You may have woke up this morning and seen that all of the charts on your screen were red. Many believing that this is crypto story, but it's actually a Korean stock market and Nasdaq sell off story. We're going to talk about that and a lot of things happening in crypto specific news 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 we've got 15 fast minutes to dive into everything that is moving markets right now. Now,
it's kind of a trap, right? Because we have to talk about the price of Bitcoin on any given day, what's happening with markets, but we all know that if you are a true Bitcoiner and that you believe in its thesis that you basically just zoom out and chill and ignore what's happening on a daily basis. That said, we still do like to cover it, dispel the myths, find the signal in the noise. And right now I've seen a lot of bad takes throughout the day on why Bitcoin is down. It's got to head down into the 50s, it's probably going down to 45. The bear market is just getting started. You've seen all of it.
But what happened today is obviously different. I mean, as you can see here, Bitcoin drops to 62,000 as South Korea's Kospi crashes 10%. Now I've got a how not to invest edition again on Korea here at the end of the show, but you've seen the previous one. There's been extreme volatility in Asian markets of late all surrounding tech. We have SpaceX down bad, we have the Nasdaq selling off and unfortunately, we are in a situation right now
where crypto tends to take the elevator or the escalator down when tech sells off, but doesn't necessarily get the upside when it goes up. So we see in bad moments when the correlations kind of link up, Bitcoin drops alongside all of these other markets, unfortunately. And of course, that means that all coins tend to do uh proportionally worse than even the markets and worse than Bitcoin. And that's what we have been seeing today. So, listen,
a lot of people are wondering what's going to happen with the stock market. If you listen to my other shows, you've seen the bears like Mike Mclone on there every day telling you about what's going to happen as we head into the next great depression. Uh I'm not so hyperbolic or concerned about that, but we do know that if markets do continue to waver, if we continue to get macro news that sends tech down, we are likely to see continued pressure on Bitcoin and crypto markets as a whole. So I don't want to talk too much more about markets specifically because as you know, by the end of the day,
they could look entirely different. So, I've got another story here that's not necessarily a today story, but it's one that I've been tracking and want you to keep on your radar. It's this. Bitmine, that is the Ethereum Treasure Treasury company championed by one Tom Lee, meets eligibility criteria for Russell 1000 inclusion. So, this is interesting because this Friday
is the day when they reshuffle the Russell 1000 and choose which new companies that are eligible will be included. There's a lot of information showing, including Tom Lee's words that this is likely to include Bitmine when it happens after the close on Friday, but we do not have confirmation. That said, they've been on the list. They have reached all eligibility requirements and it's likely to happen. So the big story here obviously,
is that this becomes passive flows for an Ethereum treasury company that owns almost 5% of all of the Ethereum on the planet. They do this semi-annually where they do the reconstitution. And so anyone tracking the new members has to passively buy to include them in that index. So the bull case here, obviously, is a flywheel and Ethereum Treasury, uh they stake their coin, they earn a yield and then if it's bought and we have passive flows, maybe it causes Bitmine and then Ethereum to go up.
But that does not mean that bit that Ethereum is winning right now. Obviously, it is down I believe about 32% year to date while Bitcoin is only down, I think about 11%. So, you know, uh I would temper your expectations on here. That said,
basically, every passive investor who has a retirement account or index funds that include the Russell 1000, which is pretty much everything, will now be buying Ethereum, whether they like it or not. I don't know if they like it. Uh, don't really care because it's a really good narrative for us. And that's what actually matters here. Now, speaking of uh good narratives for us, we got we got this one that ties into my interview recently with Phong Le. So first, let me just show you the headline.
Robinhood's convertible debt play, dilution, risk, growth upside. So what's happening here? The deal is that uh Robinhood has priced $2 billion of 0% convertible senior notes due 2029. zero coupon debt, no interest. This closes in two days on June 25th. So 290 million of this will be used to buy back their own stock. The rest is for growth and acquisitions plus 112 million on capped calls. This was led by Goldman and JP Morgan. So you've probably heard about convertible debt before.
You've probably heard about prefs before, which is not exactly what they're doing here. I want to play for you what Phong Le said because it speaks quite a bit to what's happening with STRC and the way that strategy has uh opened their Bitcoin buying playbook. Let's watch the video.
There's the advantages of digital credit to us, uh the company strategy. There's advantages of digital credit to the purchasers and there's advantages of digital credit to Bitcoin. Uh to us the company, uh we want to be able to raise capital that is non-dilutive uh that also uh does not have maturity and duration risk and preferred capital is actually perfect for that.
Right? I'll give you an example. There's more recently, uh Google last week raised $80 billion of capital and a large portion of that used uh preferred uh capital, in that case convertible. And when you have, you want to invest into something that has a long duration and it's uncertain what the return profiles are, is it one year, two years, three years, four years, IE AI, preferred capital is actually perfect for that.
So this one is not preferred capital, but it's interesting what he laid out about Alphabet following the strategy playbook. Now these convertible notes are not necessarily brand new, but strategy has obviously brought them into the mainstream and made them extremely popular. But what you have here, I mean think about this when we talk about ZIRP and low interest rates, I mean, people are so excited about the prospects of Robinhood's price going up that they're willing to lend Robinhood effectively, $2 billion dollars with uh 0% interest, right?
With that convertible debt for 2029. And the more interesting part is that strategy who as I said, somewhat pioneered uh the new wave of convertible debt, actually is now in hot water for closing their convertible notes with all the cash that they had set aside for STRC. So STRC had this massive cash reserve. Strategy chose to actually close out for 1.3-ish billion dollars, one of their convertible notes that I believe was coming due in 2028.
So kind of the opposite direction because strategy moved on to the preferreds which Phong Lee talks about for Google and Alphabet. So I think that we have uh sort of going in two different directions, but something that was really championed by strategy and the crypto market now become very popular with companies like Alphabet and Robinhood. Now, it's gonna be interesting to see uh how these all play out if they can actually raise the two billion. Seemingly, that's not going to be a problem for them and how it affects their stock.
They were trading down on the announcement but but only slightly. So I don't think it's a big deal. And that carries through a thread to our next story right here. So this is Adam Back's treasury company but Jan3 CEO Samson Mow reveals Bitcoin standard Treasury plans to buy 23,500 Bitcoin. So, why is this interesting and why do we have a consistent thread here?
Well, first of all, we have this treasury company that's going to be voted on to go public on Friday through a Cantor, SPAC, reverse merger, all of the wizardry that we've seen with Bitcoin treasury companies. But this is led by one Adam Back who's definitely not Satoshi Nakamoto, even though every documentary seems to believe that he is Satoshi Nakamoto. Uh so we've been watching this one for quite a while. It's BSTR. So they could potentially go public on Friday.
As we know, they already hold 30,021 Bitcoin, but once again, they're private. The 25,000 of that came from Adam Back himself. He's rich rich. Uh and of course Blockstream and then 5,021 were contributed in kind by early investors. But they have a $1.5 billion pipe, meaning that money is sitting on the sidelines, which could potentially around current prices buy another 23,500 give or take Bitcoin.
And what Samson is kind of lightly pointing out here is that they would be doing that well below Michael Sailor's cost basis at strategy. Now you know, strategy vacillates between a 10, 11, 9 billion dollar uh on paper loss right now. their cost uh basis is up in the 70s. Well, now we have a treasury company coming in, already holds 30,000 Bitcoin, can add 23,500 putting them over 50,000 Bitcoin would make them the second largest treasury company on the planet and their cost basis just by YOLOing all in today or this week would be much lower than strategy's.
So there's another competitor here coming into the market potentially, assuming this vote goes through on Friday could be a public company in the very, very, very near future. Now, as I promised you, I have a little how not to invest segment today. Hit the music.
How Not To Invest. How Not To Invest. Dudududu-da! That fill at the end just gets me every time. Honestly, man, that's not AI, that's me playing the drums. I didn't want to tell you guys, but I'm a drummer and that's me singing as well. So we have How Not To Invest.
Uh, the regulator regrets it is the topic that we have for today. So I obviously opened with Korea's 10% crash. and here's the part that turns it from a bad day into a lesson is that the regulator came flat out and said, uh, approving those leverage ETFs was probably a bad idea. Here you go. Korea Markets Chief regrets allowing single stock leverage ETFs. So like picture the fire marshal, you know, cuts the ribbon on a new fireworks factory.
Then he comes back four years, four weeks later with a clipboard and he's like, it's on fire. Maybe this is a bad idea. Right? So they literally approved these on May 27th. So if you remember our previous How not to Invest segments, uh these were single stock ETFs on Samsung and SK Hynix, which were the two specific assets that retirees were selling their insurance and their savings to yolo into at the top. But they didn't just want to yolo into them.
They wanted that sweet, sweet leverage, right? And so those were just approved by this regulator on May 27th. Well, yesterday, he made a statement, I quote, I personally regret the timing of the approval. And we are seeing a situation where the tail is wagging the dog. Investors gain little while securities firms and liquidity providers earn most of the profits. Now, think about this.
So they just approved these and now you're seeing circuit breakers to the downside on a every few day basis because these people are so over-leveraged that when one of these stocks moves down 12%, which is what happened uh today or I guess it's overnight in Korea yesterday while while we were sleeping, when the market had a circuit breaker and went down 10%, well, if you're 2x and the underlying asset goes down 12%, these people lost 24 or 25% today.
Today. So the regulator approved these and I think it's a cautionary tale because A, the people shouldn't invested them, but the other how not to invest obviously is a regulator shouldn't approve them. But we are seeing a massive wave of approvals of similar leverage ETFs in the United States, especially as the SEC deregulates and gives a wider breath uh and looser rules of the road for what can be approved. And we're even seeing these, of course, on highly volatile alt coins. Now, listen, if you're going to buy a highly volatile asset,
you don't need to do it on leverage. That applies even to Bitcoin, which is the least volatile asset in crypto, but it certainly applies to any altcoin. You do not need leverage. You certainly do not need a leverage wrapper that blows up the entire market, right? Because the way that this works is there, these leverage ETFs are supposed to track the daily volatility of the asset. So they reset every single day.
So they basically increase volatility because they're not open in the off hours and they react to what happens with the price in the rest of the time. This is just disgusting. We don't need leverage ETFs. and even the main regulator who's approving them is saying maybe that was a terrible idea. So we got a lot of stories here. We have an Ethereum Treasury company that could be included in the Russell 1000 giving, you know, millions and millions of investors in the United States exposure to Ethereum, whether they like it or not. We have a big competitor likely coming for strategy and of course, Robinhood mimicking strategy's playbook,
even though strategy is now closing those notes by raising capital through 0% convertible notes. I'm sure that uh the Kospi 10% drop in Korea will be forgettable by tomorrow, but it does offer us a good cautionary tale on how not to invest, how not to invest. See you tomorrow. Peace.