Bitcoin higher in New York morning trading, trading just below 78,000. The crypto markets are bracing for a historic 48 hours in Washington tomorrow afternoon. The Senate holds a key procedural vote on the Clarity Act, needing 60 votes to advance. Then the Federal Reserve will announce its latest interest rate decision.
So joining me to discuss this and unpack more is Brian Dixon, CEO of Off the Chain Capitol. Brian, welcome to the show.
Thanks for having me I appreciate it.
Well, Brian, tomorrow is the big day. Tomorrow's vote requires a steep 60 vote majority to advance. So with all the ongoing fights over money laundering rules and ethics, do they actually owe? Can they actually pull this vote off?
I'm hopeful that they can. And it's important to note that the cloture vote that's going to occur is not a passage of the bill. It's just the agreement to go back to the floor and have them continue discussions to further flesh out this bill, to hopefully get it across the finish line. The big thing that was noted just over the last 24 hours was the ethics deal that got passed.
So the sticking point there was around enforcement, and the Democrats didn't want to accept that the DOJ policing the president alone could create a conflict of interest, saying that some of his own generals or officials could actually be helping it along the path. But in reality, they wanted to require officials to divest or move things into blind trust for crypto states.
And ultimately, Trump has agreed to these terms. So I think that's a major positive step in the right direction to hopefully get an approval vote tomorrow to bring it back to the floor.
Yeah, Brian, that's definitely interesting. But I also want to talk about what Treasury secretary said. He put out a warning that a failed vote sends a troubling signal to our allies. So break down your analysis. Has this become a broader test of American financial leadership?
I absolutely think that's possible because when you think about it, we have other territories around the world that have had digital asset regulatory frameworks in place as early as 2017 to 2018, and we're way behind in that regard. So we need to take the lead in America to really create this regulatory structure so people understand the environment that they're playing in, where entrepreneurs building what regulator is governing which sides of the market.
And since we don't have that in place yet, what's really put a huge pause creating this is that the institutional investors in the space are sitting on the sidelines today. So if we think of some of the biggest allocators in the world, these people are waiting on clear regulation in order for them to enter the market.
And they've had clients demanding these products for many, many years. So once we get that regulatory clarity and the infrastructure in place in the United States, I think we're going to see a massive wave of capital to the tune of things we don't really even know yet, because it's so much sitting on the sidelines, but it's trillions of trillions of dollars ready to enter the space.
And when we do that, other nations will look at us as well and tend to follow, and you'll see more additional capital flow into the space. But from an American standpoint, absolutely, we are behind. We need to vote on this. We need to get the infrastructure in place and we need to move forward.
So, Brian, I want to look at the timing of all this, because the market is barely going to have time to digest the Senate vote before the fed drop its rate decision the very next day. So how are institutional deaths playing this doubleheader, and which event actually poses the bigger risk to crypto this week?
Yeah. So I think from an institutional perspective, if we think back to June, there was a tremendous amount of fear in the market. The actual greed and fear index was marking around a ten, which is extremely fearful levels to the tune of what we saw around the FTX collapse. And it's gone all the way up to a 65.
As of last month, there's been a huge shift, and I think this is dated because of the regulatory stuff that's coming up. Because even if the Clarity Act is not approved, what we've seen is the SEC's Project Crypto initiative, and also the CFTC will work together to create regulatory guardrails, even if this bill doesn't pass.
So what we know then, as an industry is that regardless of the Clarity Act, the regulation is still going to move forward. It just may take a little bit longer. So the Clarity Act would cement it and hopefully put the rules in effect quicker. When the institutional desks are looking at this, I believe they're trying to play around the dates of potential votes.
What's happening in the markets in general. We saw massive ETF inflows last month in Bitcoin, I think, to the tune of around $3 billion, which was a massive, massive month for inflows in Bitcoin ETFs. And they're measuring around how people are looking at the markets with the regulations potentially coming into place.
They're also looking at things like the prediction markets. Now as of those today, it has a very low percentage odds that we'll actually see passage of the Clarity Act. But that may change if we start to see some interesting information over the next 24 hours. That could really shift gears, and we could continue to see some inflows.
Just over the last 24 hours, we've seen a little bit of a spike in Bitcoin's performance, I think largely due to some of the information that came out around the ethics provision that was approved.
Yeah. And Brian, so analysts are warning that a failed crypto act could a vote could trigger a percent drop in altcoin. So are altcoins bearing most of the regulatory risk if Washington stalls?
So I think altcoins will bear a lot of risk with it because Bitcoin already has some standard definitions being a digital commodity. And that's where most of the digital asset market rests today, a little over half percent or a little over 50%. Excuse me. And so the other assets are things that don't have as much regulatory clarity.
So yeah, I think there could be a drawdown in the alt market, but there will be a drawdown in Bitcoin as well. But I do believe it's short term. And a lot of the things that we look at from a model perspective to help us analyze Bitcoin as being an undervalued, fairly valued or overvalued asset show us that today Bitcoin is still very undervalued from where it should be in the markets relative to its network effects, its infrastructure, its user base continuing to grow and now the institutional activity that's coming into the asset.
But even on the alt side of things, we are seeing a lot more institutional interest and activity on the alternative markets and digital assets and some of these altcoins as well. So as that continues to mature over time, you'll see a much more robust market there. But yeah, I do think if we see a failed vote or, you know, it's more uncertainty around what happens that could create a short term drawdown.
Awesome. Well, Brian, thank you so much for your time. Definitely an interesting week for the crypto world. So obviously we're going to keep our eye on top of that. But thank you so much for joining us today.
Thanks for having me I really appreciate it.
