Thousands of bans just teamed up to build their own blockchain

Scott Melker discusses the latest crypto-related headlines, including banks joining forces to build their own blockchain network, Bitcoin’s (BTC-USD) pullback below $78,000, and Strategy’s (MSTR) dollar liquidity approaching its outstanding convertible debt.

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Bitcoin is predictably struggling around 80,000 United States dollars per token while the battle for stable coin supremacy rages on around the world. We’re going to tell you about all of that right now on the Daily Wolf. Let’s go.

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. We’ve got the next 15 minutes to talk about the exciting price of Bitcoin, which of course is now predictably hitting a wall around 80,000. But of course, all the news that is driving markets. We have a lot of stable coin and Central Bank digital currency updates to give you today, which we’ll dive in on the back half half. First, of course, because we are re-entering a bull market in my opinion, we have to talk about what is going on with Bitcoin price. So here’s the first one.

Bitcoin back at $79,000 after 81k rejection. Why did the rally hit a wall? We actually have an amazing live video of Bitcoin price action that we’d like to show you right now.

If you haven’t been watching the Chinese Robot Olympics, I really don’t know what to tell you. I mean, there’s thousands of these videos on the internet giving me great confidence that the technological technological revolution is not in fact here yet and we’re going to just be fine. As human beings. But yeah, which running into wall. Look, why can’t they decelerate?

They can’t decelerate. They just have to run straight into a wall and literally explode. Those are probably expensive robots. I literally can’t. But here you go. So we obviously have Bitcoin jumping up to around 80,000. Crypto greed gauge hits highest since just before October 19 billion wipeout. I am seeing this narrative everywhere and it drives me absolutely nuts. Bitcoin spent a historically long period in fear.

Right? If you were looking at the sentiment index, it was fear, slight spikes out, extreme fear for months at a time, something that had never happened before. We finally exit fear and get into greed for the first time, and you already have the crypto media talking about the October 19 billion wipeout and how this is exactly the same. So take a look back at the crypto fear and greed index then, and you will notice that we were in a raging bull market with Bitcoin going all the way up to 126,000, and much like how we have been in fear here, we had a long sustained period of greed.

and extreme greed. We just got there. This is just the beginning of a sentiment shift, and it is disingenuous to compare it to the top of the entire bull market. Much like RSI can stay overbought for a very long time when things get going, it’s actually a bullish side. So can the greed sentiment in the crypto market remain elevated for a very long time. I think that this is a bullish narrative and not a bearish narrative. We’ve talked endlessly about why price went up. We don’t need to do that anymore.

I would just reiterate that when price goes up 24% in a single week and you see things getting overheated, you can expect a healthy retracement and an opportunity hopefully to buy some dips, right? Your leverage builds back up and that has to get flushed and then you go hit the key levels. At this point, the most important level on the chart is the 50 MA on the weekly, which is exactly where this move tapped. It’s only August, people. If we are in fact moving into a new bull market, we have lots of time still to participate because price would be going much, much higher.

Now, it’s Wednesday, so I know it’s weird that I’m going to talk about Saylor and strategy. We usually do it on Monday. Strategy cuts net leverage near zero as cash nearly matches convertible debt. The Bitcoin Treasury company has built nearly four years of preferred dividend coverage while continuing to repurchase STRC below par. So, listen, this is a follow-up on what happened Monday because there’s more data and the narrative has slightly shifted because I was not aware that they had effectively gotten to a point now where there’s zero net net leverage.

So, just to give you some numbers. Strategy now holds 6.69 billion in dollar liquidity. Of course, 5.1 of that is in its designated USD reserve which can be used for paying off uh dividends and expenses. And then the new reserve of 1.59 billion in flexible USD cash. So that now puts it at uh almost 6.75 billion of convertible debt with 6.69 billion in dollar liquidity. So those almost match, meaning there’s effectively no net leverage here.

So they calculate their net leverage by subtracting their dollar assets from their debt and dividing the remainder by the value of their Bitcoin. So we know that this new fund that they’ve raised, the flexible cash can be used to buy Bitcoin, repay converts, repurchase repurchase MSTR and preferred shares. So, what’s interesting here is that they can now effectively start to pay off those converts again. A lot of people looked at this dry powder they were raising as a likely war chest for buying Bitcoin.

That was the knee-jerk reaction. That’s what I initially thought too. But as I think more about it, they probably want to close out those old obligations, get them entirely off the books and simplify this financial structure that they have. Now you can look at Strive, right, which is a smaller competitor to strategy. They have SETA, which is their STRC competitor, which is already trading back at par of $100. Now last I spoke to their CEO Matt Cole, he made it very clear that they had cleared all their debt obligations, all their convertible notes, all their other products and were focused solely on SETA as their machine for buying Bitcoin.

You have to think that Saylor saw that, realizes that his structure is extremely complex and would like to clear some of that out and simplify this for investors. So, maybe that is the reason that they’re continuing to raise so much cash in this environment, why they had to sell Bitcoin unfortunately lower will end up I’m sure buying it much higher. It happens. But what they’re probably doing now is really shoring up the balance sheet, getting rid of the old debt. They have all these other preferreds, STRK, STRD that are all also trading below par. Why not clean all of that up? Get it to a point where it’s basically just MSTR, STRC, and of course the Bitcoin buying and selling machine.

I don’t know if that’s possible, if that’s where they’re headed, but right now, Michael Saylor instead of stockpiling Bitcoin clearly has changed strategies to stockpiling cash. They saw Strive with no leverage, with no debt, just using this one product. It makes a hell of a lot of sense for them to become closer to that themselves. Now, moving into the other narrative from the top of the show, which was stable coin, supremacy, the fight continues and it’s continuing all over the world.

But right now, the fight is heating up in the United States. Here is the big story that just broke. US State Banking Associations plan to launch their own nationwide blockchain network. The Bankchain Alliance, they literally just went ahead and called it Bankchain. Bankchain. is aiming for a 2027 launch and would foster stable coins, payments and tokenized deposits inside the banking system’s regulatory sphere. So this is not a small thing. This is 39 state banking associations have joined the Bankchain Alliance, which sounds like something evil out of Star Wars.

But the goal is a nationwide bank owned blockchain launching in 2027. So this represents thousands of community and regional banks that do not want tokenized finance controlled entirely by crypto companies or mega banks. That is the interesting part right here. So they haven’t even selected a technology partner. We don’t know what chain it’s going to be on. We don’t know if it’ll be a closed system, whether it be interoperable or not, although they’ve said that they would like for it to be interoperable with other chains.

This is really interesting because they’re effectively in their mind, I think they’re wrong, but they’re getting squeezed, right? You have the USDC and circle of the world who have private stable coins, they’re absolutely crushing it making tons of money. Then you have the JP Morgans and the large banks who obviously also are major competitors at this point to the regional banking system. And they have their own plans and the regional banks and the local banks, the community banks are stuck in the middle.

Now I had I had on Austin Campbell this morning on my 9:00 a.m. show. You should go back and listen to what he said about this story, because he pointed out the fact that there’s absolutely no data that supports the idea that stable coins will cause deposit flight from the big banks, which has been the major fight that was very highly publicized in December and on about the yield debate for the Clarity Act. Right?

So there’s no evidence of that. But what has been killing over time regional and and community banks is deposit flight to the bigger banks and of course, the fact that people don’t want to go into a bank branch anymore. Right? They’re they’re losing their their losing their customers to SoFi and Robinhood and Coinbase and all the digital apps that are purpose built for the younger generation because that generation does not understand the idea of going to the corner and having a relationship with your teller and getting cash out directly from the guy at the little glass window, right?

So stable coins are actually no threat in any way shape or form to these regional community banks. They’re just misinterpreting what’s actually happening and trying to build a competitive system. But now we’re going to be completely you know, bifurcated is two. Is there a word of are we trifurcated? We’re trifurcated. I feel like I’m trifurcating right now. I just trifurcated. We’re trifurcating.

private banks, big banks and these in the middle. So right, you’ll remember that we reported on a story not that long ago about Open USD, which was a consortium of all the big banks trying to compete. Everybody knows that stable coins are the future of financial infrastructure. There’s just a major battle over who’s going to own those rails and how that will proliferate. Now we have another story along with this. Japan to work on blockchain-based stock settlement system. Details expected early 2027. Japan’s regulator is all over this. They also know that they’re going to have to use blockchain because it’s faster and cheaper and is the future and have their own plans for blockchain adoption, which obviously itself will also include stable coins.

And if you think there’s no more stable coin stories to tell you, I’m sorry, we got a few. Nothing’s more exciting than stable coins. I wake up in the morning, you know, and I’m laying there and I’m like, stable coins, man. Today is going to be great. Next one. Revolut joins global stable coin race with Euro back token because what the world wants is more euros.

Nobody cares. No, they do care. They do care. And what matters here is that actually because of MiCA regulation or Mika regulation, depending who you ask. My European friends say MiCA, so I’m going with Mika. But Mika regulation uh around the European Union is that for Revolut, they were basically forced to delist Tethers. They have USDC taking a huge percentage of their gains, and they have this massive gap from Tether. And so what they can do is launch their own Euro back stable coin and try to use that internally for their customers.

Once again to give credit to Austin who I discussed this with this morning, nobody wants euros anyway. outside of Europe. And they don’t really want them. They’re just forced to use them. Right? So it’s not like this is going to compete with dollar back stable coins, but it is a private company and neo bank launching a stable coin for their customers, which reminds us of Standard Chartered launching the Hong Kong stable coin that I told you about on Monday. And if you think that that’s where the stable coin wars end between community banks and regional banks and private banks and euro banks and American banks, we have the biggest euro bank of all, the ECB claims,

that’s the European Central Bank. claims Digital Euro will offer maximum level of privacy amid surveillance fears. I look at that guy and I think, you know what, I trust him with my privacy. Look at them. The glasses, it’s the glasses. They just reek of trust. Okay, so listen, anyone who’s been in Bitcoin or crypto for a long time, the biggest boogey man and rightfully so is the idea of a CBDC or Central Bank digital currency.

Now, think about it. If you digitize all transactions directly from the central bank, what do you get? You get a Chinese surveillance state. You get the central bank being able to have full visibility into every transaction that you make because it’s on a blockchain and we know that blockchains are transparent. If I want to send my friend $10 uh which I would have given him in cash and I have to do it with a CBDC, the government’s going to know I did that.

They want to take some taxes, they can just take those out of my wallet. They want to drop you a little stimulus. Uh they airdrop that right into your wallet but they tell you, hey, this money is yours but only if you are a good, nice, behaved citizen and if you spend it on Nikes and groceries. The Central Bank digital currency is the most dystopian version of money control that a central bank or government can have and I don’t believe them for one freaking second when they attempt to tell us that these will have a maximum level of privacy.

I do not believe you. and I’m not going for it and I hope that this fails horribly. And now our favorite segment to end the show, how not to invest. Hit it.

Jury convicts Las Vegas business owner of cryptocurrency Ponzi scheme. A federal jury convicted Brent Kovar over the 24 million profit connect scheme, profit connect. At least 400 investors were promised fixed annual returns of 15 to 30%. Here’s the good part. The alleged business used an AI supercomputer to mine crypto and validate transactions. So investors were falsely promised hundreds of millions in reserves, FDIC protection, 100% money back guarantee. This was just a Ponzi scheme taking money from new people to give it to old investors.

If someone promises you 30% because of their AI supercomputer, don’t send them millions of dollars you jackasses. How not to invest. How not to invest. How not, yeah, honestly man, that’s all that I’ve got for you today. Like I we have a how not to invest every day because people are dumb and they do stupid things. Don’t be one of those people. just go ahead and uh buy that sweet Bitcoin. It’s all I got for you today. I’ll see you tomorrow.

Source: finance.yahoo.com