Transcript 0:00 [on-hold music] Welcome back to Bitcoin Season Two. 0:15 The market has dumped, and only Bitcoin seems to have survived. 0:21 Crypto broadly lost half a trillion dollars over the weekend as Trump, uh, announced, uh, a trade war or s- or what looks to be trade tensions rising with Canada spe-spe-specifically, but then tariffs kind of everywhere you look. 0:38 Um, ETH, BTC now record lows in modern memory. It is a bloodbath out there. But, um, we're gonna talk about a few things. 0:48 I have, uh, the head of Alpha Strategies, Jeff Park from Bitwise, um, with a very interesting thought piece this morning. 0:57 And then I'll also touch on, so the carnage in the market and the mempool, the Bitcoin mempool has cleared. This is the weekly roundup, the more metrics-heavy episode of Bitcoin Season Two. 1:09 This is live-streamed around noon on Monday. Thanks for c- uh, hanging in. I will get into the metrics in just a moment. 1:17 Hey, this is Will with Blockspace Media, and I don't know if you heard, but we just announced the second edition of our conference series, OpNext, now to be held at the MicroStrategy HQ in Tysons, Virginia. That's right. 1:30 After the success of our first scaling conference at Fidelity last fall, we're doing it again this spring, April eleventh and twelfth, at the MicroStrategy HQ. I'm really excited for the programming. 1:40 We have various stakeholders, industry, developers, and Bitcoin miners present. 1:45 So join us in April for open, neutral, and honest conversation about the leading proposals and technical solutions that will scale Bitcoin to the next billion users. 1:55 No booths, no tokens, no shills, just Bitcoin and honest conversation. You can find tickets and more information at opnext.dev or click below in the show notes. Yeah, that's right. 2:10 We are doing a conference in April at the MicroStrategy HQ. More info at opnext.dev as the reel sh- uh, said. Um, again, this is a more metrics-heavy episode. 2:22 I pull out some charts and graphs for maybe five or ten minutes at the top, and then I get into, um, what I think is the topic of the day, which is, is this trade war [chuckles] actually bullish for Bitcoin? 2:32 I know everybody's trying to, like, spin it their own way, but I do have an interesting thought on that. But if you're listening, I'll try to describe the charts. 2:40 Um, and the first thing I'm gonna do is pull up mempool.space. Again, it's our favorite explorer. Uh, Blockspace is a, uh, uh, one of the leading sponsors this year of mempool.space. 2:52 And we can see here on mempool.space that fees on Bitcoin are low. Again, single sats for vByte, two to four sats for vByte. 3:01 And what the momentous thing happened, which was what everybody was wondering over the past, uh, two years, is, um, are mempools going to clear? And the answer is yes. In fact, 3:16 um, around, I believe it was Saturday morning, February first and second were when we saw the mempool start to clear. 3:25 I think it was Friday, actually, uh, Friday and Saturday, we saw, um, basically tran-transactions fully get cleared out from all of the mempools around, uh, all the Bitcoin nodes, which basically means that if you were to send a transaction, you could send it for the lowest fee rate, and it would almost certainly be included in the next block. 3:42 If we zoom really far out and we look at the past, 3:47 uh, four, basically ten years of Bitcoin, we can see that, um, Bitcoin transaction activity was really, really low from twenty twenty-one till twenty twenty-three, and then ordinals happened. 3:58 And obviously, I've covered that story beat for beat. 4:01 But the last time we saw mempools clear out really ever, um, in, in this particular bull cycle was at the, uh, end of February, early March of twenty twenty-three, like a month after ordinals came out. 4:16 So it's been a really long time. It's been two years, pretty much, since we saw this event happen. What comes next? Well, um, you know, if you're a user, you enjoy the low fees. 4:26 If you want Bitcoin to succeed, you might be more anxious, uh, saying that, "Wow, this network's sixteen years old, and you still regularly have little to no transaction activity." 4:37 Um, I tend to be, uh, the, the longer we go, the more I feel that latter, uh, view. So, um, otherwise, 4:48 um, let's take a look at ETH BTC, which hit its lowest ratio since, uh, March of twenty twenty-one. ETH BTC crashed down to point zero two three-ish, 5:07 um, which basically means that, uh, the ratio of Ethereum to Bitcoin is at the lowest it's been in a long time. 5:14 And if you've been in crypto for a long time, you've seen Ethereum, uh, this narrative of the flippening happening. 5:19 That is someday one ETH will be large- bigger than one Bitcoin, or maybe this references, um, uh, the total market cap of the two. But regardless, uh, Bitcoin has been, uh, going up faster than ETH. 5:32 And in fact, Ethereum in real terms has actually, uh, been pretty lackluster and been going down. We saw this happen in the broader crypto markets too. 5:42 The Bitcoin dominance, uh, metric, uh, is the highest it's been since March of twenty twenty-one. 5:49 Um, Bitcoin hit a peak dominance of sixty-four percent, currently sits at sixty-one percent, and basically an unrelenting upwards, uh, dominance across all-- the entire crypto market since, uh, September of twenty twenty-two, kind of like the, you know, one of the, the peak bear market, uh, moments before FTX.So this basically means that altcoins have not really had their time in the sun yet. 6:14 Yes, there's been some like darling stories of the altcoin market and there's the meme coin super cycle. I've covered all these. 6:21 But Bitcoin is continues to be unrelenting, uh, you know, appreciating in comparison to the broader crypto market. Let's get into some other metrics. 6:30 I think there are some interesting things that I've seen, uh, in ordinals specifically, which I'll point out, which I don't think a lot of people have. So, um, 6:40 uh, we are actually seeing, um, a pretty active inscription market. I know, right? You're thinking ordinals are dead, right? 6:48 Well, um, we're actually seeing, um, uh, maybe about 100,000 inscriptions per month on average right now. These are mostly BRC20s. Uh, so I'm sorry, not per month, per day. 7:04 We're looking at about 100,000 inscriptions per day right now. Um, this is after inscriptions kind of fell off a cliff after the runes launch or the halving last April. 7:14 But now we're looking at, um, you know, anywhere from the lows we've had in a single day, I think it was like, um, something like, like 50,000 inscriptions, but now we're averaging like, um, 7:27 uh, like 80 to 90,000 inscriptions per day. This is pretty remarkable. This represents to me, I think a pretty like active, uh, inscription market. Now these are almost entirely BRC20. So this is still mainly, uh, Asia 7:43 activity inscribers in Asia, mainly Chinese mainland based, which are, uh, they are still enjoying, uh, the, this, this goofy old fungible token standard on Bitcoin. Um, 7:58 I want to show one other chart here, and this is the chart that I think may, may surprise a lot of people. Um, so this is the inscription by type. 8:06 So if we look at the types of things that people are inscribing, whether they are images or JPEGs or, um, like generative art, um, and we look at it in comparison to, uh, uh, like BRC20 mints and transfers, 8:20 we can actually see if we filter this, we can actually see that images and other, this is all other inscriptions, which aren't like text, JSON, BRC20 mints, images and other inscription activity has actually been increasing month on month since November. 8:37 And in fact, we are seeing the highest inscription activity, um, since August of 2024. 8:46 So, um, yes, there is this narrative that the market for ordinals is dead, but at the same time, we are seeing that, uh, we, this month, last month, January was the highest inscription activity in, um, over seven months. 9:03 So I think this is important to, to remember. Now, if we look at just images, if we're looking at just things, if we're going to try to filter for just art, 9:12 um, we're looking at again, month on month increase in November and roughly parity, um, with what is the average since August of 2024. Pretty remarkable if you ask me. 9:24 But the secondary markets is where things have gotten absolutely slaughtered. 9:28 Again, the past seven days, Magic Eden, every collection's down, puppets, cats, gnome monks, OMB ninjas, um, RuneStone based angels, whatever, everything down anywhere from seven to 20%. We won't dwell on this much more. 9:43 Skipping over to Genie Data and the runes. Runes market cap now lowest has been, uh, since, uh, since, uh, really in the past year, $785 million. Um, and not a, and most rune tickers are down on the week. 9:59 However, there may be a saving grace and his, his name is Bob Bodily. If you're not familiar, Bob's like a mainstay in the ordinals ecosystem. 10:09 He's a pretty sharp savvy dev, always got a tweet thread on like the latest bridge or the latest technical development. Um, the people love Bob. Well, he has been building a, um, a pump.fun analog, but for runes, 10:24 went public with it, own.fun. I've had a behind the scenes look at this product for a little while now. I think it's pretty, pretty cool. 10:32 I love to see Bob ship something, but basically, uh, it went live as of an hour ago with a cool hype video, you know. Um, 10:49 and, uh, yeah, so it's just basically a pumped up, um, buffer runes. It's built on ICP. I don't think the degens really care what it's built on. They just want the numbers to go up. 10:59 But the differentiating thing is that it, uh, it, it has a similar like bonding bootstrap mechanism to it. Uh, just kind of like pump.fun where you have a, um, you have a, you have a, uh, um, 11:16 uh, a bonding curve, uh, towards the initial early part of a token. And then it, um, once it reaches a certain threshold that is, I believe, uh, 0.211 BTC, some of that supply is sold and directly goes towards an AMM. 11:32 And then the, uh, then the token then operates on an AMM curve. Um, I think it's an interesting kind of, uh, pricing baked into the actual issuance of the token and the early speculation. 11:47 Um, part of the whole like challenge for these newly constructed shit coins has always been, how do you go from the, the twinkle of an idea, the idea of a shit coin to, uh, providing liquidity on, uh, in, in these, uh, either on-chain or chain-like, uh, you know, exchange, uh, marketplaces. 12:08 So own.fun has gotten a lot of attention this past week and some people calling, uh, it the platform and thenBob the savior of Runes. 12:18 Um, we've seen that it did at least kick off to a lot of, uh, interest and a lot of, uh, praise from the degens, and I think it's, uh, really fun to watch. 12:27 Um, I-I'll be paying attention to this, and I will probably have Bob sometime as he works on this platform. I'll probably have him on Bitcoin season two. 12:36 So if this is what it takes to save Runes, that is, if it takes doing Runes on the Internet Computer chain, [chuckles] then maybe that's what we need. I have no idea. We will see where that goes. 12:49 Well, okay, getting into kind of the meat of, uh, what I was w-with this episode, I've titled it about, which is, is the trade war bullish for Bitcoin? Yes. Clickbait. I'm, I'm self-aware of this. 13:03 Um, but I, you know, the boy-- your boy's gotta, like, take an angle or have some content. 13:09 And there was one interesting, uh, tweet from, uh, Jeff Parks, the head of, uh, let me get his title correct, head of Alpha Strategies at Bitwise. They're one of the, like, leading ETFs. 13:23 But there-- and he, he laid out a very, very interesting take on the trade war. Now, I personally will not comment too much on my thoughts on the trade war. 13:33 I'm just gonna tell you what, uh, Jeff, uh, thinks i-in a letter to, like, Bitwise, uh, uh, you know, 13:45 to people who pay attention to Bitwise insights, um, and because I think it is a really interesting, uh, take, and I'm gonna try to... I'll read a little bit about it. 13:54 I'll read some of it, and I'll, I'll break to explain a couple terms in it. So here is the tweet. It's a screenshot. 14:05 Um, so Jeff says, "This is the only thing you need to read about tariffs to understand Bitcoin for twenty twenty-five. This is undoubted-- undoubtedly my highest conviction macro trade for the year. 14:15 Plaza Accord two point O is coming." What is the Plaza Accord? Well, let's just jump to that. 14:22 The Plaza Accord is an agreement signed in the eighties, um, between France, West Germany, Japan, and the UK, and the US, where they basically agreed to depreciate the US dollar in relation to the, those other countries', uh, currencies, the French franc, German mark, Japanese yen, and British 14:42 pound. They would intervene in currency markets. 14:45 Now, to the average person, this might not, like, make a lot of sense, but it was, was very, very significant for global markets, and this gets into a concept called the Triffin dilemma, which I will explain, but let me get into-- Let me read Jeff's, um, comments here. 15:00 He says, "To understand tariffs today, there are two contexts you have to frame the conversation in, one, the curse of the Triffin dilemma, and two, Trump's personal goals. By analyzing both, the end game becomes clear. 15:17 Tariffs might just be a temporary tool, but the permanent conclusion is that Bitcoin is not only going higher but faster." Classic Bitcoin bull, he's, uh, he is. He says, "First, the Triffin dilemma." 15:31 And he explains it a bit here. "The US dollar status as a reserve currency gives the US what is called exorbitant privilege in financial transactions and trade. That has a few implications. 15:42 One, the dollar is structurally overvalued due to its need to be held as reserves by other currencies in a price-inelastic manner. 15:51 And two, the US has to run a persistent trade balance deficit to supply the world with those dollars. And three, the US government therefore can borrow persistently but cheaper than it should be able to. 16:05 The US wants to keep three but rid one and two. How? Enter tariffs." 16:11 So Jeff says the US wants to borrow cheap-cheaper than it should be able to, um, but it does not want, uh, but it also, uh, wants to get rid of the dollar's structural overvaluation, and it wants to stop running a trade deficit. 16:31 So therefore, tariffs might be the answer, according to Jeff. "Recognize that tariffs are an often a temporary negotiation tool to achieve a goal. 16:43 The ultimate goal is to seek a multilateral agreement to weaken the dollar, especially a Plaza Accord two point O. 16:50 One hypothetical way this could happen is that the US would explicitly specify that countries have to reduce their dollar reserves while also requiring them to shift the duration of US Treasuries holding further out. 17:04 In other words, Trump is trying to find a way to implement a YCC, not YCC strategy within the realms of the executive branch." Um, 17:16 so his newly appointed Scott Bessent is on board, recognizing that he was left with a quote, "back of trash by Janet Yellen, whose legacy will have been the near-permanent impairment of the Treasury's ability to manage duration, 17:30 um, exposing the US to the mercy of the whims of refinancing idiotically while interest rates were beginning to rise. The cost to the US taxpayers cannot be understated. 17:41 As a result, the US is charting a path to achieve the holy grail of fiat alchemy, lower dollar and lower yield." Jeff Parks says, "This brings me to my second point. 17:53 I've shared before that Trump's number one goal is to lower the ten-year Treasury rate, the reason being that his own bags depend on it, real estate." So Trump is a real estate tycoon. 18:05 His bags are real estate denominated. "His obsession with Powell cutting short-term rates, then realizing it is not working is the catalyst. 18:14 Never doubt the uncomplicated incentives of the transparently profit-motivated and align yourself next to him."Mark my words, the ten-year is going to go down whatever it takes. 18:27 So with this in mind, Jeff says that the ten-year treasury is gonna go down, Trump wants his real estate bags to go up, and the US as a country has a Triffin dilemma. Jeff says, "The asset to own, therefore, is Bitcoin. 18:43 In a world of weaker dollar and weaker US rates, something broken pundits will tell you is impossible because they can't model statecraft, risk assets in the US will fly through the roof beyond your wildest imagination, for it is likely a giant tax cut will have to accompany the higher costs borne by the loss of comparative advantage. 19:04 The tariff costs, most likely through higher inflation, will be shared by both US and trade partners, but the relative impact will be much heavier on foreigners. 19:14 These countries will have to find a way to fend off their weak growth issues, leading to the stimulating the economy through monetary and fiscal policies that ultimately cause currency debasement. 19:25 The outraged citizens of these countries will experience a mini financial crisis and look for alternatives, and unlike the nineteen seventies when the world was largely offline, today we are not only online, we are on-chain. 19:40 So while both sides of the trade imbalance equation will want Bitcoin for two different reasons, the end result is the same: higher, violently faster, for we at war." To be clear, I think he says trade war. 19:55 "TLDR, you simply have not grasped how amazing a sustained tariff war is going to be for Bitcoin in the long run." That is a doozy of a, uh, write-up from Jeff Park. 20:09 Again, this is the head of alpha trading strategies at Bitwise. Um, he's always got some interesting, uh, comments and topics that I think you should pay, pay attention to. Um, again, his words are not my opinions. 20:24 They're not the opinions of Blockspace. 20:26 I do think it's very interesting because I want to, in Bitcoin Season Two, not just talk about shitcoins like runes, but rather also talk about what's happening against the broader macro backdrop. 20:36 Now, I'm not really a macro guy. 20:37 I don't really follow this t-super closely, but sometimes something jumps out, and I've got to at least j-- uh, like touch on it because I like to identify early trends before other people have, and this to me feels like an early trend. 20:52 Anyway, enough about that. Th-- I'm gonna wrap this up. This is the weekly roundup. We do this every Monday. Make sure to go to opnext.dev. 21:00 That is O-P-N-E-X-T dot D-E-V for more information on our conference at the MicroStrategy headquarters. We already announced our first lineup of speakers, Jamison Lohp, Jeremy Rubin, uh, Hunter, Beast, 21:17 and, um, yeah. So make sure to check that out, um, and otherwise, I will see you online. Make sure to follow our socials and like and subscribe. 21:26 See you all next [upbeat music]
