Bitcoin ETFs rake in $1.9 billion

Bitcoin institutional inflows are absolutely exploding right now through ETFs and of course through strategy. The Bitcoin side is looking very, very healthy. Now, on the crypto side, we have some problems. JP Morgan and Jeffries both offering significant warnings about Dfy. We're going to talk about that hack, all the other news in the cycle 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. And as usual, we're going to spend the next 15 minutes digging through a mountain of noise to try to find some signal. Now, there is a lot of noise, but one thing where there's a lot of signal and where there's a lot of smoke, which usually means there's a fire, is prediction markets. Now, yesterday, obviously, I broke down quite a bit of the accusations about insider trading and everything else that's happening in prediction markets that's been problematic, I would say for that industry in general. Well, the gods gave us a massive story surrounding that because it seems that we're not the only ones talking about insider trading. We've got this headline right here, US Special Forces soldier made $400,000 betting on his mission to capture Maduro. Now, I

told you yesterday that somebody had made some insider bets about Maduro and we laid out all of the other insider bets that have been happening around Trump truths and other information that maybe people would have for prediction markets, but this is the first glaring example of somebody actually getting caught and getting in trouble. Now you might ask why this is a crypto story. Well, Polymarket itself was built on crypto rails. And for a very long time, the only way that you can make prediction market bets was utilizing crypto. But in the story we're talking about here, this guy actually, knowing, presumably that what he did was wrong, took his money, sent it to foreign cryptocurrency vaults, and then got caught when he tried to bring it back to a brokerage account that he had just opened in his own name. Now, there's a lot to parse here. Obviously,

I would say your average person who's making a prediction market bet and has a bit of information that they think is an edge, probably has no idea that they're breaking the law. Insider trading rules have long applied to Wall Street, and I would imagine that every person who works at a hedge fund or who is a trader has had the risk management department come down a thousand times and tell them exactly what they can and cannot do. Now, I'm not saying that in the case of this guy, he did not know what he was doing was wrong, but we even have some people on Capitol Hill jumping in with some pretty aggressive takes about how this was handled. We have Congressman Jimmy Patronis here saying, I think this guy should be pardoned.

The DOJ isn't prepared to go after every member of Congress who's profiting off insider trading, then this feels like selective enforcement, not just justice. Of course, he goes on to say that what he did was wrong, but we need to also prosecute all the people acting on insider information everywhere else. So,

This guy should definitely be in trouble. He knew he was do something wrong. He made a lot of money off of it. That money came from other people and he tried to hide it, which basically shows exactly how much guilt he had.

He should not be pardoned just because other people are doing it. The other people should also be prosecuted, which is a huge problem that we have in this country. Obviously, we know that the people in positions of power and the wealthy generally live by a different set of rules than the rest of the population. And that is very, very clear here. We've seen Nancy Pelosi's stock portfolio, right? I mean, she's like the Warren Buffet times 10, the most genius investor of all time. We know that she has profited from insider information and so have countless senators and Congress people on Capitol Hill. So, I don't think there's anything new here or that this guy should not be punished because they are. But we do have actually a very interesting video here from Donald Trump himself being asked about allegations of insider trading around his truths. Here's what he said.

that are being placed as well on the Iran conflict too and there have been some trackings where people suspect that there's insider trading happening on these prediction markets around the war. Are you concerned?

Well, you know, the whole world unfortunately has become somewhat of a casino. And you look at what's going on all over the world in Europe and every place they're doing these betting things. I was never much in favor of it. I don't like it conceptually, but uh, it is what it is.

The real story here is that Donald Trump watches the Daily Wolf. I said that all week, the whole world is a huge casino. I told you why that's such a big problem and what that that is a signal of. But I absolutely agree with the President here. Like, whether he's complicit or not, I have no idea. I think it's outrageous to think that the President himself is trading around his tweets or truths. I think that other people have knowledge of what he's going to say and are making money on them, which is a problem. But he said all the quiet parts out loud. The entire world has become a casino. Everybody is gambling and it's a huge problem. We're going to be watching this story, but I think it is a huge signal that somebody's actually getting in trouble for this and will probably stop a lot of the action just when they see just how hard the hammer of justice comes down on him. Now, another story I mentioned in the intro is the massive inflows that we're seeing into Bitcoin products. You can see some of it right here.

We've got GM from Switzerland, US Spot Bitcoin ETFs have purchased 18,991 Bitcoin over the past five trading days. Checks numbers. That's nine times the new supply in that period. That's not it. BlackRock drive 7-day Bitcoin ETF inflow streak as Bitcoin nears 80,000. US listed spot Bitcoin ETFs recorded a 7-day inflow streak totaling 1.9 billion with a B dollars. Now, we've been talking about these ETF inflows for quite a while. What I find interesting this time is that we have this chicken and an egg debate in the Bitcoin space and markets all the time, which is does price lead inflows or do inflows lead price?

67. I didn't mean to do it. Um, in this case, I think they were having steady inflows regardless of what the price does. And that is a departure from the past. Usually whichever one's leading, they track one another. But we have had up and down days and volatility in Bitcoin price, even though we are once again pushing towards the high in this period. But what we've had is sustained inflows in the background. And I I've told you many times, it's not just the ETFs that are going to keep consuming Bitcoin. We've got this guy. Michael Sailor as Mega Maid. I don't even know if it's funny, but I like it and I'm just going to keep showing it.

I'm going to keep showing it. Spaceballs. It's great. Michael Sailor, buying billions of dollars of Bitcoin almost every single week and those are tracking MSTR, we'll see that it's back up to 99.7, meaning it's just short of par. Once that stock is trading back above 100, he will be buying billions and billions and billions of Bitcoin a week until that premium disappears. So what we have here is we have very transparent, structural buying of Bitcoin on a daily basis that you can see on chain and you can see through institutional flows. Now, the question is, when people run out of Bitcoin to sell, which I've told you is already happening based on supply on chain and what the biggest wallets are doing,

what happens when there is no balance, 67, in in demand and supply. Supply down, demand up, price goes up. I still think that's what's coming for Bitcoin, not financial advice, but I would not be surprised to see this popping up above 80,000 very, very soon. Now I've been talking quite a bit about stable coins and the battle between cryptocurrency companies and the banks surrounding the genius Act and the clarity Act that's coming. Well, now we have a deft move by Morgan Stanley. This is the headline right here.

Morgan Stanley is positioning itself as the reserve manager for the stablecoin industry. So Morgan Stanley is launching effectively a mutual fund called MSNX. Say that 10 times fast. MSNXX, which will act as a Treasury management tool for stable coins. So if you don't know how stable coins work, here's the layman's description. Let's say you're tether or circle, circle with USDC,

every time that you want to create a token, there has to be a dollar to back it. Black Rock in the case of USDC manages that treasury for them. Tether, we don't necessarily know who manages the treasury. And then for Circle, BNY Melon custodies those assets. And every time someone wants to redeem a coin, they sell some of those assets or they take some of the cash on hand and they give those people the money back and that's how the supply of stable coins is basically managed. And they're backed largely by treasuries which are earning a yield, which is how a company like Tether, which only has about 100 employees can make billions and billions and billions of dollars a year, more than Black Rock. Because yields are high and they are getting paid to hold that money.

So what Morgan Stanley is effectively doing here is taking all of that and saying we can be a one- stop shop. We can manage your treasury, we'll have high liquidity, we'll always have cash available for redemptions and for people to create new tokens, and you'll have it all in one centralized place. So, this is interesting because we know that the banks have been fighting against stable coins, but if Morgan Stanley can actually gain traction with something like this behind the scenes,

then they can basically go around all of that and get the control of the plumbing for the stable coins in general. Now, I'm not going to bet that a Circle or a Tether would come and use something like this. They've already got these systems worked out. But if we know that stable coins are going to become commoditized and that every institution is going to have their own stable coin, I would bet that most of them for better or for worse are going to go to Morgan Stanley and offload all the responsi responsibility of Treasury management to them because it's a name that they trust, you know, Morgan Stanley. I think that this is a huge story. I am skeptical as to how much adoption it will get, but it could be could be a very good way for banks to get around all of the stable coin laws that they don't like. Now we just talked about Morgan Stanley, so we got to talk about their cousin, JP Morgan, who I still think should

marry their families together, so we can have JP Morgan Stanley. But the story we have here is back to the hacks I've been telling you about all week and we got a problem, man. JP Morgan issues blunt warning as investors move to safety and it's not just JP Morgan that's issuing blunt warnings. We have Crypto's massive exploit may force big banks to rethink their blockchain plans. Jeffries warns. This is the two of the biggest organizations on the planet. Now, let's not pretend every time we get a headline that says JP Morgan says or Jeffries says, JP Morgan, he's dead.

He didn't say anything. Some guy at JP Morgan said it and some guy at Jeffries among their tens of thousands of employees, he said it. But what they're saying is true to some degree. They're saying that the hacks that we've seen of late that I've explained to you over the past few days on these shows, that those hacks are going to basically put a pause on Wall Street adoption of crypto rails. Jeffries went as far to say that this will stop the adoption of real world assets on chain and it will stop the adoption of tokenization. That is complete and utter nonsense. I'll tell you why. SEC Chairman Paul Atkins said that everything will be tokenized and on crypto rails by the end of 2026. Then the DTCC got a no action letter from the SEC and said that they will be moving to tokenized rails by the end of 2026. They settle 4.5 quadrillion with a Q. I'm not even sure that's a real number. 4.5 quadrillion in volume a year. They basically settle the entire stock market. So this is not going to stop tokenization because tokenizing an asset is better, it's faster, it's cheaper, it eliminates the middleman, things can be settled in real time. That is happening. Where the confusion comes is what can you do with those tokenized assets? Because we know that once something is tokenized and once it's a part of your portfolio, it can be used to earn a yield.

And that's really where the question mark is here. Will they trust defy to go into defy and take those tokenized assets and put them to work and find a way to earn a yield? I agree with them. I don't think that's going to happen. What is probably going to happen sadly is that these large institutions will create their own centralized protocols for earning and lending and borrowing, and they'll keep it inside a walled garden and the general public will not be able to capitalize on that. There's so much more to this story, but I'm going to move on to the scarier part,

which is who's actually hacking these protocols? It's North Korea. Defy faces crisis after Lazarus infiltration claims, Kelp Dow hack may be just the beginning. So we know that the Lazarus group and North Korea uh is behind most of the huge hacks that we've seen in crypto and it's clear that they're finding novel new ways to steal people's assets. Like I said, we've described defy as composable Legos. I take a little bit of here and you go here and this you're into yield and you rehypothecate here and then you move this one here. I'm going to remind you, I used this meme before, it's not Legos, it's Jenga and this guy is North Korea. You're playing Jenga in defy right now with a guy with a flamethrower and an entire national government behind him and it makes it very clear that your assets are not particularly safe. It's scary out there and I have to agree sadly with the banks that defy adoption, especially by institutions is probably going to be

slowing at least until we can prove that these systems are safe. I mean, think about once you let Anthropics Mythos in there, which could barely hack everything at all times. This is only going to get scarier uh and your assets are not particularly protected. So, today we have a few ridiculous stories, of course, but I would like to focus on the most positive one, which is that institutions are absolutely vacuuming up Bitcoin at a historic rate. Eventually, that will translate to much higher prices and to the market going to the moon that crypto enthusiasts are always so excited about. That's it for this week on the Daily Wolf. See you on Monday. Peace.