most concentrated bet. >> Yeah. Well, are you thinking about anything else or you just wait and see? Right now >> everything else is in is in the stock market. I'll say buying lighter has been the first time my money has flown from the stock market to crypto in a long time. Usually it's been going the other way. >> Yay. >> Yeah. >> Sign of the times. I think Am I eyeing anything else? I don't think I'm eyeing anything else. >> Yeah, I uh I think it's an interesting time for the market. I think that um I'm probably pretty convinced that we'll bottom sometime in the second half of this year and that'll be a great time to buy all sorts of things.

>> By what? By what? >> Still I'm still trying to decide. I mean certainly certainly store value assets will have a comeback. The >> major I'm still you know I still think ETH could have a could have a run. I understand some people don't think that >> apps in crypto big deal. >> I mean, say what you will about ETH, it is at a discount. >> Yeah. >> Yeah. I think everyone will say that. >> It is 30% below 35% below the 200E moving average. So like it's a deal. >> Probably.

>> It could be. It could be. Could very well be. >> Could be a deal. It could be a deal. >> And it could still go down a little bit more before it goes up. But I think we're close to the bottom now. We just >> bottom still waiting for bankization. That is it for this week. Uh Ryan will be back next week. He is not going on another vacation. He'll be back back in pocket. Uh until then though, crypto is risky. You can lose what you put in. But we are headed west. This frontier is not for everyone. We are glad you're with us on the bike journey. Thanks a lot.