Mid-Month Market News

Key takeaways from this month's market activity:

• Bitcoin $120K Milestone: Bitcoin surged above $120,000 for the first time, reaching a record $123,205 before settling near $121,900, fueled by strong institutional inflows, record exchange-traded fund (ETF) demand, and anticipation of major U.S. crypto legislation.
• Crypto Week Legislative Push: "Crypto Week" in the United States House of Representatives features votes on three key bills: the CLARITY Act for crypto market structure, the GENIUS Act for stablecoin regulation, and the Anti-Central Bank Digital Currency (CBDC) Surveillance State Act targeting government digital currencies.
• AAVE Rallies on Record Deposits: AAVE’s token jumped 8% to $330 as the platform surpassed $50 billion in deposits, reinforcing its dominance in decentralized finance (DeFi) lending amid surging crypto markets and optimism around new U.S. stablecoin legislation.
• Grayscale Presses SEC on Multi-Crypto ETF: Grayscale is urging the Securities and Exchange Commission (SEC) to lift a regulatory pause on its multi-crypto fund’s conversion to an ETF, arguing that delays are harming investors and the exchange.

BITCOIN BREAKS $120K

Bitcoin surged past $120,000 for the first time, reaching an intraday high of $123,205 before settling around $121,900. The breakthrough comes as the cryptocurrency market anticipates favorable regulatory developments during the House of Representatives’ designated "Crypto Week," which began Monday with votes on three major digital asset bills.

The rally extends Bitcoin's impressive performance trajectory, with the cryptocurrency now up approximately 30% year-to-date following a 100%+ gain in 2024. Broader crypto assets participated in the advance, with Ether breaking above $3,000 and smaller tokens including XRP, Uniswap, Chainlink, and Solana posting significant gains.

Market Dynamics

Institutional Flow Surge: Bitcoin ETFs attracted over $2.7 billion in net inflows last week, marking the fifth-largest weekly inflow since their January 2024 launch. The 12 United States Bitcoin ETFs now collectively manage approximately $151 billion in assets under management.

Derivatives Activity: Open interest in Bitcoin futures reached a record $86.3 billion on Monday, indicating heightened institutional engagement and market depth. The surge was partially driven by liquidation of bearish positions, with over $1 billion in short positions eliminated during the rally.

Corporate Treasury Holdings: MicroStrategy's Bitcoin holdings have surpassed $73 billion in value as the company and other corporate treasury adopters resumed strategic purchases amid the price appreciation.

Investment Sentiment

Institutional Perspective: George Mandres (XBTO Trading): "This shift signals a maturing perspective on Bitcoin — not merely a speculative asset, but a macro hedge and a structurally scarce store of value."

The commentary reflects growing institutional recognition of Bitcoin's role as a portfolio diversifier and inflation hedge, particularly as traditional risk assets also approach record highs.

Cautionary Views: Nicolai Sondergaard (Nansen): "In my view, this isn't a macro-driven rally, but rather an isolated event. That said, recent U.S. policy developments such as fiscal expansion and expectations of further monetary easing have created a backdrop that is undeniably favorable for Bitcoin."

Broader Market Context

Bitcoin's advance coincides with U.S. equities returning to record levels, suggesting improved risk appetite across asset classes. The cryptocurrency's resilience amid President Trump’s administration trade policy uncertainties has reinforced its appeal as a non-correlated asset.

The regulatory clarity expected from Crypto Week legislation could address long-standing institutional concerns about compliance and operational frameworks, potentially unlocking additional investment flows.

CRYPTO WEEK: A Comprehensive Analysis of Three Landmark Bills

The United States House of Representatives has designated July 14-18 as "Crypto Week," marking the most significant legislative push for digital asset regulation in American history. Three major bills are advancing through floor votes that could fundamentally reshape the cryptocurrency landscape and establish America's regulatory framework for the digital economy.

CLARITY Act: Digital Asset Market Structure

The Digital Asset Market Clarity Act addresses the fundamental question that has plagued the cryptocurrency industry: which digital assets are securities versus commodities. This classification determines regulatory oversight, with securities falling under SEC jurisdiction and commodities regulated by the Commodity Futures Trading Commission (CFTC).

Key Provisions:

• Establishes CFTC as primary regulator for digital commodities
• Limits SEC jurisdiction to digital assets meeting specific security criteria
• Defines digital assets as commodities unless they meet investment contract criteria
• Creates registration requirements for digital asset trading platforms
• Provides safe harbors for decentralized autonomous organizations (DAOs)
• Addresses staking, governance tokens, and utility functions

Committee Support: Passed Financial Services Committee 32-19 and Agriculture Committee 47-6.

Impact: Ends "regulation by enforcement" approach, enables institutional investment with defined compliance requirements, reduces legal uncertainty for token launches.

Anti-CBDC Surveillance State Act

The Anti-CBDC Surveillance State Act prohibits the Federal Reserve from issuing a central bank digital currency (CBDC) without explicit Congressional authorization. The legislation addresses privacy concerns about government-issued digital currencies and their potential surveillance capabilities.

Key Provisions:

• Prevents Federal Reserve banks from issuing CBDCs directly to individuals
• Prohibits CBDC issuance through financial institution intermediaries
• Restricts Fed authority to require CBDC acceptance
• Prohibits using CBDCs as monetary policy tools
• Requires explicit Congressional approval for any CBDC development
• Mandates legislative review of CBDC research and pilot programs

Committee Support: Passed Financial Services Committee 27-22, faces more partisan division.

Arguments: Supporters cite financial privacy protection; critics worry about limiting monetary policy tools and U.S. competitiveness.

Market Impact and Legislative Outlook

Bitcoin reached $123,205 during Crypto Week with broader digital asset markets advancing. ETF flows indicate institutional confidence in favorable regulatory outcomes. The legislation package addresses international competition from jurisdictions like the UK, EU, and Singapore that have established comprehensive cryptocurrency frameworks.

Passage Probability:

• GENIUS Act: Clearest path (already passed Senate 68-30)
• CLARITY Act: Strong bipartisan support, Senate consideration expected by September
• Restricts Fed authority to require CBDC acceptance
• Anti-CBDC Act: Sufficient Republican support for House passage, uncertain Senate prospects

Implementation: Requires extensive regulatory rulemaking with 12-24 month implementation periods. Cryptocurrency companies have been preparing compliance frameworks in anticipation of federal oversight.

Crypto Week represents a watershed moment for digital asset regulation in the United States. Success would establish the United States as the global leader in digital asset regulation, potentially attracting trillions in investment and innovation while maintaining appropriate consumer protections. The coordinated legislative approach reflects congressional recognition that comprehensive frameworks are necessary to compete in the global digital economy.

DeFi Leader AAVE Rallies 8% on Record Deposits and Regulatory Optimism

Aave's native token (AAVE) surged to $330 on Monday, marking its strongest price in five months with an 8% weekend gain. The rally coincided with the decentralized finance (DeFi) lending platform reaching a milestone of $50 billion in total deposits, cementing its position as the dominant player in DeFi lending. The surge occurred amid broader cryptocurrency market strength, with Bitcoin conquering fresh records above $120,000 during the House's designated "Crypto Week."

• Platform dominance solidifies: AAVE maintains its position as the largest DeFi lending protocol, holding 5% of all stablecoin supply to generate yield—more than any other decentralized finance platform—while the record $50 billion deposit milestone demonstrates sustained institutional and retail confidence.
• Regulatory positioning advantage: Asset manager 21Shares identified Aave as a potential major beneficiary of the GENIUS Act stablecoin legislation, with the platform's dominant market share positioning it to capture increased institutional adoption under clear federal regulatory frameworks.
• Stablecoin ecosystem expansion: The platform issues its own overcollateralized stablecoin GHO with a $312 million supply while the upcoming Horizon project will enable institutions to borrow stablecoins using tokenized real-world assets as collateral.
• Technical momentum confirms interest: Trading volume spiked to 159,078 units during the morning session, indicating institutional accumulation with support at $304.25-$305.63 and resistance around $327.40, while psychological support at $320.00 attracted consistent demand.

Grayscale Challenges SEC Pause on Multi-Crypto ETF

Grayscale is pressing the SEC to lift a pause on its multi-crypto fund conversion to ETF status, arguing that investors are "suffering harm" due to regulatory delays. The SEC's staff initially approved Grayscale's proposal to convert the Digital Large Cap Fund into an ETF on an accelerated basis, but the commission subsequently imposed a stay for review. The fund trades over-the-counter and consists primarily of Bitcoin at nearly 80% and Ethereum at approximately 11%, with smaller allocations to Solana, Cardano, and XRP.

• Regulatory timeline dispute: Grayscale's lawyers argue the SEC must adhere to Congressional deadlines for product approval, claiming the fund should be deemed approved under Section 19(b)(2)(D) of the Exchange Act, while the commission reviews the staff decision that initially greenlit the conversion.
• Investor harm allegations: The asset manager contends that current investors, the exchange, and Grayscale itself are suffering harm from the launch delay, with lawyers considering filing a petition to lift the stay imposed under Rule 431(e) while commission review proceeds.
• Broader ETF implications: Approval of Grayscale's diversified crypto ETF could signal a greenlight for other pending proposals tracking assets from XRP to Dogecoin, as the SEC considers a stack of crypto ETF applications under the Trump administration's friendlier regulatory environment.
• Legal strategy escalation: Industry observers note that while Grayscale is "rightly" telling the SEC they lack discretion under the statute, forcing the issue to court doesn't provide the timeline the company wants, requiring commission action as Grayscale grows increasingly impatient with regulatory delays.