In New York morning trade, we are looking at crypto higher in terms of Bitcoin as well as Ether. In crypto news, the U.S. SEC issuing an order that clears the way for tokenized stocks trading U.S. equities. And this is the innovation exemption that crypto traders have been awaiting. This does follow a quiet volatile 48 hours for digital assets.
Following Tuesday's failed cloture vote on the Clarity Act in the Senate, the Federal Reserve delivered a second blow by raising interest rates for the first time in three years. And this is for the digital asset markets. Now Bitcoin is back above 76,590 in New York morning trade. Now despite the headwinds from Washington and the Fed, builders are hard at work with major announcements coming from Circle, Tether and Kraken, all dropping within hours of the Senate vote earlier this week.
And joining us to read the market ripples as well as separate the noise from the signal is Andy Baehr, Managing Director of Asset Management at GSR. Well, Andy, good morning. Thank you so much for joining us.
Yeah, it's a busy week.
Yes, indeed.
We finally, I want to say finally, because we got the Clarity vote, which was kind of predicted to fail. And I think many in the industry are disappointed that it failed. Others are dancing on the grave of the failure. And we can talk about that a little bit too. But it was good to get past it because it was expected.
The prediction markets were correct. It was a steep hill to climb after the August failure and now the September failure. So then the question is, what's next? And that basically amounts to relying on regulatory rulemaking to help us kind of, you know, take the beach, you know, build up enough existence of healthy businesses that future legislation will sort of honor the progress that's made.
And then the second thing is that we had the Fed hike rates, as you've been discussing all morning, for the first time in three years. You know, our view is that once you get to max hawkishness in terms of expectation and see over the top of the hill, that's when Bitcoin and other assets can sort of breathe.
It's really the certainty of what's going to happen in the future rather than what happened yesterday. So the dot plots suggest that we have one or two more cuts this year, and I think that's getting us closer to certainty. So you can see that both equity prices and crypto prices, once they got over their indigestion of the news kind of overnight, sort of regained some momentum.
So we go back to feeling much better about where we are right now than sort of where we were in the summer when things were kind of listless and low energy.
Yeah. And I'm so glad you mentioned digestion, because we're still digesting that Fed rate announcement as well as the dot plot and what we can possibly expect as we move into the final months of 2026. But this morning we have new news to digest. And that is the innovation exemption announcement out from the SEC.
So tell us about the implications for this. And as you mentioned, relying on regulatory bodies such as the CFTC and SEC. What does that actually look like?
Well, it's exciting. And I think I've been spending time yesterday. And I'll go back today to the Avalanche Summit. That's another layer one which competes or participates alongside Ethereum and Solana to try to get that, you know, all those tokenized assets have to appear on a blockchain somewhere.
And Avalanche just sort of has a lot of really interesting properties to become one of those primary blockchains. So, across the room, even those who were, as I said before, dancing on the grave of the failure of Clarity kind of are still supportive of this idea that once equities are tokenized, that will be a technology improvement that will enable 24 over 7 trading.
It will make settlement more efficient. It may even promote better connectivity between issuers and beneficial shareholders. And that's just good, right? So this is great use of blockchain technology. Remember, you need Ethereum, Solana, Avalanche and other layer ones to ultimately support this.
So you can't erase the crypto side of it entirely. So what the SEC is saying here is, well, we sort of have to give these tokenized equities room to trade to see how it works. You don't want to take some of these venues that you know, on which they would trade and say, well, now you're an exchange. We have to follow all the rules of the exchange we see in the room around us.
A lot of rules. Yes, New York Stock Exchange has books, and books are rules. So they're granting a temporary exemption to these tokenized security venues. So tokenized equities can trade there and everybody can observe.
So it's part of this innovation exemption, as you pointed out. It's temporary. It's an excellent way to kind of test pilot tokenized equities to see how they behave, what their liquidity profile looks like, what critically their liquidity profile looks like nights and weekends, who trades them, what kind of volatility comes out of that, and, you know, the short term effects it has on the market.
So it's certainly not a surprise that Chair Atkins' SEC is thinking forward about how to actually get stuff done. But it's great to see these announcements and well-timed after the, you know, sort of setbacks that the industry faced earlier this week.
Yeah. And Andy, I'm sure there are a lot of viewers out there who are keeping a close eye on the price action of Bitcoin, and right now we are looking at it hovering right below the 77,000 level. And it does appear range bound. And I know that over at GSR you pay attention to market data as well as what's happening in terms of stablecoin growth.
So give us your lay of the land here.
Well, first of all, the model that informs the allocation of our Base ETF, which is, you know, the first actively managed multi token ETF in the United States, has actually put a little bit more weight into Bitcoin now for the first time in several weeks. So it had been overweight Ethereum and then it was overweight Solana for a while.
Those are the three assets in the ETF. And it sort of shifted back. Part of that is seasonal. And part of that represents sort of the energy in trading action between the three tokens. So one could start to see that as a little bit of a more conservative stance, or it could really be directing towards more of a macro driven crypto profile in the near term.
We do like seeing Bitcoin rebounding after yesterday's news. Over 76,000, Ether getting back towards 2,500. Maybe beyond, Solana holding 100, XRP holding a buck 30, maybe heading back towards its buck 50 local high. So, we like seeing that, the energy is a little better. There's been news about more, a resurgence of VC energy back into the market.
Perpetual derivatives volume, all of these are kind of off of the summer lows. So we still have a lot of uncertainty with the election coming up and this higher interest rate environment. But all in all, I think we feel a little bit more constructive about the market now than we did over the summer.
Well, Andy, I appreciate all of your insights. It's yet another busy morning here on Wall Street. So thank you so much for joining us. And thank you so much for all of your insights. Thanks, Remy. Thank you.
Thank you.
