tl;dr
Increased dollar liquidity has a highly predictable effect on the price of BTC. The CFTC echoes the SEC’s push to promote crypto innovation.
Market Snap
Market Wrap
Two days ago, the US Treasury announced it would double the fortnightly buybacks of long-dated US Treasuries to replace them with newer, more liquid, and shorter-dated issues. This is plain and simple market manipulation, the likes of which would put any private individual into jail for a very long time. It has the effect of lowering the cost to the US government of its gargantuan and ever-growing debt pile. This came on top of the use of a repo facility for Japan to park its holdings of US Treasuries with the Fed in exchange for freshly-minted dollars, accompanied by a call to expand the program. The latter move can reasonably be interpreted as QE as it results in more dollars in circulation. The former is more of a tool for allowing the US government to continue its fiscally incontinent habit that will not change anytime soon.
This is what liquidity easing looks like, and BTC has responded in the only way it possibly could, rallying from $63k to $75k. The $126k all-time high last October and June’s apparent $58k cycle low fit the four-year-cycle narrative eerily well, despite my earlier claims that the cycle was dead and buried. Which goes to show that you should treat confident market predictions – including mine – with a degree of caution.
When we add into the mix that the spot BTC ETF flows now seem to have decisively turned positive with over $1bn of inflows in the last four days, you shouldn’t be surprised to see smiles on the faces of the crypto bros.
Curious Cryptos’ Commentary – Commodity and Futures Trading Commission (CFTC)
Joining forces with the SEC, CFTC Chairman Michael Selig has directed staff to explore potential crypto market structure rules if the CLARITY Act remains stalled in Congress. Speaking at the inaugural meeting of CFTC’s Innovation Advisory Committee, you can watch all three and a half-hours of it here:
https://www.youtube.com/live/9rTCARzj98I
Michael explains what he wants:
“To achieve this, I've directed the CFTC staff to begin exploring rules to codify a CFTC market structure for crypto assets using the agency's existing authorities.”
He also echoes SEC Chairman Paul Atkins’ fears about the failure to pass the CLARITY Act, gaining extra kudos from the crypto community by having a dig at Gensler:
“Passing Clarity is the surest way that we can prevent another Gary Gensler from running a rogue campaign of lawfare against the individuals and companies in this room today.”
Intriguingly, he also wants to bring DeFi into his regulatory orbit:
“I've also directed staff to engage with developers of on-chain finance protocols to establish ways in which developers can offer their protocols in a legal and compliant manner in the United States, future-proofing developer protections once and for all.”
This mirrors comments made by Trump earlier this week about wanting to bring Hyperliquid specifically onto US turf, a sentiment which has buoyed the price of HYPE by over 25% outperforming many other crypto assets in the last couple of days.
The combined forces of the SEC and the CFTC providing regulatory clarity would herald a wave of innovation and adoption of the crypto industry within the US never seen before.