Crypto Report: CLARITY Act "Pretty Much Dead"

**SPEAKER_1** (0:00)
Let's welcome in Adam Lynch, Director Equity Research, Charles Schwab. Glad you're with us. I was just looking at one month returns, Bitcoin up about three and a half percent, and Ethereum up nearly 10 percent in one month. What has driven crypto a little bit higher? And I know we have not heard too much about the Clarity Act, as now they're going to summer recess.

**Adam Lynch** (0:25)
Exactly.

**SPEAKER_1** (0:26)
Yeah.

**Adam Lynch** (0:26)
Hi, Nicole. Great to be back. So yeah, first of all, Clarity is pretty much dead, we think. I don't think we're going to see any progress there. But it has been nice to see the cryptocurrencies hold up, even though that news has kind of came out recently. Bitcoin has been doing pretty well, kind of holding this level at around 64, 65K.
It did dip down at the start of August to about 62 and a half or so, but it's bounced back and is holding strong. Ethereum has been doing, like you mentioned, a bit better over the last month or so.
I had looked, as of June 1st, it's up 18% versus Bitcoin up around 7 So that's been pretty nice to see. However, taking a look at the fun flows for this month, we've seen more money moving into the Bitcoin ETFs versus Ethereum, about 600 million versus 90 So that's been something to see even while Ethereum has been the one that's outpacing Bitcoin.

**SPEAKER_1** (1:22)
With the recent moves in AI, there's been talk that there were margin calls when it came to tech. People were sort of allocating funds elsewhere. It wasn't that they didn't like crypto, but they were elsewhere.
But when you have Bitcoin sitting around 64,000, what will be the catalyst if it's not the Clarity Act, because that could have been a catalyst, what are we watching for next in the world of crypto?

**Adam Lynch** (1:51)
That is a fantastic question, Nicole.
I think for a while there, we were really looking for clarity to have some signal. We didn't think that it was very priced in, which I think was proven when the price held up, if you will, once it was essentially known that this wasn't going to get done. What's going to pop up next? Maybe we could see some issues around inflation. A lot of times if inflation starts to spike again, people will rotate into Bitcoin, a currency that doesn't have that sort of control over it from a US government or a foreign government. We could see something like that. Otherwise, I think it could be some more of this product that people are creating. We've seen additional ETFs, additional types of funds around the cryptocurrencies, and I think just continued interest there could help.

**SPEAKER_1** (2:43)
I think about XRP. I'm taking a look at that. For example, that in one month is down about 5 percent. How the Fed moves, how does that affect crypto? Because we are waiting in September for what the Fed may or may not do. In the last meeting, the Fed chose to hold steady. But September, maybe you could see a hike, for example. What would that mean for crypto investors?

**Adam Lynch** (3:08)
Yeah, that's definitely on the table right now, it sounds like. I think there was a new report even out today that Warsh is comfortable with a potential increase next month. So we could see that and I doubt that that will be very good for risk assets. So we could see a little bit of a dip with something like that. Anytime the interest rates are going up, you're going to see things like stocks and Bitcoin and others probably drop a little bit. So that would likely be the result, but we'll just have to wait and see.

**SPEAKER_1** (3:41)
We also had a hiccup in the industry with the gold card cold wallet hack. I've been talking about that for the last week or so, and that was 130 million that have been drained from the accounts. You don't want to see that. We've seen this story before, you don't want to see that. It's not a reassuring story. But also on the headwind side, for the misses we've seen in Circle, Coinbase, Galaxy, Cipher, Block, in certain areas, can you pick out something here among these names that you gave to my attention?
What are your thoughts about what's going on here with these misses?

**Adam Lynch** (4:24)
Yeah, it was definitely a struggle during the Q2 earnings season for most of those stocks that you mentioned. We have seen a lot of them report, and most of them did have some sort of miss, be it a revenue miss.