‘Enacting all of the things’
The CFTC filing is the fresh piece. The Office of Information and Regulatory Affairs, the White House unit that reviews federal rules before publication, lists it as received on Sept. 17 under RIN 3038-AF80 at the “prerule” stage, which means the document the public will see first is a step before a formal proposal, such as an advance notice or a request for comment. The CFTC declined to comment on the details to The Block.
Morehead’s argument is that the agencies are doing what the Senate would not. “The SEC and the CFTC are enacting all of the things that would have been in Clarity anyway,” he said. “And so on a practical level, it shouldn’t make a big difference.”
Alex Cutler, co-founder of the decentralized exchange Aerodrome, described the same shift in an interview on Thursday. “Until we get something like Clarity, it is the job of the regulators at the SEC and CFTC to look at the existing laws on the books and try to interpret them and apply them to an emergent new technology,” Cutler said. What changed was the people running those agencies: “in a shift in guard at the CFTC and SEC they are now using their interpretation of existing laws I think to ensure that these types of things can happen and can happen on chain.”
Kevin O’Leary, the O’Leary Ventures chairman, told The Block at the Avalanche Summit in New York this week that he does not expect the Clarity Act to pass before the midterms, but that lawmakers writing tax rules for digital assets will bring regulation back to the agenda. “If you’re going to provide a tax policy on this asset, you want more regulation, not less,” he said. Polymarket traders put the odds of the act being signed this year at 8% on Friday, up from 4.6% in the hour after the vote.
‘Back into a bullish regime’
The on-chain read turned before the price did. At 10:11 UTC on Friday, with bitcoin near $78,000, Glassnode posted that the coin had reclaimed its True Market Mean, the average price paid for coins bought on secondary markets, which put it “back into a bullish regime,” the firm wrote. “Next major overhead is the corporate treasury cost basis around $80k and finally the ETF cost basis at $85k.” Four hours later the first of those was gone, with about $250 million of shorts liquidated across crypto, according to Coinglass data cited by Cointelegraph.
The fund flows had already flipped. Spot bitcoin ETFs took in a net $159.5 million on Thursday, with BlackRock’s IBIT alone adding $183.7 million, according to Farside Investors data cited by Coinpaper. The three days since the vote still net out at $586.8 million of outflows, but the direction changed on the day the agencies moved.
JPMorgan analysts led by Nikolaos Panigirtzoglou wrote this week that short interest in IBIT sits close to its highest level of the year, and that a reduction in that hedging “could create more support for bitcoin vs gold from here,” The Block reported. Those shorts are what a 5% day runs over.
‘The Fed is still way behind’
The rally came with the odds of another hike rising, not falling. Polymarket’s October contract priced a quarter-point increase at 55.5% on Friday, up from 46.5% on Thursday. Morehead reads that as the point: “I think people are bullish on Bitcoin because the Fed is still way behind. The Fed has created 30% inflation in this decade already,” he said. “They’re still accommodative and that’s great for Bitcoin. Rates should be much higher than they are today.”
Crypto skeptics remain skeptical. “If something moves 8% in an afternoon on one sentence from a central banker, it isn’t hedging inflation. It’s taking a position on it” commented Mike Law, a property broker at Coulee Land Company.
Others are less sure the week adds up. “Markets are trading suspiciously well after the double whammy of Clarity Act failure and Warsh’s hawkish hike on Wednesday,” Jeff Anderson, head of U.S. at STS Digital, wrote in a note on Thursday, according to The Block.
Zach Pandl, Grayscale’s head of research, described the pattern a week before the vote. “When price in an asset class, whether it’s crypto or anything else, stops going down on bad news, that’s usually a sign that it’s oversold,” he said on Cointelegraph’s Trade Secrets show, published Sept. 11, arguing that the $58,000 low in June was the bottom. In August Glassnode had warned that a break of $58,500 would open a deeper fall, and Polymarket traders were pricing $80,000 as a year-end target.
Glassnode’s next line sits at $85,000, the average price the ETF buyers paid. O’Leary is positioning for the attempt. “I’m back in the saddle buying new positions, putting my bets on for this next cycle,” he said.
