ETF Edge, September 09, 2026

Welcome to ETF Edge, your go-to place for all things exchange traded funds. I'm your host, Dominic Chu. Now, next week, the Senate is scheduled to hold a crucial procedural vote on the Clarity Act. Major cryptos have seen a pop in the run-up here, but beyond that, is there enough renewed interest to propel that space back to its former glory? We're a ways away from there. Joining me now for this conversation is Zach Pandle, the head of research over at Gayscale Investments, alongside Michael Buchella, who's the managing partner over at Neocclassic Capital. Gentlemen, thank you very much for taking the time to be with us here at ETF Edge. I'd like to start maybe with a bigger picture of view, and for that, I'll turn to you, Mike, on this. the Bitcoin runup. It's been fast and furious, but again, you have to kind of see where we came from. We're still a long way away from the record highs that we've seen. Is there anything to the price action lately that makes you feel as though this is somewhat sustainable? >> Yeah. Um, so I I guess the way that I think about Bitcoin's uh levels here is we we had some pretty significant leverage, right? That was the August 19th wash out. So, we had shorts get liquidated. We had pretty decent follow-through on spot spot and ETF buying, which was um good to see because that's very healthy uh in terms of building re sort of building out a base. And then what we also saw was an inry an increase in options open interest um particularly with call skew and while we also saw a decline in futures open interest. So leverage was reduced while spot buying increased and then upside buying was increasing. So that that to me indicated that there was real demand to own Bitcoin incrementally from here. We're still, you know, down on the year. We're still well off all-time highs. Um the next levels to watch are roughly 83 to 86,000. We have a lot of long-term supply um to chew through. And if we get past there, we're we're in pretty good territory. And if you look at Bitcoin relative to the rest of the market, um it's in a lot healthier position. I think I said earlier on on on the program um you know altcoin open interest and leverage is getting a little bit worrisome. Um so overall leverage open interest is is about the same as it was before the October 2025 crash. And so I don't necessarily take that as you know caution or or you know a flashing red light that we're about to head into a you know collapse in the market. I'm just saying you want to tread carefully and in this environment, you know, maybe just incrementally accumulate your Bitcoin um and then be a little bit more cautious as you go out the risk curve. >> Interesting, Zach, because this conversation as well has centered a lot on the price action in Bitcoin. We haven't spoken relatively as much about some of the other larger coins out there, namely Ethereum, namely Ether and Solana, maybe you know XRP and others. We have talked a little bit about Hyperlid. So when it comes to what's been driving the price action, there have been some macro factors at play. So what in your mind has been the reason why we've seen other than the technical stuff that Mike referred to? Are there fundamental reasons why from a macro perspective people have gotten back into cryptocurrencies? There are and it's really the same two fundamental drivers that have been pushing the asset class forward for a long time. Number one is demand for scarcity. We have risks with fiat currencies created by unchecked government debt growth. That's driving investors into scarce assets, whether it's physical gold or digital Bitcoin. But that's only half of the story for digital assets. The other half is regulatory clarity for blockchain uh technology and integrating blockchains into mainstream finance. And that's been moving ahead as well. Now, we'll talk about the Clarity Act in a moment. There is some uncertainty there. But even with that piece of legislation aside, the key regulators and the White House, the SEC, the CFTC have been bringing regulatory clarity to the industry regardless. And this benefits the rest of the ecosystem, particularly the smart contract space like Ethereum and Salana, perpetual futures platforms like Hyperlquid. These benefit from regulatory clarity in addition to that scarcity or debasement trade, if you will. So, it's both of those things, demand for scarcity and portfolio diversification as well as regulatory clarity for the industry and asset class. >> So, let's follow up, Zach, with that because you brought up clarity because I mentioned it in the introduction here. How much is the momentum that we've seen in cryptocurrencies contingent upon clearer clarity in terms of the regulatory framework around cryptocurrencies? Is the Clarity Act crucial to the longer term success of cryptocurrencies, especially when it comes to the US market and its investors? Regulatory clarity in general is absolutely crucial. This is financial technology. We need a clear rulebook to protect investors, protect consumers, to protect the financial system itself. We don't necessar necessarily need the Clarity Act, that specific piece of legislation. And we've been very encouraged by the recent steps by the CFTC for example to approve perpetual futures here in the US market by the SEC for laying out uh some ground rules around uh transfer agent uh changes around issuance of of crypto tokens what's called reg crypto. So we're getting that regulatory clarity through agency guidance rather than through legislation. For stable coins we went a legislative path. Got the Genius Act last year that was a great step forward for stable coins. we may be taking a different path forward for the rest of the industry but I think we are still getting that clarity and it absolutely is crucial encouraging we are seeing it uh every day with the announcements from these agencies >> it's interesting Mike because the last time we spoke we were on CNBC air for power lunch and it was just around the time when there were some kind of lastm minute hiccups and and and p on the path for the clarity act to get some real momentum and we had talked a little bit about just how important the clarity act is. I wonder since then, have you have you maybe altered your view in some way or not at all about whether clarity and that clarity act is something that we really do need for this next leg of the markets to go higher. >> Yeah, I think it's um kind of what towards what Zach was saying is I think we're kind of in this unbundling phase um of the areas of regulation that we're looking to push forward. So, you know, I I think back then I had said, you know, we'd love to see the Clarity Act, you know, move forward, but we've done just fine without government direction in the past, and we will continue to do it and move forward. And I think we have the right folks lobbying. Obviously, you know, everyone has their own FFTs and people are going to lobby for the things that that interact most kindly with their existing business lines. But I think generally speaking, we're in a um a very good environment where the the the private sector is doing a very good job of informing the public sector on what we're trying to do. Um and I think we're getting progress. I I still, you know, unfortunately don't see um a likelihood that we get the Clarity Act passed near term. Um and then obviously we head into midterm elections and and that could obviously uh uh stall a number of things including including clarity. Um but you know I think generally we're doing just fine educating the government, the public sector and regulators and I think we're going to continue to get support from those who are open to having productive dialogue with us. Now, Zach, speaking of that dialogue, the regulatory framework is important here as well because it does provide at least some guard rails. People feel a little bit more comfortable. One place that they've seen a lot more of that happen and and really evolve quickly is in the world of exchangeraded products that track many of these crypto assets. It's broaden out the total addressable market to investors and traders who aren't necessarily cryptonative, but want to have some kind of exposure. and you've given them by the framework that we have more vehicles by which to do so through traditional markets, centralized markets. Grayscale is one of those people is one of those firms that has offered these types of products. So how much has this dynamic around regulatory scrutiny been helped by that cooperation with regulators on issuing these exchange traded products and is that big for the driver of this next leg higher? Yeah, absolutely. Grayscale has been one of those players that's had a long engagement with regulators on these topics. You think back to the first ETF filings for Bitcoin were in 2013. They didn't come to market until 2024, almost 11 years later. So, it was a lot of process to bring those first products to market. But we've had a streamlining now, I think, thanks to some of the current regulators. Last year, the SEC created something called generic listing standards, which gives an asset manager like ourselves a pretty clear roadmap on when and where and how uh we can issue new ETF of products. So, we're broadening that exposure for our clients. One of the great things about these products is they're kind of the easy button for crypto investing. There's lots of different ways to buy crypto. No wrong way necessary way to do it. Uh but you have to solve some things for yourself. Where do you get the liquidity? How do you custody these assets? how to do your taxes and your estate planning. The ETFs package all of those solutions into a single uh product, often times a lowcost product. So, they make it very easy uh for investors. They've had a great success as you know uh since the Bitcoin ETFs are launched. I think ETFs will continue to capture a rising share of the crypto asset class because they make investing in these assets straightforward for anybody. Now Mike, another big point about this whole process is access to these markets and the way that ETFs and ETPs have kind of done so and propelled this kind of current leg that we've we've also seen a lot more of a variety of these ETF products come to market tracking not just Bitcoin but other parts of the market as well because the regulatory framework has been loosened is not the right term but it's allowed for more of these products to come to market in a quicker fashion. I wonder how much you think investors and traders who are not necessarily as deep into crypto as you and Zach are, Mike, to go and maybe get more into places that are not just Bitcoin, but to other places that people talk about maybe in the news, but maybe don't talk about as much as Bitcoin or Ether. >> Yeah. Um, it's funny you mentioned the Bitcoin exchange. I was actually in Switzerland in the mountains the day they first started trading uh in 2024. So, it's a nice little come around story. It's also nice that Zach and I, both ex, you know, Goldman uh colleagues, saw our our alma mater uh issue a new uh approval for a for for I think a call overwriting Bitcoin ETF today. So, a lot going on in the space. I would say we probably need to get we need to be quicker to allowing further ETF distribution or creation and distribution. It unfortunately I think the lack of clarity not the act just clarity broadly led to an overissuance of public company um of of public holding companies of the longtail of altcoins and led to you know what was a kind of a bubble in digital asset treasury issuance last year and a lot of those structures are very toxic and a lot of retail got burnt on those and so I think you know from my perspective you have really you know I would say good stewards of capital. So before the hyperlquid ETF was issued, you know, we had Hyperion DeFi was the first to come come along and buy Hyperlquid in a public company and really engage with the ecosystem, make strong investments and and I I say act very responsibly as a as a fiduciary for the shareholders. Um and then you had you know per hyperlquid strategies and then you had the hyperlquid ETF issued and you know you have this much more neutral safe exposure that was you know stewarded again by you know more responsible digital asset treasury holding companies. the long tail where people really wanted this obscure exposure was what led to a lot of um retail pain because these a lot of these digital asset treasury companies that happened last year came to market they were again just really really toxic structures when you pick when you lifted the hood um and that was unfortunate and it wasn't necessary so I do think um the more uh ETF issuers become comfortable surrounding uh the assets that they'll issue ETFs in the better uh environment and more transparency that we'll have um from the investor base. So that's something that I think is interesting. Obviously as options market develop option markets develop um futures markets develop there's a lot more opportunity to have yield enhance strategies which you know is is an interesting um area of the market and I think could work for um you know a lot of folks. Again Goldman Goldman uh I don't think it was approved but they they filed the ETF today. >> Yeah. I mean speaking of I mean these yield enhanced funds Goldman is very active in these days with the acquisition of innovator Capital and NEOS and everything else. So that's a big point. The last point I'm going to ask to you sack here, the ETF product market and exchangeraded products market has led to maybe the ability for retail investors and traders as well as financial adviserss to quote unquote allocate right on a systemic or more systematic basis. Do you find at a company like Grayscale that you are seeing more activity from people who are not just taking shots about buying and selling but are programmatically every week or two weeks or month putting money to work in a certain crypto or basket of cryptos? >> That's absolutely the change that's taking place. You know, it's not only the products that are changing, it's the investment uh strategy. It's the investor types that have changed over time. And this allocation trade I think is what is beginning now uh that is catalyzed by some of the other things that we've been talking about the treasury buybacks fiat currency risk investors are looking at how do I build a diversified portfolio I have a lot of equity concentration a lot of AI concentration where can I start to spread things around that give me a different type of exposure crypto gives you a unique exposure it to an asset class that is built on a new technology that's integrating with the financial system to digital scarcity and so that type of allocation trade if if you will, is exactly what's happening. The ETF structure, a great way to do that for so many types of investors. >> All right, my thanks very much to Zack Pendle, also uh Michael Buchella as well. We've asked Zach to stick around for the ETF Edge podcast. You can catch that and all of our other content over at ETFedge.cnbc.com. Thanks for watching and we'll see you next week. 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