Dovish Fed Comments, MSTR Buying More Bitcoin Lifts Crypto Space

**Sam Vardas** (0:01)
Welcome back to The WatchLayers. I'm Sam Vardas, in for Nicole Pedellini. It's time now to take a closer look at Bitcoin, Ethereum and more in The Crypto Report. So let's welcome in Adam Lynch, Director of Equity Research over at Charles Schwab. Adam, good afternoon to you. Thanks so much for your time. So a typically seasonally weaker month for cryptocurrencies, is it going to be different this time around, given what we're seeing today?

**Adam Lynch** (0:23)
Yeah, that's a great question, Sam. Hi, it's great to see you. You mentioned September. It does tend to be a pretty slow month, but it kind of got off to a slow start after a big August. During August, we had Bitcoin up over 25%, Ethereum up nearly 30%, and then we kind of limped into the start of the month until today. Both of them are up about 4% or 5%.
Mostly on some of those comments from Federal Reserve Governor Waller, who said that he's going to lean a little bit more towards holding rates steady right now, if the August inflation data comes in as expected. And yeah, we've got Bitcoin trading around 81K and Ethereum just below 2,500.

**Sam Vardas** (1:01)
What are you hearing, seeing in the research as to, you know, what exactly would keep it over 80,000 right now and sustainably hold? Because this seems to be, I don't know, kind of the point that hasn't meaningfully been able to get past Bitcoin.

**Adam Lynch** (1:17)
Yeah, I would certainly agree with that. We hit this 80K level back in May after a bit of a bump off the market lows back in late March, but we couldn't sustain it.
In order to move substantially higher from here, I do think we need to break through this resistance and then establish some sort of multi closes above the level. In order to move higher from here based on non-technical indicators, I think we're going to need some sort of macroeconomic progress, whether that is resolution to the situation in Iran or maybe some easing less hawkish tones from the Fed, I think could also push us higher here.

**Sam Vardas** (1:59)
All right, so it's obviously closely correlated to the macro, as we've seen today with Waller's comments yields backing off a bit here.
But it's also about sentiment, isn't it? You've highlighted and as we've been following very closely, strategy has been buying, it's not been buying, but purchases have been keeping pretty steady in recent weeks. What is that signal of? I mean, why do we pay attention to that so much?

**Adam Lynch** (2:27)
Yeah, strategy is obviously a pretty interesting one and typically thought of as a bellwether, if you will, when considering Bitcoin in particular.
They did actually resume their purchasing, so they hadn't made any purchases for about 10 weeks. Until last week, they bought over 350 million in Bitcoin. Their CEO came out and said that he doesn't foresee any further sales. He also called the future market a pretty heavy bull market. So they definitely have some sort of optimism and have essentially signaled that with a resumption of their purchasing. I think the stock is up something like 15 percent today. Most of those crypto related stocks are flying.

**Sam Vardas** (3:10)
Yeah, they certainly are. You have very much seen it in a number of these crypto related stocks today. And they've been closely correlated with obviously the price of Bitcoin. We've seen that recovery, which has been very interesting lately as well. I'm just wondering then, as far as overall sentiment, I mean, okay, strategy buying is an interesting signal. But we were speaking a lot over the summer, and I think you and I have even perhaps touched on it at one point about the kind of sentiment mismatch, you could call it, between the sort of DeFi and the TradFi guys. We've seen a lot of institutional adoption, financial services companies obviously looking to bring this on, a way to offer this to their clients. But at the same time, you've had this kind of depressed feeling within the industry among the sort of natives that have all been going, oh, hold on a second, I might go over and do this AI thing.
Are you seeing that gap closing? I mean, what are you hearing and seeing out there? I mean, what signals do you look out for, for any improvement in terms of sentiment?

**Adam Lynch** (4:12)
That's a fantastic question. I think you mentioned there a little bit, the typical Bitcoin or crypto investor right now, or at least maybe rewind the clock a couple of months, was pretty depressed. We had come down from 125 to 60 or so, and things weren't looking good.