Hi all, happy Wednesday! 

Today we dive into BTC’s recent surge and give an update on the CLARITY Act, on which President Trump found time to comment yesterday, despite the ongoing war.

Bitcoin surged roughly 6% overnight into Mar. 4, rising from around $66,200 to over $71,000 in just ~10 hours while traditional markets were closed. The move occurred during a period of relatively thin liquidity, as US equities and the major ETF trading venues were closed. Additionally, overnight price expansions often occur when BTC breaks through key technical levels that traders are watching. Once the asset moved above nearby resistance zones in the high-$60K range, algorithmic traders and momentum strategies may have added fuel to the rally, contributing to the rapid climb within a short time window.

With no spot-ETF creations occurring after the US equity close, derivatives positioning appears to have been the primary driver of the overnight move. Liquidation data from CoinGlass shows that the rally coincided with a concentrated unwind of short exposure across perpetual futures markets. Over the last four hours, roughly $100 million in total BTC liquidations occurred, ~97% of which were shorts. The imbalance is even clearer across shorter windows: In the past hour, $22.6M of the $24.3M liquidated was short positioning, indicating that upward price momentum was largely driven by forced covering rather than discretionary long demand.

The surge in perpetual-futures volume reinforces the view that the overnight rally was driven primarily by derivatives activity rather than spot flows. As BTC began breaking higher, trading activity accelerated sharply across major offshore venues, with the largest contributions coming from Binance and OKX. The most pronounced spike occurred during the early morning hours, when aggregate hourly volume across tracked exchanges briefly approached $4 billion. This surge in trading activity coincided with the wave of short liquidations, suggesting that forced covering and momentum-driven positioning amplified the move, as liquidity remained relatively thin outside US trading hours.

As BTC pushed through key resistance levels, short covering and elevated perpetual-futures volume accelerated momentum across offshore exchanges. While ETF creations were inactive during the overnight session, spot BTC ETFs have now recorded two consecutive days of net inflows, indicating that institutional demand had been building ahead of the move and may help reinforce spot support once US markets reopen.

— Marc

CLARITY Act stalls

Trump posted on Truth Social on Mar. 3, urging Congress to pass the CLARITY Act (H.R. 3633) and attacking banks for holding the bill hostage over stablecoin yield provisions. The Senate Banking Committee has not yet scheduled its markup. Polymarket odds on passage in 2026 sit around 75%, down from 85-90% in early January.

The CLARITY Act passed the House on July 17, 2025, with a 294-134 bipartisan vote. It draws a jurisdictional line between the SEC and CFTC, gives the CFTC primary authority over digital commodity spot markets, and creates new registration categories for digital commodity exchanges, brokers and dealers. The Senate Agriculture Committee advanced its companion bill on Jan. 29, 2026, on a party-line 12-11 vote, covering the CFTC oversight portion. The Senate Banking Committee, which handles the securities-side provisions, has postponed its markup twice. A mid-January session was pulled indefinitely, and the White House’s target of reaching a deal by the end of February was also missed.

The core dispute holding things up is stablecoin yield. The GENIUS Act (signed July 18, 2025) bars stablecoin issuers from paying interest or yield to holders for simply holding stablecoin balances. The banking lobby argues this left a loophole: Third-party platforms like crypto exchanges can still offer yield to stablecoin holders, functioning as de facto interest-bearing accounts and pulling deposits from traditional banks. Over 40 banking associations, led by the ABA, want the CLARITY Act to extend the interest ban to affiliates and exchanges. The crypto industry opposes this. Compromise language circulating among lawmakers would ban passive interest on idle balances but allow rewards tied to active participation (liquidity provision, staking, transactional activity). 

No agreement has been reached. The White House has hosted multiple meetings between both sides without producing a deal.

Polymarket odds dropped from roughly 85-90% to the mid-50s in late January when the Banking Committee pulled its markup, then recovered back into the 70s by early March.

— Boccaccio

1. The "Investible" Crypto Tokens

Out of more than 17,000 crypto tokens, only about 132 appear truly investable, with just 45 generating revenue for holders, distributing roughly $1.8 billion annually. The market is highly concentrated: Hyperliquid and pump.fun alone produce about 69% of all holder revenue. 

Meanwhile, several major protocols — including Lido, CoW Protocol and Drift — generate significant revenue but don’t yet pass it to token holders, creating potential upside if fee-sharing is introduced.

2. Geopolitics takes the wheel as U.S.-Israel strike on Iran rattles risk assets

A US–Israel strike on Iran over the weekend triggered a broad risk-off move, sending BTC down to $63K before its rebound toward $67K as the conflict enters its third day, with the Strait of Hormuz effectively closed. 

Oil has surged, gold is rallying, and equities are under pressure, raising concerns that sustained energy disruption could keep inflation elevated and delay Fed rate cuts, an unfavorable backdrop for crypto. While $1B+ in ETF inflows briefly broke a five-week outflow streak, institutional activity remains muted and volatility is rising, leaving the market fragile as investors watch whether the conflict escalates or stabilizes.

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