Crypto Corner: Bitcoin Bullishness & Clarity Act Progress

Added: 2026-05-09

[00:00:11]Hey everyone, great to be here today.

[00:00:14]So, we've seen some renewed optimism in Bitcoin recently with some progress being made on the Clarity Act in Congress. It appears that um the Senate has uh come to an agreement on how to treat stable coin rewards. This has been a major point of contention between the banking industry and and the crypto industry. And it seems that the path that they're taking is that um you cannot receive a reward simply for holding a stable coin in your account, which would be very similar to um earning interest on a deposit. You can receive rewards rather for stable coins that are being used actively. And so that seems to be a fair um agreement between the two industries and it looks like we may get some progress moving forward here. Beyond that, in the past few months, we've seen a reignition of the narrative surrounding institutional adoption. Obviously, Charles Schwab has been in the news uh being that we're launching spot trading this year. Uh there's also been several other firms who have come out to announce it as well in addition to some new spot ETP launches. And so as we've uh frequently discussed on this network, the crypto market is primarily a momentum driven market and narratives can be very powerful in momentum momentum driven investing. We're seeing some improving technicals on the chart. Bitcoins crossed both the 50-day and the 100 day moving average and it's moving towards the 200 day moving average. Um, that's good, but we'd like to point out some potentially more fundamental areas of resistance. So, there's two measures that we track for cost basis as we've spoken uh about on this network many times. The the Bitcoin blockchain and any blockchain in real time, you can see every transaction that's happened. And so we can estimate these things versus other asset classes which you can't. And so the active investor cost basis is the average cost basis for anyone who's purchased Bitcoin in a secondary market.

[00:02:18]So what that does is it it excludes Bitcoin that was awarded to miners for validating the blockchain. The ETF cost basis is the average cost basis that the ETFs purchased Bitcoin and that's at about $82,000.

[00:02:34]and the active investor cost basis is about $78,000. So, we think it's reasonable that investors who potentially purchased around these levels a year or so ago and then experienced a pretty sharp sell-off might be more inclined to sell here. So, we think that this could be more of a fundamental period of congestion uh beyond just kind of resistance from technical uh analysis indicators such as moving averages. Uh that said, you know, as we were just talking about, the crypto market is momentum driven and there is potential that if the Clarity Act were to pass this summer, that could reignite some momentum and potentially push through these levels. And so, should that happen, you know, we we would um expect a a broader rally into the year end. Um there's been some large uh forecasts um by various banks on Wall Street calling for anywhere from 126,000 to 200,000 and beyond for Bitcoin. And we think that's a bit over optimistic.

[00:03:38]Uh one of the key things we use to value Bitcoin in the short term is its price relative to the cost of producing a Bitcoin. If you look at miners with higher energy cost or maybe a less efficient fleet of AS6, they currently produce Bitcoin at about $95,000 per Bitcoin. So, they're underwater right here. They've temporarily shut down operations as Bitcoin's been below their production prices. And so, what we've seen in past bare market recoveries like this is that that level often acts as a key level of support on the recovery.

[00:04:12]And it can take uh a long time to breach that level again. Uh back in 2018, it took about uh 30 months. Uh in 2022, it took about 12 months. And so again, we think it's a bit optimistic for these uh forecasts that are calling for a new high. We do think though if the market could break through these levels that that's a reasonable next level of more fundamental uh resistance for Bitcoin.

[00:04:42]We just published a report uh titled a dream of spring amid crypto winter. And in that we looked at past bare markets and what's typically been the best exposures and you know how you should think about the recovery from here and well we talked about some technical points just now about cost of production kind of serving as a a level of resistance in the recovery. You know, from a more fundamental perspective, we like to think about what are the drivers of Bitcoin. And the number one main long-term driver is growth in money supply. And so we track this on a global basis, but also just in the US. And the primary driver really there is US M2 growth. Historically, Bitcoin has outperformed other cryptocurrencies. And so we have a more favorable perspective on Bitcoin relative to the other the rest of the crypto market cap here. It's the largest. It's the original. It's seen as the leading market share for store of value cryptocurrencies. And so um again looking at its fundamentals and looking at how past recoveries have worked, Bitcoin has typically been uh the asset that be outperforms other cryptocurrencies after steep bare markets. Altcoins often take uh more uh of a recovery for investors to start buying them again to start using their platforms again. as an example. So, we're we're neutral on Ether because Ethereum is the largest um smart contract platform in terms of the assets deposited in it. It's the original smart contract platform. But if you look at the actual usage of of the Ethereum network in 2025, about half of it came from stable coins and 20% came from liquid staking and 20% from lending, so liquidity solutions. and the balance came from things like trading and some infrastructure.

[00:06:42]If you compare that to another blockchain like Salana, majority of the activity on Salana is it's a combination of stable coin transactions and then speculative trading and and meme trading. And so when we think about altcoins, uh we think that the usage of the utility the utility of the Ethereum blockchain is a bit higher than what we've seen historically on Solana.

[00:07:08]Salana also sold off sharper. It's newer. It's more of an emerging uh blockchain compared to Ethereum. So again, we we're we're neutral on Ethereum. We're least we're less favorable favorable on Salana. We're also less favorable on XRP. XRP is one of the older cryptocurrencies, but it's going through this fundamental debate of whether it's a competitor to Bitcoin or a smart contract platform and more of a competitor to maybe Ethereum or Salana.

[00:07:38]And so we think again looking at historic recoveries, Bitcoin has historically outperformed um and some of the cryptocurrencies that we have a least favorable or a less favorable perspective relative to the rest of the crypto cap is uh really fundamental in nature and because they they're either going through a transformation or they have more of a speculative use case than other cryptocurrencies.