A strong stretch for crypto
Bitcoin (BTC) is up 27% month to date. The recent runup came from two events. The Treasury announced a surprise buyback, which made the market pop. There was also a large short squeeze: a big short position sat around $70,000-$75,000, and prices blew through those levels, pushing values higher.
Those higher prices are now holding because of increased fund flows. A pop driven by a short squeeze matters less than higher prices driven by real demand. Lower leverage makes this move look more solid - closer to long-term holders who cause less price swinging than to traders forced to cover shorts.
The Clarity Act vote on September 15
Whether the Clarity Act is dead in the water is still an open question, but there will be progress on September 15. On that day the Senate record confirms that Senate Majority Leader Thune has filed cloture on the motion to proceed. Cloture is a vote before the official vote. Even during cloture, the bill must clear the 60-vote threshold. Getting that done is uncertain.
Rules versus legislation
Regardless of whether Clarity passes, there were signs this week that the SEC and the CFTC are willing to step up and fill the void with rules instead of laws.
Is a rule as good as a law? No. Rules can be easier to put in place, but they are also easier to remove. A change in the head of the CFTC or the SEC could reverse the rules right away. That is far harder to do with legislation. Legislation is preferred because it gives long-term guard rails to operate under.
How to spread money across digital assets
There are many choices. Bitcoin (BTC) is the classic and works more as a store of value - the asset to hold if you worry about debasement of the fiat currency. Ethereum (ETH) has more functionality and carries a lot of demand, which sets it apart. Other options include Solana (SOL), XRP/Ripple, and Hyperliquid (ticker PURR).
A sensible approach is to put some share of a portfolio into this asset class, keep most of that in the majors, then place a smaller amount in the alternate coins. Those alternates tend to be more volatile and riskier than the classics.
Hyperliquid (PURR) has surged: up about 16.5% on the day and nearly 120% for the month.
Rates, buybacks, and the debasement trade
Treasury Secretary Bessent's move gave crypto a boost. The buybacks went from $2 billion to $4 billion, with the possibility of more - talk points toward a $1 trillion mark. Any financial intervention likely helps crypto: what is happening with the yen, with rates, the extra $2-4 billion, and an account the Fed can draw down as another option.
When the government gets involved and these plays start acting out, the crypto rally could keep going, because that raises the idea of debasement and printing our way out of the problem. If that happens, gold and crypto would probably be good places to hold. Gold is up about $10 on the day.
