Traditional banks take the lead in the stablecoin arms race

Scott Melker discusses the stablecoin market seeing traditional banks take the lead, $114T in assets to be tokenized on Stellar network by DTCC, and other big crypto headlines of the day.

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Bitcoin price has dropped to a five-week low on Iran headlines and everything that's happening in the news, but the real story is that a billion dollars were liquidated on this flush down into the low $70,000. We're going to talk about that, but a lot of positive stories that are happening in the crypto news. Let's go.

What is up everybody? Welcome to the Daily Wolf on Yahoo Finance. I'm your host, Scott Melker, also known as The Wolf of All Streets. Now, we're going to spend the next 15 minutes diving through the news. And of course, what everyone wants to talk about is Bitcoin price action. I don't particularly find it that interesting, honestly. Bitcoin bounces around, it's volatile. It's up and it's down. I think what's more compelling is all the stories we have about the actual adoption of Bitcoin and of the broader crypto asset class.

But as as we dive in here, I guess to the first story, we could just go ahead and do, show you what is happening in the market. Of course, liquidations near 1 billion as US, Iran exchange fire. Now, I I think the mechanics of that are interesting and we'll get into it, but let's just talk about exactly what really happened here on this flush.

We have 958.8 million in total liquidations over 24 hours across 167,706 traders. That's a lot of people getting their entire accounts liquidated on these small moves. I do not understand how we have that many degenerates left with that much money who don't even use a stop loss and get liquidated. But that's a story, again, for another day.

897 million of that was longs. Of course, these are the overnight ones, so these will likely compound as price continues to drop. 93% of the wipeout was longs. What blows my mind is that 7% of that wipeout are people who somehow were using high enough leveraged to get liquidated when they were short. How does Bitcoin drop a few percent and you lose all your money when you're short and you're right.

It's just how bad people are and how much leverage they're using. So of course, we had Bitcoin liquidations roughly 386 million, ETH liquidations 246 million and and quite a few others across the board. So, the next story that's a part of this obviously and a continuation of yesterday is this, Black Rock's Bitcoin ETF sheds 528 million, the second largest daily outflow on record. Now if you do a show every single day, sometimes the news is going to make you look kind of, what's the word for it? Stupid.

Yesterday I did an entire show telling you about the massive $1.3 billion sell order on IBIT and how it had barely moved the market. Well, it seems like maybe the reaction to that was just slightly delayed. $528 million. We cannot say that it is because of the same trade, but that trade was obviously a signal that somebody massive in the market was exiting, which could lead a lot of other people to exit.

And now we have our second largest daily outflow in history from IBIT. This is an 8-day Bitcoin ETF outflow streak. And interestingly, if you were taking a look at the Ethereum market, Ether futures open interest hit a record high as it broke below 2000, meaning that people are aggressively shorting and opening new shorts as the position is hitting at new low.

So, Ethereum breaking below $2,000, people not caring, piling into the shorts still. So listen, mechanically, obviously everybody wants to say that it was bombs and Iran and an escalation of the war, but anyone who's trading or believing in those headlines at this point is is an idiot, in my very humble opinion.

Sorry to all the idiots out there. Love you guys. Um, this was obviously happening already in advance in advance, right? Bitcoin had already topped at 82,000, hit the 50 MA there on the daily chart, was already dropping. We already had the outflows here on an 8-day uh streak. So of course, people are going to assign a narrative. I do not believe that's necessarily what was happening.

I think it's just a great narrative trigger for people to talk about. Now, Bitcoin's one thing, but we have continued stories as I've showed you of adoption by massive entities across the world of crypto rails and crypto tokens and crypto assets. This is one of the biggest ones we've ever seen. DTCC plans to bring tokenized assets to Stellar in latest Wall Street blockchain push.

US market structure infrastructure, giant targets connecting tokenized stocks, ETFs and Treasuries to Stellar in the first half of 2027. So this is part of the DTCC's standards driven multi-chain strategy that they laid out at the end of last year when they got a no action letter from the SEC. You may remember that they first made an announcement with Canton Network. Price did go up, uh not immediately, but over time after that with Canton Network.

And now you have them making an announcement with Stellar. I had to look at this twice. It felt like an announcement from 7 or 8 years ago when we used to get announcements about Stellar, but certainly not with the DTCC. This is one of those chains that's been around for a very, very long time. We haven't seen many announcements around in quite a while. And I think what's actually notable is that over 24 hours, the price of Stellar, last I checked, I haven't looked, was up over 35%.

We have not generally seen tokens moving on news in quite a long time. So that could be an interesting signal that finally some of the altcoin market is ready to move when it gets a favorable headline as big as this. I mean, the DTCC custodies 114 trillion in assets. They do about 4.5 quadrillion in volume a year. Of course, as I said, they are looking at going multi chain.

And they're not going to be, you know, strictly building on Stellar, but having them in the mix, obviously bullish for that token. There's more than 50 financial firms that are participating in the DTCC's efforts here including of course BlackRock, Circle, Goldman Sachs and every major bank. So, seems that we're still having two competing paths here for tokenization and adoption by the largest institutions.

Remember, I mean, DTCC clears most securities trades, right? Path one is the one that we just saw path, uh paused, excuse me, the SEC's innovation exemption that we talked about that would basically allow for third parties to tokenize and bring those tokens intofy and participate in a decentralized manner. The path two that we see very rapidly advancing is this sort of DTCC's regulated issuer aligned tokenization.

multi chain. It's been blessed by the SEC and has a huge asset base, but it basically just means that crypto is being adopted as the plumbing. It doesn't necessarily mean that a lot of that is going to accrue to crypto assets or crypto natives. This is very, very highly centralized and using the technology for its best purpose, but that doesn't mean that it's going to be decentralized or in the true spirit of crypto.

Now, talking about this mainstream adoption and utilization of the chain and the plumbing being built, we have three announcements in a row that I want to show you about stable coins. So first, Mastercard secures New York bit license to support stable coin and digital payment infrastructure. Anyone knows that getting a bit license is like seeing a unicorn on the moon wearing a tutu. It's basically impossible to get uh this sort of stamp of approval in New York.

Very few entities have gotten it. MasterCard obviously one that would be in the running to be able to get one because they have an established business for for so long. But big news for them on the stable coin front to get the bit license in New York. The next story here, SoFi launches S SO SoFi USD, S o f i USD, Sofi Zofiy.

Stable coin across Ethereum and Solana. This is big news because they have, I believe 15 million customers and this is a bank-issued stable coin. They're not adopting a circle or a USDT. They're launching their own stable coin and will be issuing that out to all of their own customers to be able to use for payment. So this is a neobank, basically a Fintech that's launching their own stable coin.

And then of course, this one which really, really, uh, which really got my attention. Block kicks off Cash App's Phase stablecoin roll out to its nearly 60 million users. So, hey, this is wild. So I wrote a whole newsletter on this actually. It went out this morning and this was the title. Crypto was supposed to replace the dollar. It's replacing the wire transfer instead.

And so the idea here is that, you know, Bitcoin was built to replace the dollar, become the global reserve currency. It didn't actually replace the dollar. What it did is built basically built the dollar a better delivery truck, right? We're replacing wire transfers, we're replacing the way that dollars are moved with stable coins and crypto infrastructure, but not necessarily replacing the dollar itself. In fact, all the stable coin adoption is hyperdollarization and the irony should not be lost on anyone in crypto that the reason that Bitcoin was created

was as a hedge, as an answer to hyperdollarization and Fiat and money printing, and stable coins are arguably have been the killer app for the technology underlying Bitcoin and they increase all the things that Bitcoin was created against. That said, the dollar clearly remains the main medium of exchange here, even, you know, in the war against Bitcoin, but Bitcoin will continue to win the store of value war in my opinion.

But that story about the block, particularly interesting because that uh the block is Jack Dorse who was basically our last Bitcoin payments ma