Well, Bitcoin is down in New York morning trade, but managing to hold that 78,000 level. And after staging a sharp recovery, jumping 30% from its July lows and briefly topping 81,000. But at the same time, U.S. debt has crossed $40 trillion. And the recent strong jobs data in terms of nonfarm payrolls threatening another fed rate hike.
Traders are asking if this rally can actually continue. So joining us now to break down what's driving this move and where we're heading next is Alex Blume, founder and CEO at Two Prime. Alex good morning. Thank you so much for joining us. So we're keeping an eye on all asset classes this morning. But what do you make of Bitcoin's move higher.
And tell us about the correlation with the precious metal gold.
Hi Remy. Good to be with you again. Yeah I think the recent rally in Bitcoin is driven by some macro factors as well as more microstructure on the microstructure side. You know, the trade of the last year, 18 months, has just been cell covered calls endlessly against Bitcoin. And that's been a good income strategy for the last 12 to 18 months.
However, implied Vol has gotten so low that as soon as there was a rally which, you know, besides comments or expanding the bond buying program, they had sort of kicked it off. There was a short squeeze that blew out a lot of positions people were forced to cover, and we saw 30% rally quite quickly. Um, at the same time, I didn't see implied vol or funding rates on perps or futures become so expensive that you think, oh, this is a blowout top.
And so this range 78 to 81. It seems like we're leveling out in a healthy place. Uh, on the macro side, I think the future of Bitcoin is still very macro dependent. You know, our entire economy is basically AI and the price of oil. And though Bitcoin has sovereign properties, if there's a huge sell off on risky risk assets across the board, I think Bitcoin will suffer in the short term.
That being said, it's stayed pretty resilient the last couple of weeks, even despite, you know, very high jobs data outcomes and a lot of macro uncertainty. And so overall, I think it's holding up pretty well. And I think it was deeply depressed by college selling. That's now starting to to recover.Yeah. So Alex, you highlighted a lot of areas that we continue to monitor. And obviously we're coming back from a long holiday weekend. So that does mean we are heading into the final months of 2026. So first I do want to ask you about the biggest catalyst that you're watching this autumn and what you think Bitcoin needs to see in order to recover that six figure threshold as we head into the final months of this year.
Yeah, I mean, I think probably the number one barometer is just the ten year and 30 year yields. If, you know, there's kind of two ways out of our current fiscal crisis. One is spend our way out and growth and the other is austerity. I was just at the G20 summit. That's in my hometown of Asheville, and that's got the Senate and Jamie Dimon and a number of others.
And what I can say is austerity is not the way we're going. You know, it's politically unpalatable. It is painful. And at the same time, our economy is booming with AI, at least for now. And so the path forward is growth. Or set another way, basically, you know, robbery of people's money via inflation. But I think inflation is going to stay persistently high.
And I think they're going to run the economy hot. Um, so, you know, actually starting today has or starting tomorrow is programed to buy back long dated ten year 30 year bonds will go into effect. It's going to be a drop in the bucket the 4 billion. And I think they're going to have to print more money and spend more money to keep things under control at the same time. You know, we're actually seeing the PCE measurement is actually being changed to account less for stock growth. And so we're going to see a PCE print that's lower. Even though it's just a technical change in how things are being calculated, which has been done a lot of times in the past as well. Um, and so I think that, you know, we're going to make inflation look lower.
But I think in reality, inflation people know in the real world that inflation is pretty bad right now. And I don't expect it to change anytime soon. Yeah, Alex, that must have been quite the event in Asheville with the G-20 gathering because as you mentioned, it wasn't just geopolitics as well as monetary policy. It was also about the role of artificial intelligence. But moving on to the other crypto major, which is ETH, that has outpaced Bitcoin since July.
So what do you think is happening with ETH here? Do you think we're looking at a relief rally or could this be a new bull run. And what are the factors that you're watching for. Sure.
Well, you know I think ETH is the second largest asset in. So there's really in Bitcoin I think many people look at what else can rally alongside it. Um, and people go to ETH. It has an ETF and it's the most piped into mainstream finance at the same time, I f has no mechanism to really attract fees that like use up. And so I think long term I just don't understand their economic model.
That being said, there's a plethora of these new things called vaults, stablecoins, tokenized equities and ETH. Even Solana are really the places where it's being built. And so as there's more traction in these things, I think that you'll see maybe the prices of these L ones that support these newer products to be growing too.
But just from like an economic perspective, I don't understand how ETH attracts fees. And so I don't see how it can grow long term unless they change their fee policy. And Alex, before I let you go, I do want to get your perspective on the regulatory landscape here in the US when it comes to digital assets. You mentioned ETFs off the top of the show, and grayscale, as well as a 16 Z are pushing the SEC to speed up ETF reviews and also allow confidential filings to protect concepts from AI powered copycats out there.
But there are also the Wall Street heavyweights out there, including Jane Street and Schwab, that are warning about the rushing of launches in secret risks in terms of liquidity as well as bad fund structures. So when it comes to the regulatory landscape, of course there are questions surrounding clarity.
But what do you think should be prioritized when it comes to innovation out there?
Excited about is more on on chain finance. So taking traditional financial products and making them on chain, where the ability to create new funds to attract global capital and to create composable financial assets that can be mixed and matched with other people's products, that's all, on a technical level, possible today.
That's where stablecoins came from. There's tokenized treasuries. There's tokenized equities. These things are growing. The growth charts are exponential on all of these things. At the same time, they directly run into a wall with US securities regulation and transfer agent rules so I can create a tokenized equity. But as soon as it starts moving hands, you know, you either need to use some kind of legal loophole, or maybe you have economic exposure, but not true ownership of the equity. And I see Robinhood and other on chain tokenization of equities and treasuries grappling with how to stay compliant while still offering all the new benefits of on chain composable assets.
And I've heard from the SEC, I've heard rumors they're going to change some of those transfer agent rules. And even if clarity doesn't pass, I think we'll see new rules guidance that allows people to build products with greater clarity. Even my own firm is building some of these products, and we're looking for clear answers on what to do.
Well, Alex, appreciate your time. We will have to leave it there for today, but always great having you on the show and thank you so much for all of your insights.
