Bitcoin has been stuck in a $77,000 to about $81,000 range for three weeks now, with the next move likely hinging on inflation data and progress on the Clarity Act. Joining me now to break down where crypto goes from here is Paul Howard, Senior Director at Wincent. Paul, great to have you back.
Hi. Thanks for having me.
Is this Bitcoin recovery driven by real institutional demand or just short term positioning?
The data points to a lot of this flow being institutionally led. Over the last week we have seen exchange balances of Bitcoin and Ethereum leak out — around $1.17 billion worth of Bitcoin and over $300 million worth of Ethereum has left exchanges, which is generally a bullish signal in this market. However, we are now at a point where we are hinging on macro data from the US. The latest data is pointing to potential rate rises, which will lead to a restriction in money supply if rates do go up. I think that is what we are going to see over the next few days — trend lower and potentially break the $77,000 floor.
How much is the macro environment driving crypto right now?
It is less influential than it was five years ago in the era of cheap money, when we had a lot more reaction to macro news. The plethora of derivatives and other Bitcoin products that exist now has taken a lot of volatility out of the market. But it is still a major driver — especially with the ETF market now being such an institutionally led market rather than the retail speculator market we had five or six years ago. I would expect a softer macro picture. With inflation coming in higher, that is probably going to lead to some erosion of the $77,000 floor.
Is the Clarity Act the biggest catalyst for crypto right now?
It has to be. That is really what is going to be needed to push this above what has been like an 81-day high. My sense is that we retract from these levels and it is going to need something like the Clarity Act — a big piece of legislation or positive movement — to really propel Bitcoin higher. It may come with some more dovish comments from the FOMC, but all the data today is pointing towards a rate rise. Clarity is probably the biggest thing on the horizon right now for Bitcoin and crypto.
What are your predictions for September on the Clarity Act?
I think the pricing is not necessarily factored in yet. Hopefully we get to a stage where rewards can be given to stablecoins — which means a lot of debt and real world assets could potentially move on-chain to earn cryptocurrency holders yield through those products. If it comes through, that will be very positive for the segment. Depending on the form the act takes when it passes, it is going to really push Bitcoin to new levels we have not seen for the last year or so. If it fails on the downside, we could easily see a retrace back to around the $68,000 levels.
Zcash just became the latest asset wrapped into an ETF. What does that signal?
Zcash is a cryptocurrency based on zero knowledge proofs — a way of knowing that a transaction is valid without revealing the password or key behind it. It allows you to move money peer to peer without the footprint that might get left in other stablecoins. Seeing the $500 million ETF print is very welcome news. It shows institutions getting broader exposure than just Bitcoin and Ethereum. It is very constructive because it gives access to family offices and financial intermediaries to a product they previously could not hold in spot form. Yes, it is a far broader signal of institutional adoption.
Paul, thank you so much for joining us this morning.
Likewise. Thanks. Have a great day.
