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Happy Friday!

You know we’re fully back when David and I go back and forth about what to write about this morning. There’s so much going on, but we’ve got some excellent insights to end this week on a high note. 

Before you go off to enjoy your weekend, we’re curious to pick your brain on the likelihood of a strategic bitcoin reserve. After all, it’s all the rage to chat about now. Be sure to vote at the end.

See you early Monday morning.

— K.R.

❓ What backs bitcoin

Long ago, skeptics insisted that bitcoin was worthless because it had no intrinsic value. Times have really changed.

BTC wasn’t backed by anything, they’d say. There’s no revenue, cashflow or profits pooling with a single source, so no reliable framework for figuring how much each coin is worth. To zero, they said!

The correct answer was: Bitcoin doesn’t need to be backed by anything. Bitcoin backs bitcoin. After all, the first coins were sold only for the cost of the energy spent to mine them.

Today, there’s so much more to it. Bitcoin isn’t just powered by its industrialized mining sector. 

There’s now a whole Crypto-Industrial Complex forging a path for bitcoin and the wider crypto space — and it’s worth almost half a trillion dollars.

To be clear, the entire crypto market — as in the actual coins and tokens — has a $3 trillion-plus capitalization. The Crypto-Industrial Complex is a different beast. 

It consists of the most prominent, influential, valuable entities and vehicles in the industry right now: 

Publicly-traded stocks: MicroStrategy, Coinbase, bitcoin miners and ETFs.

Stablecoins: USDT, USDC and USDS (formerly DAI)

DeFi governance: Uniswap and Raydium (DEXs), Aave (lending) and restaking apps (Lido and Jito).

There are, of course, other big players worth including. Perhaps Ethereum giant Consensys, last valued at $7 billion in March 2022. Or Solana Labs and Binance, although the latter would’ve almost certainly taken a meaty hit to its valuation after its run-in with the DOJ.

Not to mention the other funds holding billions in crypto altogether that aren’t ETFs, which don’t show up in this data, like Bitwise’s index fund BITW and the ever-expanding roster of Grayscale trusts.

Still, for many, the Crypto-Industrial Complex as presented here would be the first points of entry into crypto (and, perhaps more critically for this newsletter, their valuations are easily trackable: up 140% year-on-year and 50% above its previous top in 2021).

• Michael Saylor, the bitcoin alpha bull provides the orange pull. 

• Tether, the stablecoin with a compelling history, reveals just how deep the rabbit hole goes. 

• Uniswap, Lido and Aave form the basis for DeFi 101.

• All while the public miners help keep Bitcoin humming.

The Crypto-Industrial Complex is always churning, gobbling up coins much faster than they can be mined and sold.

And here we are, just one more ~10% rally away from $100,000. If it felt unrealistic before, perhaps it’s because the Complex was much smaller than it is today, with fewer players.

Who knows what happens on the other side.

— D.C.

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During this week’s Empire Roundup, Santi brought some sage thoughts for investors who are sidelined as the market picks up momentum. 

With the caveat that he’s not giving out investment advice, Santi said: “I do prescribe to this idea of Stan Druckenmiller, which is buy first, analyze later.”

“If you have an inkling, if you want to pay attention to something, size it appropriately, buy a small amount, so that psychologically you insulate yourself from this paralysis that comes so often when you don't buy something … it eats at you in a way that it paralyzes you and you can't re-underwrite the thesis.”

Santi’s comments were made about DOGE, which is up over 90% in the past week, though it’s down 4% in the past day. 

At this point, Santos doesn’t think the real question is whether investors have missed the move. It’s rather a matter of which larger themes and narratives are playing out. 

Still, if the shackles preventing crypto from another full-blown bull run are off, is now the time? 

But again, we’re not here to offer financial advice, just some insight.

And now you know.

Meanwhile, bitcoin is back at $90,000 this morning. Or, at least, while I’m writing this newsletter. (I hope I don’t jinx it.)

Thursday’s pullback, Galaxy’s Alex Thorn tells me, was “anticipated.”

“Some consolidation below the new $93,000 all-time high is healthy; it clears out recent leverage, creating a more stable foundation for another upward move. $100,000 by year’s end is very possible — or we might even see it within weeks,” he said. 

We saw bitcoin quickly take on fresh price records before falling back slightly, which left one question on my mind: Wen $100,000?

Sounds like, from my chats with folks, Thorn’s thesis about the end of the year is the general consensus.

Brian Rudick, managing director of research at GSR, told me that “new demand takes time to materialize, and will likely occur over the coming months.”

Admittedly, I wondered aloud if we could see holders hit the sell button when we hit six figures, due to how big of a milestone it’ll be. Rudick, however, doesn’t buy it. 

“The possibility of a US strategic bitcoin reserve will likely dampen selling. For example, whereas one may have been happy to let their bitcoin go at $95,000 before, it is now tougher to justify selling at that price when $500k is a real possibility, should the US add it as a reserve asset,” he told me.

Thorn added that the “emerging catalysts, particularly from the Trump transition team, could keep momentum strong, pushing BTC beyond this mark” despite the fact that it’s a “psychological barrier.”

Maybe it’s time to start asking: Wen $500,000?

— K.R.

Last week, we asked: “Should more coins consider rebranding?” 

About half of you replied: “Please no — I already sold the bottom” (feels), while the rest said, “The DAO wants what the DAO wants.”

This week, we’re wondering: