Bitcoin Is on Track for Its Best August Since 2017, While Washington Wants to Write the Rules With or Without Congress

Two weeks ago, the fear and greed index was deep in fear territory. This week, Bitcoin went back to trading above $80,000, and the flows tell me that there might be more going on than a short squeeze.

TL;DR

• Spot Bitcoin ETFs logged eight consecutive sessions of inflows through August 26, with August above $3 billion, the strongest month of 2026. Bitcoin's roughly 26% month-to-date return (at the time of writing) separately puts it on track for its best August since 2017.

• FASB proposed guidance clarifying when certain stablecoins may qualify as cash equivalents under existing US GAAP.

• CFTC Chair Michael Selig says staff is exploring crypto-market rules under the agency's existing authority and could propose them if the CLARITY Act stalls.

The Rally Grew Up 🚀

When Bitcoin ripped 20% last week, the fair criticism was that it was all positioning, with a Treasury buyback headline meeting a crowded short book. I made that point myself in last week's issue. However, it looks like there’s real demand behind this rally.

US Spot Bitcoin ETFs have taken in money for eight consecutive sessions through August 26, pushing August above $3 billion in inflows, the strongest month of 2026 and roughly double what April managed.

Bitcoin opened the week of August 17 at $62,832, hit a three-month high near $79,500, and has since pushed through $80,000, up about 27% from that open. The rally even put Strategy about $1.4 billion above its aggregate acquisition cost when Bitcoin traded near $77,000, after the company sat on a $13 billion unrealized loss earlier this month.

Now look at what Bitcoin is rallying into.

The 30-year Treasury yield traded above 5.3%, its highest level since 2007, and US federal debt has surpassed $40 trillion. The Fed's July minutes showed several participants favored a rate hike, with three members formally dissenting, and markets still price meaningful odds of one in September.

So we have a hawkish Fed, the worst long-bond market in nearly two decades, and Bitcoin up more than a quarter since August 17.

Persistent ETF inflows can't tell you exactly who's buying or why, but they fit the thesis I've held all along: when the 30-year starts asking hard questions about the fiscal path, an asset with no issuer and a fixed supply gets a longer look from serious allocators.

The money is broken, and the bond market is starting to say that part out loud.

Kevin Warsh speaks at Jackson Hole on Friday. I'll be listening for whether anyone dares to say "fiscal dominance" on stage.

The Accounting Board Just Opened a Door for Stablecoins 📒

I know accounting news puts most people to sleep. Stay with me on this one, because I spent the first years of my career as a CPA, and I think it's the sleeper story many people missed.

On August 18, FASB proposed guidance clarifying when certain stablecoins may qualify as cash equivalents under existing US GAAP.

To qualify, a stablecoin needs a direct, on-demand contractual redemption right with the issuer for a known cash amount, plus segregated reserves backed at least one-to-one in short-term, highly liquid assets. Classification stays an elective accounting policy, nothing automatic. Comments are open until November 19.

Corporate treasurers don't hold assets their auditors can't classify. Until now, a company holding stablecoins had a line-item headache. But under this proposal, a qualifying stablecoin could be presented alongside T-bills and money market funds as a cash equivalent, if the company elects that policy.

The GENIUS Act built the legal framework, and now FASB is clarifying the accounting treatment. Looks bullish to me.

The CFTC Isn't Waiting Around for Congress ⚖️

The CLARITY Act faces a 60-vote procedural test on September 15, when the Senate votes on whether to advance to consideration of the bill. However, Washington has started hedging.

At the CFTC's first Innovation Advisory Committee meeting on August 20, Chair Michael Selig said he has directed staff to explore crypto-market rules under the agency's existing authority, and that he would move swiftly to propose them if the CLARITY Act stalls.

He still wants the legislation, and his fallback authority is narrower than what Congress could enact. Think leveraged and margined crypto trading rather than a comprehensive spot-market framework.

The message to the Senate was hard to miss all the same: progress arrives either way.

Also, he wasn't the only one applying pressure. President Trump gathered crypto and finance executives at the White House on August 19 and urged Congress to pass a "fair version" of the bill. Asked whether the administration might accumulate sizeable amounts of Bitcoin or other crypto, he said the idea had been discussed and that he would consider recommendations. Add the SEC's proposed crypto fundraising exemptions and the OCC expecting final stablecoin rules by November, and you get the picture.

In my experience, the biggest blocker inside institutions hasn't been volatility. It's been legal departments that couldn't say yes. Those answers are now arriving through every channel at once, which means staying on the sidelines is getting expensive.

Elsewhere in Bitcoin 📖

A quick look at what else has been happening in Bitcoin:

• Standard Chartered and HSBC complete the first live cross-border tokenized deposit transaction on Swift's blockchain-based ledger

• The OCC expects to finalize GENIUS Act stablecoin rules by November, ahead of the January 2027 deadline

• Strive buys 1,110 BTC for $81.5 million at an average of $73,409, taking its stack to 21,356 BTC

Your fellow stacker in sats,

Patrick Lowry

PS: If you want to see how the value of goods and services changes when priced in Bitcoin, check out the Samara Bitcoin CPI. It might give you a new perspective on holding Bitcoin on your company's balance sheet or just as an individual.

Disclaimer: The opinions expressed in this newsletter are solely those of the author and do not necessarily represent the views of any associated company. This newsletter is for educational and informational purposes only and should not be construed as investment, financial, or any other professional advice. Nothing here is a solicitation, offer, or recommendation to buy or sell any asset or to use any service. Investing in cryptocurrencies is highly speculative and carries a significant risk of substantial financial loss, so you must conduct your own thorough research and consult with independent professional advisors before making any decisions.