Last week, Scott Bent gave markets a

reason to believe the government would

defend the bond market and Bitcoin flew.

But today, Kevin Worsh reminded

investors that the Fed is still actively

fighting inflation. That tension matters

enormously for Bitcoin. I'm going to

tell you why and cover all the other

news driving crypto markets here 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. Today is a big day.

Everybody was holding their breath,

awaiting the words of Kevin Worsh in

Jackson Hole, Wyoming. Now, I joked

earlier that uh we should actually be

looking for what he doesn't say and not

what he does say because we all know

that Kevin Wars is being purposely

tight- lipped, not trying to give very

much information, eliminating forward

guidance entirely, and trying basically

to be as opaque as humanly possible.

That's his new strategy. But he did come

out rather hawkish and markets probably

are going to take some time to absorb

that. And as I said in the intro, we now

have this strange push and pull between

the Treasury and the Fed. Many were

looking for the Treasury and Fed to work

together. People view Kevin Worsh as

Bent's guy. Both Bent and Kevin Worsh

were students of Drunken Miller and

Trump probably put them in place so that

they would work together to create the

ideal financial conditions. But so far

that is not exactly what's happening. So

you all remember that last week on

August 19th, the Treasury announced that

it would at least double its buybacks of

older 10 to 30year government bonds. The

maximum increase from 2 billion to 4

billion per operation beginning on

September 9th. Now, the Treasury

described this as liquidity support for

older bonds that trade less efficiently.

As I've told you, it's not quantitative

easing because it's not money printing

to do it. And it's not yield curve

control because there's not a specific

number that they're going to defend. But

either way, it was Bent coming in and

saying that the government has a level

of yields on long-term bonds that is not

acceptable and that they're willing to

do something about it. that sent Bitcoin

flying because long-term yields

determine mortgage rates, corporate

borrowing costs, asset valuations, and

of course, the government's own interest

bill. We know that the national debt is

now over $40 trillion. And that interest

bill is the largest line item on the

balance sheet. So, Bitcoin flew because

Bitcoin is supposed to fly when we

realize that fiscal and monetary policy

are irresponsible, as is our government.

So what we had today was an expectation

that Worsh would follow in his buddy

Besense path. So there was a lot of

articles saying Bitcoin will or won't go

up based on this and this is the most

important comments ever from a Fed chair

for Bitcoin. I don't agree with any of

that, but I can understand the reason

they were saying so because there were

basically two paths that Worsh could

take. Worsh could either say, "Yes,

we're going to ease. We're going to

lower interest rates. We are going to

support the operations here of the

Treasury. We want to refinance the debt

lower." Of course, none of these are the

Fed's business. Those are Treasury

problems. Or he could come in hawkish

and say, "We have a strong economy and

inflation is still a problem." He

basically did the latter. So, he says

the economy appeared to have

strengthened. He pointed out that

business business investment is growing

at its fastest pace since 2021 driven

heavily by AI and S&P profits have ri

risen more than 20% over the past year.

Credit spreads remain tight. Lending

standards are relatively e easy and war

said and I quote he would be quote

hardpressed to describe financial

conditions as broadly restricted. He als

rest restrictive. He also pointed out

that labor markets remain stable and

consistent with full employment

and then hinted that this allows the Fed

to concentrate on inflation with annual

PC at 3.7 month annualized PCE at 4.1%

more than half of the PCA basket has

increased by over 3% during the last

year. He said, this is where it's hawk

is. He said, recent improvements have

not meaningfully challenged the

underlying inflation trend and said the

2% target is quote firm and fixed. His

conclusion was that the Fed must see

inflation moving clearly and

sufficiently towards 2% otherwise it

still has work to do. Of course, he then

said he has no crystal ball. There'll be

no more forward guidance, all these

things. But he, this was his final

quote. I stand here today committed to a

discipline, not to a decision. So he was

non-committal. So it doesn't close the

door entirely. But right now, we have

Bessant and War addressing different

parts of the same problem. Right. Uh

Treasury has long-term borrowing costs

that cannot be allowed to destabilize

the financial system, but the Fed has

persistent inflation cannot be allowed

to destabilize the dollar or inflation

expectations. So he came in very

hawkish. He didn't say he's going to

raise rates. I don't think he will. But

he certainly indicated that there's no

reason to believe that they would cut

into an economy right now. And that is

not what Bent wants. Right? Basent wants

the Fed to make his job easier by

cutting. So very clearly Bitcoin's rally

that we had was not based on the idea

that the Fed would turn dovish. Right?

Right? It was a bet that America's debt

burden will eventually force policy

makers to control yields and tolerate

more inflation. Right? Bitcoin goes up

when the government is irresponsible and

Worsh really challenged that bet today

uh without destroying it. So we know

that Treasury is already demonstrating a

willingness to intervene and Worsh well

he really has not. So the question for

Bitcoin moving forward is which one of

those wins? Where does that tension play

out? And does Worsh eventually

capitulate do what Trump and BMP want

and cut rates? Really interesting

financial environment right now. I think

it's clear that if he's not going to do

what Trump and Bent want him to do that

we will remain in a fiscally dominated

environment where the actions of the

Treasury will be most prominent. So Wars

obviously made AI central to his

economic outlook talking about it and

one former Bitcoin miner just shows us

exactly what that transformation to an

AIdriven world looks like. Here you go.

Iron shares fall 8% as costly AI

transition weighs on earnings. Weakening

profitability overshadowed a major

milestone in Iron's transformation into

an AI cloud provider. So I've told this

story over and over and again. It

started with iron. Bitcoin miners are

becoming AI data centers. It's more

profitable for them to become AI data

centers. They're already set up to do

it. And Bitcoin mining right now is not

profitable at all. It's a perfect storm

for them to convert their business and

make a lot more money. So listen, at the

top line, this looked really good.

Iron's AI cloud revenue more than

doubled during the quarter to 70.5

million. Their Bitcoin mining revenue is

66.7.

So AI now generates 51.4%

of Iron's quarterly revenue. The first

time that we've seen a tilt in the

direction of AI, and we know that trend

will continue until Bitcoin mining uh

becomes a rounding error. This is very

clear evidence yet that iron and the

other miners I've told you about are

exactly what I've said, which is AI data

centers that may mine some Bitcoin when

it makes sense. So this seems like good

news for Iron, right? So why is the

stock down? While total quarterly

revenue fell 5% sequentially to 137.2

million adjusted EBA dropped 68% and

they recorded a 684

84 million net loss. Why? Because it's

really expensive to become an AI data

center and make that transition. Now

that will all clear out eventually. But

it should be clear that as much of it

see as it seems like this is an obvious

and easy pivot for these companies to

make, it is not. It's going to be

expensive and it's going to be

difficult. Either way though, we can

stop viewing Bitcoin miners as Bitcoin

miners. It's a misnomer. It's not the

case. They are AI data centers that will

likely mine some Bitcoin. And now, while

these cryptonative companies are

attempting to become AI companies,

traditional financial institutions

continue moving in the opposite

direction, deeper into crypto. And I'm

here for it.

Charles Schwab adds Salana avalanche

chain link to crypto platform. This is

native Salana avalanche and chain link

not ETF or some kind of wrapped

institutional exposure. This joins the

announcement that we had before that

they were offering Bitcoin and Ethereum

spot trading. Now to be clear, you

cannot transfer these assets on and off,

but you can buy and hold the spot assets

on Charles Schwab's platform. Chucky

Chuck Schwab,

this is going to happen in the coming

months. And

once again, uh the fees here will be 75

basis points like they are with Bitcoin

and Ethereum. So just to like put in

perspective how big this is, right?

doesn't mean that all these people are

going to buy these three very random

assets that they've added, but Schwab

oversees more than $12 trillion in

client assets with approximately 39

million active brokerage accounts. So

joining Bitcoin and Ethereum is not the

big story for Salana, Avalanche, and

Chain Link here. The big story is it

sits alongside customers, stocks, bonds,

ETFs, and cash. This makes a crypto

allocation far easier for investors who

in the past would have had to go open an

OKX or a Coinbase account to get

exposure. So people are asking why these

three. I mean Salana obviously is the

clearest large gap next to Ethereum.

They said that chain link is an

infrastructure connecting blockchains

with prices, financial data and

tokenized assets. Avalanche is a bet on

institutional networks and customizable

blockchain infrastructure. Schwabs are

take effectively taking three

established infrastructure plays rather

than offering hundreds of speculative

tokens. Eventually, this is going to be

everything I would imagine. Obviously,

not the case yet, but it is a slow roll

out that we're seeing from multiple

platforms, right? We obviously reported

on the fact that Morgan Stanley via

Erade had opened the doors to their 9

million customers to gain spot exposure

exposure to crypto assets as well. So,

as I've told you before, we have the

traditional brokerages and institutions

on one side, the crypto natives on the

other side, and they're all converging

to offer everything to everyone. And

it's going to be a very interesting

battle to see who wins. Now, to me, this

isn't really Charles Schwab trying to

gain new customers.

This is Charles Schwab trying not to

lose customers who want exposure to

these assets to other platforms. If you

leave Charles Schwab as a customer or

take 20% of your assets and go to OKX

and buy Bitcoin, that money never comes

back, right? Even if you go buy Bitcoin

right now, you can't send that Bitcoin

back to Charles Schwab. So, to me, this

is protection. They're making sure that

they offer the biggest most popular

assets in their view and that the

customers who want it can at least gain

some exposure there without seeing

capital flight. I think it's really

really interesting time right now in the

industry and we're going to uh see only

more of this moving into the future.

The next story is a really interesting

one. Kraken users briefly locked out

after a flood of sanctioned crypto

transactions. The activity appearing to

spread sanctioned funds to trigger

account restrictions occurred between

August 17th and August 24th. So, Kraken

basically received roughly 12,000 lowv

value crypto transfers in that oneweek

period. The transactions were between,

you know, a few cents and up to maybe

just a few dollars and they came from

wallets that Arkham Intelligence had

stated belong to HTX exchange. Now ATX

HTX is subject to UK sanctions and

European transaction ban over alleged

connections to Russian linked payment

network. So HTX themselves has disputed

this has anything to do with them that

the wallets are inappropriately

attributed. That's not the story. That's

what happened here. They are sanctioned

wallets regardless of where they're

coming from. So why would somebody do

this? Basically public blockchains allow

anyone to send funds to any valid

address. So a customer does not actually

have to approve to accept these

addresses. So by sending dust, as they

call this, from sanctioned wallets, you

can basically wildly disrupt an exchange

and make things very, very difficult for

the individuals you're sending to

because they're getting a transaction

from a sanctioned wallet, which caused

Kraken to obviously have to freeze very

temporarily the assets of some

legitimate customers that were doing

absolutely no nothing wrong. Now they

restored this quickly but what they did

here you know they identify exchange

link customer deposit addresses and then

send them all a little bit and then

compliance freezes it. So this becomes a

very very cheap attack vector these

hackers to cause mayhem. Crazy story.

And one very final story how not to

invest. We have GTA 6 leaker cashes out

of his own memecoin hours before

Rockstar's gameplay revealed. You may

have seen that somebody was leaking

Grand Theft Auto uh 6 clips and said he

was going to release the whole game. And

every time he did that, it was tagged

with a memecoin. Well, he was earning

fees on that memecoin trying to pump his

token by doing it. It was all about a

meme token and then was able to dump a

bunch of that on retail. Made about

$270,000. Reminding you, don't just buy

an unofficial meme coin cuz it has a

cool name that seems to be linked to

something. These are not real. They're

used to extract value and you will

eventually lose money and get rugpulled.

That's all we got today for the week. I

will be back on Monday with the next

Daily Wolf. Peace.