The Man Who Called Bitcoin a Fraud

Good Morning to all the Bitcoiners out there.

Sometimes, the biggest stories of the week are obvious. Price moves, ETF flows, and another hack.

This week though, they are hiding in the Japanese bond market, a payments rollout few noticed, and a new asset class that Wall Street is racing to own.

Here is what we are covering:

• Why a bond market in Japan could hit Bitcoin harder than anything in the Middle East right now.

• How Jack Dorsey and Jamie Dimon made the same argument this week.

• Are prediction markets about to have their “Bitcoin ETF moment”?

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1. Japan's Bond Market and the Trade That Could Unwind

Japan's 10-year bond yield just hit 2.425%. The highest it has been since 1997.

Most people read that and just move on. I would not.

For nearly 30 years, Japan has kept interest rates at or near zero.

By doing so, they created one of the most popular trades in global finance. Investors borrow yen cheaply and buy higher-yielding assets everywhere else.

US stocks. Emerging markets. And, of course, Bitcoin.

It is called the yen carry trade and it’s worked beautifully in the past, right up until the moment Japan decided to raise their interest rates.

When rates rise, investors unwind the trade. They sell their foreign assets, pay back their yen loans, and the money floods back to Japan. Risk assets everywhere take the hit.

And we’ve actually seen this before, back in August of 2024, the Bank of Japan raised rates modestly and Bitcoin dropped roughly 20% in a single week (see chart below) as carry trades blew up globally.

Today's move is bigger than that one.

Milk Road, described it as "gradual pressure" rather than a chaotic unwind right now. An uptick in yen strength could change that quickly.

Keep stacking. Just understand what you own and why. The macro environment just got more complicated, and this story is not finished.

2. The Week Two ‘Suits’ Started Moving

Two things happened this week that belong side by side.

Jack Dorsey's Square automatically enabled Bitcoin payments for 4 million US merchants. No setup required. No price volatility risk. Customers pay in Bitcoin, merchants receive dollars instantly at checkout. Zero processing fees through 2026.

Our COO Hector explains why this matters for everyday Bitcoin adoption below:

Your coffee shop. Your barber. Your local hardware store. If they use Square, they can now accept Bitcoin.

They did not ask for it. It was just turned on - and that is exactly how real world adoption actually happens. Quietly, by default, inside the tools people already use.

And then there is Dimon.

Every April, Jamie Dimon publishes his annual letter to JPMorgan shareholders. It is one of the most widely read documents in global finance. Monday's letter had a line every Bitcoin holder should read.

"A whole new set of competitors is emerging based on blockchain, which includes stablecoins, smart contracts and other forms of tokenization. We need to roll out our own blockchain technology and continually focus on what our customers want".

Let that sit for a second.

This is the same Jamie Dimon who called Bitcoin "a fraud" in 2017. Who threatened to fire any JPMorgan trader caught buying it. And who spent years publicly dismissing the entire space.

Now he is telling shareholders in a formal document that blockchain companies are an existential competitive threat to JPMorgan. He named them in the same sentence as Revolut, Stripe and Block.

He still does not like Bitcoin specifically. But the most powerful banker in the world just told his shareholders that the technology Bitcoin is built on is coming for his business, and his response was to say JPMorgan needs to move faster.

Dorsey is building the rails. Dimon knows it.

The people who have been saying this for years were not wrong, they were just early.

3. Are Prediction Markets About to Have Their “Bitcoin ETF” Moment?

A few weeks ago, Bitwise filed for a prediction market ETF.

Their CIO Matt Hougan wrote a piece this week explaining why.

The line that stood out to me?

Before the Bitcoin ETF, you could buy Bitcoin. Self custody, exchange, private fund. All of it was available.

But the ETF put Bitcoin on the same shelf as stocks and bonds, inside regulated portfolios, accessible to every investor. It changed who could participate.

Hougan is saying prediction markets are on the same path.

What’s most surprising though is the incredible degree of accuracy for many of these prediction markets.

A recent Federal Reserve paper found that Kalshi, the largest regulated prediction market in the US, correctly predicted the federal funds rate before every single FOMC meeting going back to 2022. Better than the New York Fed's own survey. Better than Bloomberg consensus estimates.

The NYSE's parent company invested $600 million in Polymarket last week. Bitwise filed the ETF and even the Fed itself is citing the data in academic papers.

Prediction markets are becoming one of the most honest signals in finance. And they are being built on the same blockchain rails that Bitcoin runs on.

The Bottom Line

Japan's bond market is flashing a warning that history says Bitcoin holders should not ignore (time to prepare for yet even more volatility).

Jack Dorsey just turned on Bitcoin payments for 4 million merchants without asking any of them.

And prediction markets are about to get their own ETF.

What’s clear from this weeks’ news is that the corporate suits continue to pay attention to Bitcoin regardless of price.

Stack accordingly.

Chat next Tuesday.

Hector