Well, Bitcoin coming off its best August in nine years, giving some hope to investors that the market may have flipped from bearish to bullish. At the same time, the crypto major has cooled from its rally last week above 80,000. And of course, as we approach the fall, geopolitical factors are in the spotlight with the midterms coming up. Also, a cloture vote on the Clarity Act is awaiting Senate lawmakers when they return from summer recess on the 15th of September. And another DeFi focus area could be swayed by fall events and that is prediction markets. We have both football and the midterms approaching and prediction markets contract volumes could run as high as $54 billion. Well, joining us today to break all of this down is Adam Morgan-McCarthy, researcher at the capital markets firm, Lotag. Well, Adam, great to have you back. Thank you so much for joining us. We have a lot coming down the pike and we are counting down to the end of the quarter, not to mention Iran. What are upcoming Fed decisions as well as economic data such as inflation setting the stage for Bitcoin's next move?
Yeah, thanks for having me, Remy. It's great to be back as we head into the end of summer here. I think, you know, we saw what's got the sense decision there to just about two weeks ago. on those macro signals right now, those indicators, his decision to try and bring down the long end yields, which so far had a little bit of an impact. Obviously, the bond buying program will start next week, I believe. Hasn't done much, but crypto bent on it. Bitcoin popped, I think it was up nearly 25% at one point week on week. And You know, the altcoins were moving even higher, which was really quite interesting. But I think that the big tests are still ahead, as we saw with Walsh's speech on Friday in Jackson Hole. The kind of gains were powered back a little bit there. He was a little bit hawkish there. You know, the inflation data and the data more broadly doesn't support yet this kind of, you know, cutting regime that we thought we might get with Walsh. And we've also got the midterms coming up. So there's two really kind of key things there. that the market has to kind of contend with before I think Bitcoin, we can say it's out of the spare market just yet. And we'll find out a bit more on those the next few weeks. But I think the first one will be the Fed. What they do, you know, there could be a hike, which would, I think, really put the kind of, you know, brakes on this move that we've seen over the past week. A lot of the move as well, we got to say it was a leverage washout. You know, shorts were squeezed. If we look at, you know, open interest and perpetual futures, it's actually not increased a lot. You know, it's kind of flattened coin terms, even though the price is rallying so much. So the kind of speculation hasn't come in to support that. And we haven't even started thinking about the U.S. election midterms yet in crypto. So I think that, you know, this was a little bit of a factor of kind of low liquidity over the summer, market reacting to percent and sort of like pricing in a debasement trade. And then we kind of brought back to reality with that war speech on Friday. And we're seeing that in options market as well, as you can see here. You know, there's a lot of people looking at that 70k strike at the end of September. And then, you know, the market's going to start pricing in the midterms, which it hasn't even looked at yet. I mean, two years ago, we were looking at the US election, the presidential election, the major, you know, national elections. They were pricing in around now. There's not a lot of that happening yet in crypto. So I think it's going to be something that we can tell me close to the time. Right now, I think it's fed into this month, seeing how liquidity comes back. But the things I'm watching are volumes and these volumes and options as well as the spot market. Right now, I think Binance, the largest venue, is doing a little over a billion dollars a day in Bitcoin. On target to do maybe two, three hundred billion this month. Last year in September, it did six, seven hundred billion. So we're really, really way off the highs in terms of volume and activity. And that's where you really need to support these moves.
And Adam, we have time for one more question here. So I do want to get your perspective on prediction markets when it comes to the midterms as well as the NFL season. So what are you watching and why?
Yes, I think, look, we had a big drop off in volumes last month from that World Cup volume was bumper. There was huge activity between June and July, but it fell about 15, 20 percent in August. The NFL's back next Thursday. I think the Seahawks and the Patriots kick it off. I'm going to be watching that, seeing how volumes pick up. And we want to see those volumes come back to support the kind of stress testing that we saw over the summer prediction markets, where they can handle that huge flow. And they handle it pretty well, pricing markets pretty tightly and repricing goals and events quite quickly. So that'll be a big test as we head into the November elections. The NFL's kind of setting the scene for it, but the November elections will be important because traditional polling is still off. We saw that in the Michigan. primary Senate race between Haley Stevens and Abdul Saeed. That was pricing pretty broadly on polls, you know, that there was, Saeed was going to win by 15 or 20 points. It was much closer than that. And prediction markets proved in 2024 that they can price things a little bit tighter, a little bit more accurately, maybe. This could be a nuclear blow for polls this month. So I think I'll be watching the NFL and then the midterms.
you so much for joining us today and thank you so much for all of your insights. Thanks for having me. Bye bye.
