Macro Headwinds vs Crypto Market

Bitcoin is holding near $65,000 despite significant macro headwinds. Peter Schiff called the rally another opportunity to sell and admitted he does not understand why Bitcoin failed to sell off. Anthony Scaramucci sees no near-term catalyst beyond supply-demand dynamics and said the Clarity Act passing would be a small catalyst at best, though it would open bank access to Bitcoin and change how it can be held in the United States.

Trump posted an image claiming the Strait of Hormuz is now U.S. territory and stated there are no talks scheduled with Iran. Oil hit a low of approximately $68 per barrel on July 6 before rebounding to $85, but Brent crude rose only about two dollars since the MOU expired, suggesting markets remain relatively insensitive to the conflict. A prediction was raised that oil could return to $100 per barrel near the midterms, which would represent a significant narrative advantage for Democrats.

Kevin McCarthy put Republican odds of keeping the Senate at 51 percent while Democrats have an 88 percent chance of taking the House. Republicans are projected to win approximately 219 House seats with potential to gain 10 more and need to win only 3 of 18 contested seats. McCarthy said the economy is the number one issue and candidates who campaign on anything else are losing, and argued Iran will likely wait until after the election to act, giving them a strategic advantage.

The OCC conditionally approved Trump-linked World Liberty a national trust bank charter, allowing it to issue the USD1 stablecoin and custody digital assets. This approval puts significant pressure on BitGo, which had been handling custody for USD1. Scaramucci said it is not fair to bar family members of the president from doing business but that conflicts of interest must be watched carefully, and suggested the World Liberty charter could signal that crypto companies like Coinbase should pursue banking licenses. Austin Campbell warned that the OCC approval could give any bank or stablecoin issuer that objects the equivalent of a death penalty because Trump controls the OCC, and noted that banking regulators have far more expansive powers than the SEC or CFTC, making a bank charter especially risky under a hostile future administration.

Campbell predicted that if Democrats win the House or Senate, crypto companies become public enemy number one from an investigation standpoint, and that a Democratic president in 2028 could demand every communication, policy, and commercial arrangement from charter holders and impose large civil or criminal penalties. A broader prediction was raised that a Democratic-controlled Congress could create regulatory pressure on crypto potentially ten times worse than the FTX fallout. Operation Choke Point 2.0 was cited as a prior example of crypto companies being impermissibly discriminated against through regulatory process.

Mike Novogratz said Trump believes he won crypto money and support by positioning himself as a pro-crypto president. A claim was raised that Trump may not want the bipartisan crypto compromise bill to pass because he wants to blame Democrats for its failure. Five Republican senators including Tillis are behind a compromise bill described as a fair ethics compromise, and if the White House does not act it could be delayed until September or not happen at all. The White House held meetings with crypto industry executives the week of August 20th as part of positioning ahead of midterms. The CFTC released a polished video signaling it plans to turn the page on what it called anti-crypto armies and decelerationists.

Jane Street bought $225 million of Michael Saylor's Strategy shares, now worth $250 million. The DTCC, which oversees $114 trillion in securities, is launching a tokenized service in two months covering Russell 1000 and other securities, allowing institutions to move tokenized shares between approved wallets. The Blockchain Association submitted a comment letter urging the SEC to rescind rules 611 and 610 to prevent the DTCC from monopolizing tokenized securities. Citi announced Custody Plus, offering near real-time crypto custody solutions. JPMorgan is closing in on becoming the world's first trillion dollar bank, and it remains unclear whether crypto will be absorbed by traditional finance or hold its ground as large banks expand into the trillion dollar valuation tier.