Crypto Market Back at $3T: How Bitcoin's 'Golden Cross,' Clarity Act Contribute to Bull Run

Nicole (0:00)

All right, we welcome in Adam Lynch, Director of Equity Research at Charles Schwab. So it's great to see you. We're seeing crypto and bitcoin, for example, at the highest levels since January. It's pulled back just a little bit, but it was notable. What are the fun flows telling you about some levels to watch in the world of crypto?

Adam Lynch (0:19)

Yeah, hey, Nicole, it's great to see you too.

It's been a great couple weeks here for bitcoin. Both bitcoin and ethereum over the past week are up over 10%, and like you mentioned, we've been trading at some pretty high levels. I think it's flat today. Maybe bitcoin's around 84.5%, and ethereum was 26.75% or so. But it's been really nice to see this overall rally has lifted the total cryptocurrency market back over 3 trillion, which is a fantastic level to be at. And then, yeah, we've seen actually year-to-date flows in the bitcoin ETFs were negative all throughout 2026 until this week. We've had 4.6 billion dollars poured into those products just since August 19th. And that's really been what's lifted us above that level. So great signs.

We think it basically means when you see fun flows at that level, that's a sign institutions are getting back in. So we like to see that re-engagement.

Nicole (1:16)

Yeah, I was reading something that even when bitcoin is volatile, don't write off the institutions because they're definitely in on this. Why does it say that? Why does these articles say the institutions are definitely in sort of, you know, why is that?

Adam Lynch (1:33)

Yeah, great question. So whenever we see any very large flows just because of the amounts, we know it's got to be the big boys playing around.

But again, we are not seeing big dips. I think one of the strong things, and when I get a really good sense that the institutions are involved, is when we're not seeing sell-offs, when we don't have a big dip, when clarity fails, when the Fed hikes rates. So I think that more steady kind of chugging along as we're going up, instead of seeing some wild rides, is telling me that there's just a little bit more institutional participation.

Nicole (2:09)

I couldn't believe when I was reading your notes because I follow crypto pretty closely. The Clarity Act still has, they're saying there's a chance. Tell us a little bit about that.

Adam Lynch (2:21)

Yeah, that was fascinating to see.

So obviously, it failed in the Senate a couple of weeks ago. But House Majority Whip, Tom Emmer, says it could still pass, could be resurrected after the midterms and pass before the end of 2026 even. Now, in order to have that happen, it's going to be done during that lame duck period that's between the election and when the new Congress takes over in January. But seven of the Democrats who oppose the current version have since come out and said that they remain committed to negotiating. So we'll see, we could actually get there.

Nicole (2:58)

It's very interesting because we've also had the CFTC making moves, a couple of new rules there, the SEC talking about the tokenization advancement that they are seeing. Tell us a little bit about some of the, what are these rules and advancement and tokenization exactly? Why do people need to know about this?

Adam Lynch (3:17)

Yeah, so this is just a big step to see these institutions actually come forward and step up and take over where Congress failed us.

But what we saw was the CFTC stepped forward. Michael Selig has been saying for a long time that they're ready and willing to come forward with their new rules. So they proposed one rule which was essentially a crypto asset transactions and markets regulation. Then another one which gave passive software providers, relief so that they don't have to register as introducing brokers. So those were two nice things to see. There's very little details known. It's still confidential. But it's clear that these agencies are ready to kind of step up where Congress is not.

Nicole (4:02)

I also think about maybe a renewed confidence as strategy gets back into Bitcoin and actually swung to positive on some of the metrics that people watch when it comes to profits and losses because Bitcoin went higher, right? I mean, does that bring some optimists? Is it enough to really change the sentiment in the world of crypto?

Adam Lynch (4:23)

Yeah, I do think so.

You mentioned strategy. We're also always looking at, is the average Bitcoin holder underwater or are they in profits? And they're now in the green. So that just leads some, obviously, increases their sentiment. They're happier to see that versus the drawdown that they've been experiencing. So hopefully, that sort of momentum will continue. We've seen some strong technical signals. We've mentioned that Golden Cross that's happened for both Ethereum and Bitcoin. So hopefully, that could lift us higher throughout the rest of the year.