Morning trade, we are looking at Bitcoin holding below $65,000 and as we kick off trading this Monday morning, several key developments are in the spotlight.
Bitcoin ETS pulled in more than $853 million in net inflows for the week ending August 7th.
Meanwhile, a hot IPO market as well as surging AI enthusiasm continued to draw investor attention.
Meanwhile, on the legislative front, when it comes to digital assets, Senate Majority Leader John Thune has delayed action on the 30 Act until. and strategy executive Michael Sailor pushing back on that stating that Bitcoin doesn't need clarity.
America needs clarity.
Well joining us on this Monday morning to weigh in is Thomas, chief economist at crack and Thomas, good morning.
Thank you so much for joining us.
So let's start out with fun flows.
Bitcoin ETFs marking their largest weekly total since mid April.
So when it comes to what's happening in crypto, what do you think is fundamentally driving these flows and tell us about the demand.
Good morning, Remy.
Thanks.
Yeah, with ETFs, as you mentioned, this is the.
First time since mid April that we've had ETF flows on a weekly basis this strong.
In July we had positive flows, but they were a little bit more modest.
I think the market structure right now, year to date has largely been very heavy towards micro strategy being the largest marginal buyer of Bitcoins year to date, but that stopped about two months ago, really since the beginning of June.
And so what we're seeing now is ETFs being the big demand source for bitcoins on the margin and usually setting the price trend.
What I saw back in May, June of this year is we had a large period of very steep outflows from Bitcoin ETFs, including June where we had a record $4.5 billion of Bitcoin sold.
Since the inception of the ETFs 2.5 years ago, that's been the largest outflows in a single month, and it really corresponded with this kind of growth in the AI trade, particularly this explosion in interest and in performance.
On the semiconductor side, and that's moderated largely in July where we saw semiconductors underperform, down about 20% on the index, but Bitcoin rose actually about 5% points during the month and so we're seeing this reversal a bit in terms of the AI flows in the AI trade and semiconductors and hyperscales and more of a moderation I would say in Bitcoin demand coming from the Bitcoin ETFs.
Yes, and Thomas, I do want to get to Sailor in a bit, especially after the 8K filing with the SEC regarding the latest Bitcoin that he sold.
But first and foremost, I do want to shift our focus to the nation's capital now.
Senate Majority Leader John. delayed the clarity act until after the August recess so the bill is now pushed to September, but tell us about this delay and how it impacts corporate treasury as well as institutions that were waiting on some of these rules and what do you think it means for digital assets.
Sure, so what it means for digital assets, of course, in our view, the Clarity Act is an important piece of legislation defining a permanent sense of understanding of what the regulatory posture is going to be in the US, the biggest financial market in the world, is an important step for digital assets at large.
That said, you know, the regulatory environment continues to move forward with or without legislation.
We already have the agencies at the SEC and the CFTC working on rulemaking.
In the absence of clarity Act, and so we do have progress undergoing despite the lack of a vote here.
I do think that the industry was disappointed by the delay, but that said, you can see in the prediction market odds falling down to year to date lows, closer to 20% now that this passes in 2026.
The market's been pricing in this lower expectation over the last month.
Or so and so from a market reaction, I don't think it was that abrupt and all of that said, you know, we still are looking forward to mid September.
A lot of these negotiations tend to happen at the 11th hour and we're very optimistic that given all the work and effort on both sides, that it is something that's good for consumers, it's good for America, and we think that it has a real run and a real chance to pass here.
So we're we're pretty optimistic still on this, but I do believe that this is going to be the largest fundamental near-term catalyst specific to crypto.
Yes, and speaking of which, sailor did make headlines by saying that Bitcoin doesn't need clarity.
America needs clarity.
So he also, according to the latest 8K filing with the SEC, he did sell 1690 bitcoin last week.
So as an economist, what does it all signal to the broader market?
Yeah, I mean, clarity's common about America needing clarity, it's, it's a, I think it's a recognition of the fact that Bitcoin is a global asset and so the US is an important piece of the puzzle, but it is not the only piece.
Bitcoin belongs to the world, and so I think that's kind of his reflection on the Clarity Act and specifically with respect to the net flow.
When I think about the impact of micro strategy in these recent sales, you have to understand that over the last 2.5 years since the Bitcoin ETFs launched, there have been over $100 billion of bitcoins purchased by these equity vehicles inclusive of a micro strategy, and micro strategy makes up about $60 billion of that.
They've bought over $13 billion year to date.
So they are a very meaningful participant on the demand side in the aggregate equation of supply and demand for Bitcoin as a commodity.
Now over the last two months, as I mentioned, they've paused that buying activity in large part because they've been shoring up the balance sheet to support their preferred equity dividends, interest payments, and possibly debt payments that come due in the next 1 or 2 years.
And what I've seen, at least with respect to micro strategy, is that because of all this effort to raise their US dollar reserve, now over $4.5 billion they put themselves in a position where liquidity risk isn't as much of an issue, and so you don't have any kind of near term forced liquidation of Bitcoins in the market, at least not in a large part.
My personal opinion is that the the the.
Lack of micro strategy as a large bidder in the market has been the dominant effect on the price trend, and of course the ETFs going from large buyers over the course of 2025 to net sellers through the first half of 2026 and now modestly buying is really driving that next trend.
So micro strategy is kind of sidelined right now.
Bitcoin ETFs are setting the trend.
And I suspect that micro strategy again is taking action to prevent themselves from becoming 1/4 seller in this market.
Yes, and Thomas, finally, before I let you go, I do want to get your take on the macro environment as we kick off the trading week.
Obviously we're going to be watching out for those inflation figures, CPI and PPI, especially on the heels of that week non-farm payrolls print as well.
That pullback in unemployment, but when it comes to the inflation picture, give us your take on how the geopolitical situation is constraining the central bank and what is the direct read through for the crypto market here.
Sure, so in my opinion, and I think it shows up in the correlations as well, Bitcoin is very sensitive to overall monetary policy expectations, particularly the trajectory of it, and year to date we've had this tightening, higher for longer kind of outlook building in markets, largely following the trend in oil prices, which was the dominant change in inflation or headline inflation.
Year to date and that all stems from this US-Iran conflict geopolitically.
Now what I think is happening is I think the Fed is kind of in a bit of a knot here where the markets have already largely tightened for them, particularly the long end of the curve.
So you're seeing mortgage rates, for example, at highs.
You're seeing the 30-year Treasury bond at multi-decade highs as well, and that tends to have a slowdown effect.
Now with the Fed in particular, you have to understand that the Policy Decisions that they make today typically have a lagging effect 9 to 12 months.
And of course with a geopolitical conflict like Iran, you don't know how it's going to play out over the next 9 to 12 months.
And so taking that kind of permanent look forward bet on monetary policy is quite difficult for them.
My suspicion is that they're going to be in a holding posture even though I think the market has a bit more of a higher outlook.
They're pricing in.
1 to 2 rate hikes by year end.
Again, I think it's a hold, but what we're seeing in the market right now is that oil prices where they are today are having less of a marginal impact on the expectation.
It's things like the Goldilocks miss or what I call a Goldilocks miss in the jobs data that actually had a very meaningful impact on near term expectations, where the odds of a rate hike fell from 65% to about 45% over the course of a week for the September meeting.
And you're seeing that also play out in Bitcoin price where on these days of important prints, whether it's jobs data or CPI, Bitcoin price moves about 1.5 to 2x the daily average where there isn't any economic data being released.
And so I do think that the look.
Forward expectation on monetary policy is going to have a big impact on Bitcoin, and I do think at this point it's really driven by this U.S.Iran conflict.
But that said, assuming things stay steady where they are, we will, in my opinion, see a hold for the remainder of the year.
Well Thomas, a lot of moving parts there are a lot of uncertainty when it comes to geopolitics, so I appreciate your time today and thank you so much for all of your insights.
Thank you for having me.
