Inflation was moderate in July, coming

in along expectations and markets

basically shrugged it off. But behind

the surface, we have a few huge stories

that are impacting crypto markets and of

course the rest of markets in general.

We're going to unpack all of those right

now. Let's go.

Happy Wednesday everybody and welcome to

the Daily Wolf on Yahoo Finance. I am

your host, Scott Melker, also known as

the Wolf of All Streets. You can find me

at Scott Melker on X and on YouTube and

anywhere else that you may have social

media or want to watch my content. I

highly, highly, highly recommend that

you do check out my 900 a.m. show each

day on YouTube. Today I had an

incredible guest, Jordi Visser. One of

my favorite conversations that I've had

in a very long time, and I I guarantee

it will make you quite bullish on the

future of Bitcoin and crypto, especially

in the context of AI and capex growth.

So, listen, it's not a crypto story

today, but as usual, we had a CPI

inflation print, the most important CPI

inflation print since the last one and

until the next one. I I don't think

anybody really is paying attention to

these anymore, but they do inform how

prediction markets are viewing the

likelihood of a Fed interest rate hike

or cut. I mean, here was the news live

updates. Inflation was moderate in July,

but energy prices remained elevated. So,

headline CPA CPI rose.1%

monthly and 3.4% annually. Core CPI rose

2% monthly and 2.5% annually.

Importantly, all four numbers matched

expectations. Remember, it doesn't

matter if we have inflation or not. It

just matters what Wall Street is betting

inflation will be, right? It just

matters what we expect and what happens

versus that. Of course, energy declines

slightly, but still 14.7%

more expensive than one year ago. As I

like to do, just take a look at

prediction markets. Cali, like I said,

what does this mean for Kevin Worsh and

what does this mean for the Fed? I think

that it's more confusion, but as you can

see, people were kind of handicapping

the idea that there would be a rate hike

more seriously than they are now.

Yesterday, 41% chance of a hike, now

down to 33% after the news came in. If

you believe that Kevin Worsh is going to

hike rates in September, which was as

high as a 5050 bet recently, I think

that you are smoking crack.

I think that I would take the other side

of that bet. Actually, I'm interested in

doing it. Kevin Wars has one job and one

job only. He's the sock puppet. He's

going to do what Donald Trump

fingers on this side. What Donald Trump

tells him to do. And Donald Trump wants

this guy to cut rates. There is, I would

say, a 0%.

0% chance, as my friend Dave Weissberger

alluded to the movie Animal House, you

know, Blue Tarsky's uh GPA, 0.0% 000%

chance that we are going to see a rate

hike that would massively put us into a

horrible situation, especially

considering we're at almost $40 trillion

in debt and need to refinance that. It

ain't happening. Let's move on because

markets shrugged it off just like we

should. CPI doesn't matter. Nobody

cares. But what people do seem to care

about is prediction markets. So, we have

a big story right here. CFTC exercises

emergency authority to ensure market

stability. If you want to know how

important prediction markets have

become, or at least how important the

battle for power over prediction markets

between the federal government and the

states has become, just look at that.

That is an official CFTC release

invoking emergency authority to ensure

market stability. So, a couple weeks

ago, New York uh went after Khi once

again. Now, we know that uh many states

have been suing prediction markets, but

they were seeking a nationwide order

blocking KI's event contracts and more

than $35 billion in damages. New York

obviously continues to argue alongside

many states that Khi markets are illegal

gambling products. But the CFTC here

invoking emergency authority and

ordering Khi to continue operating under

federal derivatives law. So the the

federal government thinks these are

derivatives contracts. The state

governments tend to think that these are

gambling contracts. What do you do here

if you're couchy? Right? You have the

states like Minnesota and New York that

I've told you about in the past.

Multiple other states telling you to

cease operation. Then you have the CFDC

of one, Mike Celig, coming over the top

rope and telling you that you have to

continue offering these services to

customers in those states even though

those states are telling you that you

cannot do it. So this order keeps Kali

operating in New York, but it certainly

does not resolve the underlying lawsuit

or the underlying turf battle that we've

been had constantly. I know this is not

a crypto story, but I think it is a huge

story about how the states and the

federal government will behave when it

comes to regulation, which informs what

we may see in a world with no clarity

act where the regulators are effectively

in charge of what happens with crypto. I

mean, this is the just the states versus

the federal government at a level we

haven't seen in a long time and it's

about new control of an entire new

category of financial markets. Now

moving on to the next story which oh man

just makes me shake my head because the

own goals in crypto are seemingly

endless. Harmony's one sinks 37% after

attack or mints 4 billion tokens. Now

what might be interesting to you is that

the entire market cap of this right now

after the drop is probably I'm guessing

fully diluted value. I don't know market

cap of one token is probably like $11

million. So 4 billion tokens, only a

couple million bucks, four billion

tokens, but it equals roughly one

quarter of the legitimate pre-attack

supply. So the token obviously dropped

35 to 40%. Now independent investigators

say that about 97% of those counterfeit

tokens had already reached exchanges or

been sold. So now, okay, so we're a

clown show. We know that this side of

crypto is a joke. We know that AI as it

continues to become more powerful uh

we're going to see hacks uh increasing

and the amount of money from these hacks

increasing and on these older

blockchains where probably there's like

one guy in a closet uh working it's like

the stapler guy from office space

there's nobody working here nobody

really protecting these these things are

going to continue to happen but now

harmony has the unenviable position of

deciding what to do about it right they

they haven't disclosed what the

technical cause is but they've said that

they will either to prepare a patch. Uh,

last I checked, per patch would just uh

mean they can't mint any more tokens,

but the 4 billion that have already been

minted will still uh remain out there

and whatever. Or rolling back the

blockchain. Nothing says decentralized

immutable ledger like rolling back a

blockchain and pretending that a thing

didn't happen. So, we go back in time

like uh you know, Marty McFly with his

sweet Delorean

uh and we can pretend that this never

happened. The problem is that doesn't

actually uh change anything for the

seven people on planet Earth who maybe

use this blockchain uh for some

legitimate purpose. Maybe they're real

transactions. So those uh those people

would be affected. I'll okay I'll eight

eight of them. I'll be generous. But it

also uh it does not going to roll back

the sale of these 4 billion fake tokens.

So the damage there largely already

done. I mean,

this blockchain was supposed to be, as I

said, an immutable decentralized ledger,

but it basically just became like a

Google doc with a version history. Like,

go back to a few days ago and and see

what the document says. This is like,

man, it seems like every day. I mean, I

think we had read or reported that, you

know, there's a hack in crypto every two

days this year basically. And the

numbers are not necessarily huge. It's

not billions of dollars a day, but it it

just really like uh informs your

investment decisions moving forward. I

think that a lot of the old stuff is

dead or dying or will be exploited and

it's really time to just focus on

quality and teams that are building and

actually care about security. There's

like six of them. We're going to find

them for you. All right, the next story

right here. It's a continuation of

yesterday. I told you how Riot Platforms

yesterday did a $9 billion plus deal

with Anthropic and how miners are all

now effectively just becoming AI data

center providers. Well, one overlooked

group has added 1.78 billion of selling

pressure to Bitcoin market. Did I spoil

it? It's Bitcoin miners. They've sold

28,000

Bitcoin already this year. that you know

the value of that right now about 1.78

billion at current prices but obviously

they sold a lot of that probably higher

but this is the publicly traded miners

that began the year holding 127,000

Bitcoin now holding 99,000

Bitcoin and there's a lot of reasons for

this so one is obviously the pivot to AI

which makes a lot of sense you can make

a lot more money there's less risk

you're not exposed to Bitcoin price

you're not exposed to crashing hash rate

I mean right now on average apparently

it costs about $74 $4,300

to to uh produce one Bitcoin and the

price is not $74,300

last time I checked at 63 64 65 they're

losing money every time they produce a

Bitcoin. So of course they're going to

pivot to brighter pastures. But this is

something that has happened in every

bare market. I mean they have to sell

it, right? this is forced selling

because they need to be able to pay

their bills, you know, like the electric

bill comes and you're like, I would like

to hold my Bitcoin, but also I need to

pay my electric bill and the only way to

do that for them is to sell Bitcoin. So

maybe this is one of the less hyped and

untold stories of why we've remained in

a bare market because of this minor

transition to AI and they're forced

selling directly into the market. Now,

you know, we can call it force selling,

but as we look at what they're doing

with AI and the money needed to build

out that infrastructure, maybe it's

actually just a pivot in their business

model, and this is going to become more

permanent until they're no longer

Bitcoin miners at all. The next story

that we have today, Crypto.com rolls out

tokenized stock derivatives have crypto

exchanges push into equities. So, the

real story here is not that they're

offering tokenized stocks. We know that

that's coming everywhere and that all of

these platforms are competing to be the

everything app, right? But what they

launched here is roundthe-clock exposure

to approximately 1,500 American stocks,

but they are derivatives available to

people outside the United States because

we hate fun here and aren't allowed to

do anything that's cool. But uh this

gives you exposure to the price of

stocks but no voting rights or rights

that would come with actually owning one

of these stocks. So it's very important.

We have this battle in tokenization for

the way that uh people will be able to

gain exposure to stocks. On the one

side, you know, you actually tokenize

the asset. It's held in custody by

somebody and you have all of the rights

that come with actually owning a share.

It's a tokenized version of that actual

share. On the other side, you just get

the price exposure kind of like we've

seen with preIPO stocks where you can

bet on it and trade it, but you don't

actually own anything. That is what they

are launching here. No legal ownership,

beneficial ownership, voting rights, or

direct claim against the underlying

company. So, these are not tokenized

stocks. They are stock price exposure

wearing a fancy crypto costume.

still cool,

but important to know what you own and

what you're trading. Now, speaking of

people wanting to offer everything, we

have our friends over at Kraken now

offering 20x Bitcoin margin. So, I'm old

enough to remember when an exchange in

the United States could only offer 5x

perpetual offerings. Now, I did not know

I didn't know and I looked this up that

in May Kraken announced 100x leverage on

Bitcoin and Ethereum perpetuals. So, on

purps on Kraken, you can get 100x

leverage, meaning that if Bitcoin moves

1%, you get liquidated, which is a good

time because that happened probably

since I started saying that sentence,

right? And it's even worse on ETH and

all coins obviously. So, I didn't know

that they were able to actually do that.

So this 20x on Kraken Pro is actually

for spot bitcoin USD exposure meaning

that you like you know margin on a stock

account you can get 20x leverage. So you

know if you got 5,000 bucks you can now

control a $100,000 position. But listen,

you know this is that same thing like

that means at 20x a 5% move on Bitcoin

gets you liquidated. You're gone. Your

money is gone. Right? An unlevered

investor can survive a large decline.

You can just wait until price comes

back. But if you are using leverage, 20x

leverage specifically in this case, you

can be liquidated during a normal

intraday move, even if you're right and

Bitcoin ends up going the way of your

bet. Leverage is very, very dangerous.

Now, there are reasons to use leverage

because it reduces counterparty risk.

you can basically, you know, gamble with

20x or invest or hedge or whatever you

want to call it with more money leaving

less money on the actual exchange and

then you don't have the counterparty

risk of your money or your deeds your

coins being on exchanges which is very

important. I would just say that these

are instruments that should be solely

used by professionals and that retail

probably should not be using 100x

leverage on per 20x leverage on their

spot trading accounts. This it it's

yeah, it's going to get ugly. I'm all

here for it. People should have the

freedom to do whatever they want. I love

that Kraken is innovating and improving,

but I just don't think the average

person needs this. So listen, the the

market continues to shrug off any news

that's coming from the Fed. Once again,

I think that you might actually be on

drugs if you think that we are going to

raise rates, but uh maybe I'll be wrong

and I'll be the one who's on drugs.

Never know. Definitely possible. But

meanwhile, the industry keeps chugging

along with good news after good news and

people building left and right. It's all

I got for you today. I will see you

tomorrow, next Daily Wolf. Deuces.