The Fed delivered a hawkish hold. Oil

exploded. The Dow went down and Bitcoin

did nothing, which might actually be

good news. Meanwhile, Robin Hood

reported earnings, and in a big shocker,

they made a lot more money from

prediction markets than they did from

crypto and even from stocks. Those are

just two of the stories we're going to

unpack 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 I am

conveniently camouflaged and blending

into the background. I can see my shirt

and it's basically the same color as the

background. So, I'm going to wear a

different shirt next time. I hope you're

all having a wonderful Thursday. We've

got about 15 minutes right now to dive

into everything happening in the crypto

and macro news and try feudally to make

sense of it. And obviously the big story

of the day. Yesterday we had sock puppet

Kevin Worsh

leading a very boring Fed meeting.

Actually not as boring as the meetings

of the past where we always had

consensus and we knew exactly what

Powell was going to say, but we held our

breath and wondered if he would scratch

his nose or his ear or what color tie he

would wear and how markets would react

to those things. Well, now we basically

get a mute uh Fed chairman who tells us

nothing, no forward guidance and no dot

plots, and we can just guess what he's

thinking. But here we have the Fed's

hawkish hold muddies path for stocks and

bonds. So here's what happened. The Fed

held rates at 3.5 to 3.75%.

Maybe the biggest story is that we used

to get consensus. That's what Pal always

wanted, right? He'd say, "We're all in

agreement. Everybody is voting the Well,

we had three officials dissenting and

they wanted a hike immediately. So,

Worsh also said a few other things that

might have rocked the markets. He said

there is no soft inflation target.

Basically recommitting to the idea that

they want to get inflation down to 2%.

On this news at the time, oil jumped

more than 7%. That likely also has to do

with the conflict in Iran. And the Dow

lost 1,153

points. Treasury yields surged and

Bitcoin just kind of hung out there

around $64,000, which is good news. Now,

I just want to show you a tweet from my

friend Jeff Park over here, who I had on

my morning show last week live from the

Audi Summit. July 31st, 2007 was the day

Bear Sterns liquidated its subprime

mortgage portfolios, marking the

beginning of the great financial crisis

and the eventual birth of Bitcoin.

Today, the 30-year yield passed 5.2%, 2%

the highest level of the year and since

that dramatic event the time for Bitcoin

is near. So the bond market obviously is

saying that uh financial conditions are

tightening here but uh they're certainly

not believing that we're going to get

rate cuts anytime soon. I believe when I

checked this morning the odds of a rate

hike in September were over 70%

on KI. Uh, I think people who think

they're going to hike are probably

smoking crack because you have Donald

Trump saying what a great job Kevin

Worsh is doing and making a comment to

the effect of Kevin knows exactly what

he needs to do. All right, Kevin

going to cut. It's going to cut. Right.

So, listen. I think that we're in this

amazing moment right now where Bitcoin

has largely decoupled. We've heard

narratives over the years that it trades

correlated to tech stocks, that it's

supposed to trade like digital gold. The

fact is markets have been all over the

place and Bitcoin has just been sideway

sideways. Now does that mean that

Bitcoin has suddenly become the safe

haven that we believe it can be?

Absolutely not. That is not evidence of

that. But it is relative strength and

may indicate that there's far fewer

leveraged holders and far fewer nervous

sellers right now than there were in the

market. Maybe they've all already sold

and are not reacting to macro. But it

also lends to my thesis over the last

you know 18 years of Bitcoin's existence

existence 17 years that maybe it's just

an uncorrelated asset and sometimes it

trades like those other things but a

beautifully uncorrelated asset is the

holy grail for any investor's portfolio

and we are seeing that right now. The

problem is sometimes when you have an

uncorrelated asset it doesn't go up when

everything else does but when it goes up

and everything else is going down you're

very very happy to be holding it. So the

next story that we have today is not

necessarily a crypto story, but it

certainly shows you where all the a lot

of the money that was interested in

crypto is. It's an AI. And in this

earnings bonanza that we've had of late,

so we had the FOMC, obviously the Fed

meeting yesterday, but we also had Meta,

Microsoft, Robin Hood reporting

earnings. We have a story about Robin

Hood coming. And then tonight, Coinbase

and Strategy are reporting earnings,

which is interesting. But here you go.

Meta and Microsoft report ballooning AI

expenses. But that's not really the

story. The story is that you had two

companies reporting that both had

massive increases in expenditures in

capex. We know that everybody is

spending tens of billions of dollars

every quarter now and it's only

increasing on AI infrastructure, but the

market effectively rewarded Microsoft's

earnings and punished Meta. Microsoft

was up, Meta was down. So, let me just

tell you the numbers. So, Microsoft had

quarterly revenue of about 90 billion.

Microsoft cloud revenue was 59.3. Azor

growth was 43% and C-pilot now has more

than 30 million paid seats. So they have

future contracted revenue at 678

billion. So the market can see that they

have money that's going to come in while

they had quarterly capital spending of

approximately $ 41 billion in a quarter

on AI infrastructure. Now on the Meta

side, you had revenue grew 28%. They did

exceptionally well still on advertising

performance. So there was some good

news. Their quarterly capex reached

31.08

billion. So between these two companies

about 72 billion dollars spent on AI

infrastructure. Their free cash flow

though collapsed from 8.5 billion to

about 784

million and they're expecting 130 to 104

billion in capex. So why would Microsoft

be up and Meta be down? Because now the

market just doesn't want to see you

blindly spending on AI. They want to see

that there's revenue attached for it.

Microsoft as I said they had massive

growth in Azour. They had massive growth

in co-pilot. They have future revenues

that you can see and they're out earning

basically their spending. Meta it's a

lot more muddled. They're spending a ton

of money but nobody can see where the

results of that are and the market is

punishing them for me. This isn't simply

that Microsoft is succeeding and Meta is

failing. It's that Microsoft can

directly sell AI infrastructure and

software and people don't really know

where the revenue is going to come from

for Meta as of yet. I mean, Meta spent

31 billion on AI in one quarter. For

that price, you would hope that the AI

could explain to them why the stock's

going down. It's like Zuckerberg.

Dearest Sam Alman at OpenAI, sir, can

you please explain to me why my stock is

going down when I have spent a lot of

money on the AIS? Thank you. And then it

obviously it responds, uh, Mark, we're

sensitive to your feelings because it's

it's woke. AI is woke. I've been told

that. I don't find that to be the case,

but hey, anyways, what are you going to

do? Next story is another one of

earnings because we're in earning

season. And this one actually does more

directly touch crypto uh but doesn't

touch crypto in the ways you want to be

touched. Robin Hood beats quarterly

profit estimates as trading activity

remains robust. So let me just give you

the numbers here. You might notice

something. They smashed Robin Hood

quarterly revenue record 1.31 billion.

Biggest revenue ever. Big numbers huge

numbers. The best numbers. Their options

revenue was 342 million which is good to

know that uh their traders are still

degenerates. Prediction market revenue

156 million stock trading revenue 129

million

crypto revenue 100 million event

contracts increased more than tenfold.

Customers traded 13.6

billion prediction markets contracts.

Think about this. Robin Hood made 56%

more from prediction markets than they

did from crypto. And they just launched

these a few months ago. Now, you'll

remember last quarter, I think I I I'm

not going to give the exact number

because I don't want to misquote it, but

Robin Hood's crypto revenues were down

40ome percent. 41 47 something like

that. 67. Um, this month I believe they

were down just over 30%. More, right?

And we know that there's no volume in

trading crypto right now. A lot of that

money has followed AI and hotter trends

and certainly prediction markets. But

the fact is that Robin Hood is no longer

democratizing finance. They're democ

democratizing parlays,

right? I mean, this is what people want.

They want sports, politics, economics,

entertainment. They're they don't want

to be dependent on, you know, memecoins

going up in a crypto bull market. What

they want right now is just to be able

to make a directional bet that lets them

express an opinion with money. Will this

happen or will this not happen? I want

to put my money on that. And it really

is a simpler way, I think, to express

your view. And it makes sense that

prediction markets have become so

popular. But I don't think customers

care anymore if it's a stock, a token, a

derivative, or a sports bet. They just

want to gamble in the most convenient

way possible, and they're able to do

that. Now, as I mentioned before,

Coinbase is reporting tonight, I I I

don't know what the estimates are, but

that's going to be slaughterhouse 5.

Like, there's no way that they've done

massive revenues in crypto trading. To

their credit, I mean, in their last

earnings, they announced they had 11 or

12 new products. They were already doing

over 100 million in revenue. They're all

they're all, you know, going after the

same idea. And maybe that's really the

broader story here beyond just Robin

Hood revenues, right? This is a world

now where you have everybody trying to

do the exact same thing, right? You have

Coinbase, Robin Hood, OKX, and then from

the prediction market side, you have

Kali and Poly Market, and they're

launching perpetual swaps. Everybody

wants to be the everything app. And the

fact is, if they're going to survive,

they have to. I don't think you can just

be a crypto exchange anymore. Look what

happened to BitMX and BitMart and

Bitfart and Bit Dart. I why why are they

all bid

right it you cannot survive anymore

simply on having people trade there was

a story today that Binance US which uh

barely you know is just coming back uh

is launching prediction markets

themselves and seeking CFDC approval to

do so very clear exactly what everyone

wants to do and more importantly what

everyone needs to do now for everybody's

favorite topic the clarity act

senators ready to send stricter ethics

rules on Trump's crypto ventures to

White House, sources say.

So, listen, we're we're there, man.

We're getting to the uh we're getting to

the finish line. Brian Armstrong said

that the Clarity Act is at the one yard

line. The problem is he didn't say which

one yard line. What if we're 99 yards

away? Right. And listen, like even if

we're at the one yard line, any Seahawks

or Patriots fan knows what could happen

when the clock's running out at the one

yard line, right? I mean, the Clarity

Acts at the one yard line in Washington,

that means like six more months and

three committees and 12 votes and

something called closure.

They have to do closure. It's a thing,

right? So the fact is that right now we

do have a Republican senator and a

Democrat senator Tillis and Ggo coming

together for an updated proposed ethics

framework. That really is good news. All

joking aside, right? The problem is they

haven't presented it to the White House

yet. So we don't know what they think

after the White House proposed what they

called historic compromise and said that

was about it. We don't even know if the

Democrats have seen it. And we know that

we need at least seven Democrats, maybe

more, to vote for this. So, it's a

statement of progress, but it's a

statement of progress when we have about

a week left to really get this done.

It's a proposal, not not a completed

deal. The other thing worth remembering

is that the Democrats have explicitly

said it ain't just ethics. They want

still to have questions about stable

coin rewards, DeFi developer liability,

elicit finance requirements, right? So,

uh, we don't even know if they're

completely at consensus for all of the

other things in this bill. That said,

it's getting closer than we probably

believed it would be. And if there

really is a thirst to get this done,

it's possible. It is possible that they

will. Now, uh, one last story that's

also sort of, uh, crypto adjacent here

because it does not necessarily affect

our cryptography. You might have seen

this discovering cryptographic

weaknesses with Claude. The story here

is that anthropics Claude Mythos

uh which apparently should be called

Thanos because you just kill everybody,

right? But Mythos found a major weakness

in Hawk, which is a great new show on

Netflix with Will Frell. Highly

recommend. Really funny. But Hawk is

actually an experimental postquantum

signature system that's being evaluated

by NIST, which survived two years and

two rounds of expert human review. Well,

uh, AI unprompted went in there for

about $100,000 of compute and found a

weakness in 60 hours. So, what's

interesting here is it's not like we

broke postquantum security, but AI did

find a weakness in an experimental

candidate for postquantum

cryptography,

uh, which is what it's supposed to do.

But we're now at the point where we're

building postquantum security for

computers that don't exist yet. and AI

is already attacking those and showing

vulnerabilities. I guess this is both a

positive and a terrifying story. Like I

said, it won't hurt Bitcoin and

Ethereum, but it shows that even the

quantum proofing that we're doing is

already having potential problems

identified by AI and we don't even know

where AI will be at the time. I'm not

particularly worried about quantum, but

it's important to know that we can't

really handicap what's coming with AI.

So listen, Bitcoin is holding strong uh

for now in what many would believe is a

cracking market and we got a lot to

watch for with Coinbase and Strategy

earnings. That's all I got for you

today. I'll be back tomorrow with the

next Daily Wolf. Peace.