THE PHENOM CRYPTO LETTER

GM,

Welcome to the Phenom Weekly Update, where we recap the week’s crypto highlights, sift through the chaos on Crypto Twitter, and cover all the important (and sometimes not so important) events in the space. We cover everything from price swings to meme wars, so sit back, relax, and let’s break down the week in crypto.

Here’s what we’ve got this week:

• The Silvergate Conspiracy

• The Isreal-Iran Crypto Crash

• CZ Released from Prison

-Will

PS: We sent out a deep dive on Bittensor ($TAO) on Friday. If you missed it check it out here → Bittensor Report. Spoiler* We are very bullish

Jump to :

• CONTENT WE ARE READING

• NEWS

• CRYPTO TWITTER

• MEMES

How the U.S. Government Tried to Kill Crypto: The Silvergate Conspiracy

Silvergate Bank was a major player in the crypto world in 2022, running the Silvergate Exchange Network (SEN), which allowed 24/7 transaction settlements for leading institutions. By 2023, however, the bank filed for bankruptcy, and the official narrative blamed its collapse on risky crypto ties, compliance failures, and its involvement with Sam Bankman-Fried's FTX. But this week Nic Carter published a damning report positing a different theory: the Biden administration may have deliberately targeted Silvergate as part of a covert operation to weaken the crypto industry in the U.S. 👀

The Alleged Plot

According to this theory, key figures in the Biden administration, with regulators backed by political heavyweights like Senator Elizabeth Warren, were behind a campaign to dismantle critical banking infrastructure supporting crypto companies. The goal? Choke off the domestic crypto industry by making it impossible for these companies to access banking services.

One of the central moves in this plan was an unofficial 15% cap on crypto deposits imposed on Silvergate, which critics argue effectively forced the bank into voluntary liquidation. For an institution of Silvergate’s size, this move raised eyebrows, suggesting it wasn’t just market forces or poor decisions that led to the collapse, but regulatory overreach. This theory, dubbed “Operation Choke Point 2.0,” posits that the administration was trying to decapitate the crypto sector by cutting off its banking lifeline.

Impact on Crypto and Banking

Critics argue that this approach didn’t just harm Silvergate—it hurt the broader banking sector and worsened an already fragile financial environment. By sidelining crypto through backroom tactics rather than transparent legislative action, the administration allegedly undermined trust in both the financial system and emerging technologies.

Silvergate’s collapse was, therefore, not just about financial risks or bad business. Instead, the bank was allegedly a casualty of a broader political agenda to stifle the growth of crypto in the U.S., dealing a blow to an industry that many believe is key to the future of tech innovation.

Israel-Iran Conflict Sends Shockwaves Through Crypto Markets

The ongoing conflict between Israel and Iran is rattling global markets, and crypto isn't escaping the fallout. Bitcoin and other cryptocurrencies saw a significant downturn as tensions escalated, with Bitcoin dropping around 3-4% and altcoins taking even bigger hits. As investors shifted into safer assets like gold, the total crypto market cap dropped by 2.7%, highlighting how sensitive the market is to geopolitical instability.

Historically, Bitcoin has been seen by some as a "safe haven" during times of crisis, but this conflict has shown otherwise—at least in the short term. Instead of holding steady or rising, Bitcoin has been reacting similarly to traditional risk assets, with investors opting for gold as their go-to safe haven. The narrative that Bitcoin is a store of value during global uncertainty is under pressure, and this conflict is reinforcing the idea that crypto is still highly volatile and sensitive to world events​

However, we believe this dip will be temporary. Bitcoin has often shown resilience after geopolitical shocks, bouncing back once the immediate panic subsides.

For now, though, traders are keeping a close eye on the evolving situation. If tensions in the Middle East worsen, we might see further instability in the crypto markets as investors continue to prioritize safety over risk. Stay tuned—this conflict is shaping up to be a major factor for crypto in the coming weeks.

CZ is Free: Binance Founder Released from Prison

Changpeng Zhao (CZ), the Founder of Binance, has been released from prison. After what felt like an eternity (in crypto time, anyway), CZ is back on the scene, following his highly-publicized legal issues.

While CZ’s imprisonment shocked the industry, especially given Binance’s prominence, his release could signal a pivotal moment for the platform—and crypto at large. 🚀

• What happened? CZ found himself embroiled in regulatory issues, accused of various compliance violations as governments cracked down on crypto exchanges. Binance, known for operating in a bit of a grey area, drew a lot of attention from authorities around the world.

• What’s next for Binance? While CZ won’t be running the day-to-day at Binance, he will be the chairman of the board. His time away has likely given him new insights (or at least, a fresh desire to keep Binance on the right side of the law). Regulatory compliance and transparency will probably be the hot new trend at Binance HQ. 📜

• Impact on the market: CZ's return is bound to send waves through the crypto ecosystem. Binance’s leadership stability was a big question mark, and now, with CZ out, we could see increased investor confidence and market rallying. 🤑

READING CORNER

A collection of longer form content we are consuming this week 

Raoul Pal laying out the timeline he sees for the disruption of the economy

@nic_carter publishes an in-depth and damning article demonstrating how the federal government forced the liquidation of Silvergate as part of a coordinated attack on crypto

NEWS

Quick Hitters from the week

• Bitwise Files for Spot XRP ETF: Bitwise submits a registration statement to the SEC, seeking approval for a spot XRP ETF.

• Bitcoin Drop Triggers $450M in Liquidations: As Middle East tensions rise, bullish crypto bets were liquidated, leading to a 5% dip in crypto market capitalization.

• FTX Reorganization Plan Gains Traction: The majority of creditors back FTX’s reorganization plan, while EigenLayer’s token begins trading.

• Q3 2024 Crypto Hacks Reach $750M in Losses: Despite fewer hacks, CertiK reports that losses surged 9.5% in Q3 2024, with $753 million stolen across 155 incidents.

• World Liberty Financial Opens KYC Verification: Trump-backed World Liberty Financial begins Know Your Customer (KYC) verification on its website.

• October Crypto Unlocks Near $2B: The release of $1.1 billion in TIA tokens will push October's crypto unlocks to almost $2 billion.

• MicroStrategy Unlikely to Join S&P 500 Despite Strong Performance: Although a listing could drive Bitcoin exposure, MicroStrategy’s inclusion in the S&P 500 remains improbable for now.

• Charles Schwab Open to Cryptocurrency Trading: The financial services giant expresses interest in offering cryptocurrency trading services.

• More Companies Adding Bitcoin to Balance Sheets: Publicly listed companies continue to accumulate Bitcoin, while Binance’s CZ plots future strategies.

• Bithumb Mulls Nasdaq Listing: South Korean crypto exchange Bithumb is reportedly considering a Nasdaq listing.

• BlackRock's Spot Ethereum ETF Surpasses $1B: BlackRock’s spot Ethereum ETF reaches a new milestone, exceeding $1 billion in value.

• Robinhood and Revolut Could Launch Stablecoins: According to Bloomberg, both Robinhood and Revolut are exploring the possibility of issuing their own stablecoins.

THE TWITTERVERSE

A collection of the most interesting stuff on Crypto Twitter this week

MEMES

For the (crypto) Culture

📣 Share with your friends and get free stuff! 📣

If you like Phenom Crypto maybe someone you know would as well.

As a way to say thank you in case you refer someone, we’ve built a referral program. Check out our current reward milestones below!