0:00 Scott Melker
Michael Saylor’s Bitcoin buying machine has sputtered as they aggressively adds to their cash reserve. Meanwhile, the company that owns the New York Stock Exchange is teaming up with a crypto exchange OKX to bring tokenized stocks to 120 million people.
0:23 Scott Melker
And we have announcements from Franklin Templeton and Morgan Stanley. We got a lot to talk about today on the Daily Wolf. Let’s go.
0:39 Scott Melker
What is up everybody? Welcome to the Daily Wolf on Yahoo Finance. I am your host, Scott Melker, also known as the Wolf of All Streets. Now we’re coming out
0:52 Scott Melker
of a very busy weekend, specifically in the macro. Of course, we had a number of Iran headlines, but we’re not going to focus on those today because as you know, we try to separate the signal from the noise and right now, any headline coming out of the war seems to be noise. But what is not noise is deeply analyzing every single week what is happening with one Michael
1:14 Scott Melker
Saylor. So here’s the headline as we get every Monday morning.
1:21 Scott Melker
Strategy added 35 million in Bitcoin, 300 million in cash reserves last week. The boost to cash reserves is meant to reassure investors about dividend payments on the company’s hard hit preferred shares STRC. So yes, I know that we constantly harp on what is happening here with strategy, but there’s a reason because it is the main narrative right now in the market.
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and just Friday, we talked about the worst day in digital credit history where we saw the massive liquidation event across both CEDA and STRC with STRC trading as low as $82. Now, as you know, STRC is supposed to trade around $100.
2:05 Scott Melker
It’s still trading well below par today and as long as it’s trading down below 100, it is effectively turned off as far as being able to buy Bitcoin. In fact, they are shutting down the ATM temporarily and not even issuing more shares while it’s trading below par.
2:27 Scott Melker
So they bought 520 Bitcoin this week, $34.9 million at an average of 67,068. Shockingly, once again, that’s probably the highest price that Bitcoin really traded at this week.
2:44 Scott Melker
They seemed to top take the market. Saylor himself jokes about the fact that he’ll be buying the top forever. That seems to be what happened here. The bigger story is that their cash reserve is back up to 1.4 billion. It was at 1.1 billion last week after going as low as around 100 million after they paid 800 million after they paid off that convertible
3:03 Scott Melker
note that caused this massive scare that we’ve been watching. So, listen, the only way right now that Michael Saylor seemingly has to buy Bitcoin and add to the cash reserve is to sell off Microstrategy stock, which is obviously dilutive, at least temporarily to strategy shareholders. The market is not loving that. They want to see some massive buys and not these small ones. That said,
3:28 Scott Melker
I think if this S, if this uh cash fund gets back up to two, 3 billion over the next few weeks and Bitcoin even slightly rises, this is going to be a narrative of the past. I think another interesting narrative to add to this is that rival Strive, who I’ve been telling you about with their very attractive product, CEDA, they bought 750 uh nine Bitcoin this week. So they actually bought more Bitcoin this week than strategy was able to buy.
3:58 Scott Melker
So we could see a bit of a transition here from strategy to strive. That has certainly been the trend of late. We’re going to see over the next few weeks
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what happens with strategy’s Bitcoin buying machine, but right now, clearly, temporarily, it is sputtering a bit. Now,
4:15 Scott Melker
The next story to me is not going to be the one that grabs the largest headlines, but is arguably the biggest.
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Let me show it to you here. Intercontinental Exchange and OKX establish joint venture to bridge traditional and digital asset markets. So what they announced today was Ice, which is the parent excha uh parent company of course of the New York Stock Exchange and others. They formed a 50/50 joint venture to build infrastructure for tokenized and digitally native financial products.
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Now, why is this interesting?
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So, first of all, they uh did a deal where Nize or Ice, the parent of Nize uh got a board seat and invested in OKX last March. We know that Andrew Cuomo has been working with OKX uh to help with the regulatory and legislative environment.
5:14 Scott Melker
And now this is the huge announcement. And and once again, this is the reason. So, we’ve seen a lot of crypto exchanges and OKX is one of the largest on the planet. But we’ve seen a lot of crypto exchanges building products out to attract a new non crypto native audience. Last week we told you about how Coinbase was adding 11 products or so, 9, 10, 11 products all at once to be the everything app.
5:35 Scott Melker
And we’ve seen a lot of products coming from Wall Street that are trying to bring some Bitcoin into their existing customer’s portfolios, right? But this is the first major example where I can see an entity as large as the New York Stock Exchange and Ice, which is arguably the largest entity and institution of its kind,
5:58 Scott Melker
directly trying to create something for a huge swath of crypto native users. OKX has 120 million customers and this is going to bring all of those tokenized products from Wall Street directly to those people.
6:18 Scott Melker
That’s why I think that this is so massive and so different. It’ll operate as a US uh registered broker dealer and FCM. And so now those 120 million customers from OKX and those people are primarily all around the world. Of course, many of them are US users, but all over the world to access directly tokenized offerings from the New York Stock Exchange. So,
6:40 Scott Melker
this is a completely different direction, a completely different approach, and arguably the one that, in my opinion, is going to have the largest impact on our actual industry.
6:55 Scott Melker
Now I told you about how this isn’t just coming in one direction. We also have, of course, the incumbents creating new products to try to give exposure to Bitcoin and crypto in different ways to their existing customer base. We’ve got two stories about that right now, but the first is this one. Franklin Templeton files first Bitcoin dividend ETFs. Stock income buys Bitcoin automatically. So these are called DRIP ETFs, D R
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I P. Now, this is an existing structure that’s been around for a very long time. It’s uh dividend uh reinvestment uh which is what DRIP is, right? And so what this is going to do and they’ve filed two of them, is effectively, you’ll have a basket or an index within the ETF and those of them that have dividends, that dividend will be directly used to purchase Bitcoin into that fund.
7:51 Scott Melker
So it’ll be 95% equities, 5% Bitcoin and this is targeted to launch in September. So, this is as I said, not a new product in that there are plenty of these drip ETFs that redirect the dividends back into the asset. So basically, you know, if you have a dividend uh yielding stock, uh you get that dividend and the ETF automatically uses that dividend to buy more of that stock.
8:22 Scott Melker
But this is the first time that it’s being used to buy Bitcoin. And this is once again a new and novel product for us that they already exist in the market is an extremely popular. And it shows the maturation of products around Bitcoin and crypto. So, I think that this is absolutely going to be huge. I mean, Franklin Templeton, I believe has 1.3, 1.4 trillion assets under management and will be continuing to aggressively pitch these new products to their customer base.
8:56 Scott Melker
I think it’s absolutely huge.
8:58 Scott Melker
On the other side, we have another huge uh entity which is Morgan Stanley. Now Morgan Stanley targets crypto ETF fee crown while Franklin Templeton wants your stock dividends buying Bitcoin. So this is the second half of somewhat of the same story, which is more products being offered to retail in the United States around crypto and Bitcoin. Now, what they’re doing here,
9:22 Scott Melker
We saw when Morgan Stanley came into the ETF race a few months ago. I reported on it widely. You can go back and watch those shows. But what was interesting there is that Morgan Stanley generally doesn’t issue ETFs, but they had the opportunity to enter a very crowded Bitcoin spot ETF space with their own ETF and their sales force of 15 to 16,000 advisors out there pitching it. Why give the fees to Black Rock when you can create your own product and capture those fees themselves?
9:46 Scott Melker
But it wasn’t just about themselves because they came in with the lowest fee product in the market at 14 bips. That is an exceptionally cheap product. It undercut all the existing Bitcoin spot ETFs.
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And so that was a huge story because it meant that they were also clearly intending to try to compete in the retail space. Now, they’re coming in now, this announcement is they’ve amended their filings for their upcoming Ethereum ETF and their upcoming Solana ETF,
10:28 Scott Melker
both with 14 bip products. So this is the same uh sort of playbook that they recently took with Bitcoin that they’re now taking with Ethereum and Solana. They will come in as the cheapest. Uh I believe Eric Eric Bachunis from Bloomberg ETF said that this was going to be the cheapest offerings in the market that he’s effectively ever seen.
10:53 Scott Melker
I mean, Wall Street basically spent 10 years calling crypto rat poison. Now they’re in a price war war over who gets to serve you that rat poison, right? It’s really a just massive change in the way that our industry is viewed and the biggest institutions on the planet are all coming through with a big plan for how to approach it. Now,
11:10 Scott Melker
The next story really leans on two stories that I told you last week. So we have Bank of England soften stable coin rules in final policy draft. So now, you remember last week we had America putting a surveillance camera on on stablecoins, all the big uh regulators and agencies saying that they wanted full KYC and AML on every stable coin. Of course, I told you the story about how
11:32 Scott Melker
Europe, specifically Greece and Lagarde effectively blocked Binance from getting approval and that was a stable coin story as well. Well, now we have a third approach, which is the Bank of England, which was historically the most contentious for stable coins, completely softening their stance and reversing and going the other direction. I mean, the only thing that uh everybody can agree about on stable coins is that they can’t agree on how to approach stable coins.
12:02 Scott Melker
Right? But so you now have basically these different regimes. And as I said, the Bank of England was the worst. So when they originally floated their idea for Sterling backed stable coins. That’s important. These are not dollar backed stable coins, for Sterling backed stable coins, they proposed that an individual would only be able to hold 20,000 pounds worth of stable coins and a business could only have 10 million. It sent the crypto world into a frenzy. Now, of course, almost all
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stable coins are dollar backed, very few are Sterling, but what happened here is that people started to say they were going to go to other places to mint stable coins and the Bank of England and the pound would be completely left out. They can’t have that happening. So what they’ve floated now is a 40 billion pound cap on the issuer instead of targeting the individual. This is a complete and utter reversal and it lends to the story that Lagarde was telling in Europe
12:59 Scott Melker
about their fear of dollar stable coins coming in and eating their lunch. I’ve told you stories like this actually for months now about how a number of governments are fearful of stable coins because why would you use your inferior currency if you are a retail investor in any country, if you can get access to dollars, which is what everybody wants. Well, I’m not sure they can stop this hyper dollarization through stable coins, but they’re certainly going to try and that’s really what the story
13:30 Scott Melker
here is from the Bank of England. What they’re trying to do is make it more popular for somebody to create sterling backed stable coins instead of dollar backed stable coins because they need to somehow compete. But I find it very interesting that the United States has been leading with the genius legislation, but now is calling for higher surveillance.
13:54 Scott Melker
And I told you how they’re already doing that through both private companies and through the government having full transparency into your uh into your transactions. Of course, Europe being very contentious now for stable coins and England trying to open the doors. Now,
14:14 Scott Melker
the final story is a string of stories and it’s a story I hate telling, but here we are. We had one of the worst weekends uh I can recall, not in size, but just in number of hacks and events across Defy and across crypto. This seems to be a theme that will not die. Now the first was a Microsoft report
14:38 Scott Melker
that they found malware that hijacks crypto wallets and spreads through USB sticks. USB sticks. right? I mean we’re in the age of super intelligence of AI, talking about quantum threats, and apparently what’s coming for your Bitcoin is a USB stick. Right? I mean we declared this technology obsolete in 2012. I’m not sure the last time I’ve even put one into my computer and your crypto can survive a 50% drawdown in bear market, but it can’t survive Greg from accounting plugging in a mystery thumb drive into his laptop in the parking lot.
15:13 Scott Melker
Right? So we don’t know if this has actually been used at all, but it has been, it has been highlighted as a potential risk. The malware is definitely out there and when people plug it in, it effectively infects the computer. You think you’re sending a transaction to a friend and instead you’re sending it to a hacker. Well, that’s not the only story. We’ve got Ethereum MEV King Jared from Subway, had a massive 50 million exploit. This is ironic because this guy was basically stealing money using MEV bots and then got hacked himself for $50 million.
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Secret network bridge exploited for 4.7 million with infinite mint bug. and of course Tyco halts its Ethereum layer 2 network after a bridge exploit, token dive. Never even heard of that.
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Once again, I do this all day every day and these protocols that keep getting exploited are things I have never even heard of or paid attention to it. So, we have a hacking problem. Luckily, uh, right now, it’s not the big mainstream names that are getting hacked. I mean, that’s really all we’ve got today. It’s interesting to see the approach towards stable coins from uh all these different countries and continents.
16:16 Scott Melker
And of course, interesting to see how institutions are now trying to grab their piece of the crypto pie. We’ll be talking about it all week. That’s all I got for you today. I’ll see you back tomorrow on the next Daily Wolf. Peace.
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