August 2026 Market Commentary

Crypto’s Best Month So Far This Year

August ended on a positive note for a broad range of assets. Equities finished higher with the S&P 500 up 2.6% and the Nasdaq up 4.2%. Gold also surged 9.6% to $4,500/oz, a level not seen since May. Meanwhile, crypto had its best month of 2026 – BTC gained 25.4% and ETH outdid BTC, gaining 33.0%.

The month was driven by the Federal Reserve’s shifting tone from dovish to hawkish, a continued tension between the U.S. and Iran sparking a Strait of Hormuz standoff that kept oil prices volatile, and a U.S. Treasury bond-buyback announcement that shaped sentiment on both rates and crypto.

In the first half of the month, an in-line July CPI and a soft PPI print in mid-August had the market pricing September rate-hike odds lower toward 30%. However, Fed Chair Kevin Warsh’s remarks at the Jackson Hole symposium on Aug. 28 turned more hawkish than his July press conference. He noted that while the inflation readings were better than expected, they did not show that the underlying trends had “meaningfully improved” and said broadly, he “would be hard pressed to describe broad financial conditions as restrictive.” The market reacted by raising the rate-hike odds to 65%, sending long-end yields higher and capping equities into the close of the month.

As the U.S.-Iran tension kept resurfacing, oil prices traced the geopolitical arc. Brent oil traded between the mid-$80s and low-$90s/barrel as reports of a U.S.-Iran arrangement over the Strait of Hormuz alternated with renewed strikes. It ended August near $91/barrel after the U.S. struck Iranian targets over the final weekend and Treasury Secretary Scott Bessent launched "Operation Economic Outcast" to further isolate Iran's economy.

At the beginning of August, equities were driven by restored confidence in the AI trade after July’s correction. A $9.1 billion, 20-year data-center lease between Riot and Anthropic, plus strong reported Anthropic revenue growth, reinforced the AI-capex narrative. That momentum faded in the third week of the month as oil's climb and rising long-dated yields pressured chipmakers and dragged the broader tape lower. Chipmakers came under renewed pressure again in the final week on fresh AI-capex jitters before Nvidia's Q2 earnings beat analysts’ forecasts and its bullish sales outlook reversed much of that damage.

On Aug. 19, the U.S. Treasury surprised markets by announcing it would double the size of its long-dated bond buyback operations, from $2 billion to $4 billion per operation, after the 30-year yield touched a 19-year high. The move pulled yields lower and triggered a broader risk-on reaction, including in crypto, where it became the catalyst for BTC's rally.

While BTC spent the first half of the month lagging equities, it cleared its 200-day moving average on Aug. 19 for the first time since last fall and rallied on short liquidations and the strongest ETF inflows since October 2025. It extended to a high of $81,400 the following week, its best level since May, before Warsh's hawkish Jackson Hole tone pulled it back into the high-$70,000s, closing out the month capped below $80,000. ETH finished the month with a larger percentage gain than BTC, aided by an over $1 billion late-month inflow streak led by BlackRock's ETHA fund.

As usual, institutional build-out continued: Coinbase launched tokenized equities on Base through a regulated third-party issuer structure; JPMorgan is reportedly weighing a freely circulating stablecoin alongside its existing JPM Coin, the same week Bank of America, Wells Fargo, and Santander announced a joint stablecoin push and smaller lenders formed the BankChain Alliance. On the risk side, the Coldcard hardware-wallet exploit that began in late July grew to at least 1,700 BTC in losses before abating by mid-month.

On policy, the CLARITY Act's odds continued to shrink. Galaxy Research cut our 2026 passage probability to 10%, from 30% in July. However, the SEC is making progress on crypto regulations. It proposed Regulation Crypto Assets on Aug. 18, which we will discuss in detail below.

001 Bitcoin Chases 50-Week Moving Average, Raising Hopes for a Bottom

Jianing Wu builds on Alex Thorn's original analysis, Bitcoin Logs Biggest Weekly Dollar Gain as It Chases 50-Week Moving Average, incorporating updated data and recent market developments to reflect the latest conditions.

Following July’s stable performance, BTC had a strong month in August, starting at $62,899 and ending at $78,852, generating a return of 25.4%. Most of the gains were achieved during the third week of the month: BTC saw the single largest one-week gain in its entire history between Aug. 16 and Aug. 23. By percentage, that week’s BTCUSD weekly candle ranked 41st of 840 weeks in the trading pair’s history at +23.5%. Since 2020, only three weeks had a larger percentage gain: March 19, 2023 (+27.7%), Jan. 3, 2021 (+25.9%), and Feb. 14, 2021 (+25.2%). The August rally came during a period of extremely low volatility, with both realized and implied volatility printing near all-time lows.

The record-setting week also coincided with the largest bitcoin ETF inflows since October 2025’s all-time high, and August closed as the biggest inflow month since July 2025, attracting $3.4 billion of capital.

A substantial catalyst was the return of the debasement trade sparked by Treasury Secretary Scott Bessent’s announced expansion of bond buybacks (on the long end). Gold also rallied after the Aug. 19, announcement. Given the U.S. debt profile ($40 trillion, or ~125% of GDP), the debasement narrative is likely to remain highly relevant to investors, which could benefit long-term bitcoin bulls, even if interest in the debasement trade ebbs and flows on shorter time frames.

President Trump also hosted crypto executives at the White House and delivered pro-crypto remarks last month, including calling on Congress to pass the CLARITY Act, and crypto executives held the first meeting of the CFTC’s Innovation Advisory Committee. Both events resulted in substantial positive regulatory headlines and may have contributed to last month’s positive performance.

Aside from the policy catalysts, BTC’s rally was also aided by substantial short liquidations, gamma squeeze, and momentum chasing. With other risk assets (such as AI-related stocks) near all-time highs, and bitcoin trading more than 50% off its prior all-time high but failing to make new lows, BTC was primed to receive inflows from allocators who assessed that it looked “cheap.”

As discussed in a recent Galaxy research alert, one of the historical indicators of the bear market bottom is the 50-week moving average, which stands at $81,473 at the time of writing on Sept. 2. In the past four of the five completed bear markets, once the 50-week moving average was first broken to the upside, the bear market bottom was “in.” (The only exception is during the mini-bear market in between the April and November 2021 all-time highs, a period that most bitcoin analysts don’t even consider to be a “full bear market.”)

On Sept. 3 at the time of writing, BTC surpassed its 50w MA. History suggests the bear market may be over.

002 SEC Proposes Long-Awaited Regulation for Primary Token Issuance

The SEC is moving forward with some regulatory clarity for crypto even while the Senate remains stalled on the CLARITY Act. On Aug. 18, the SEC proposed Regulation Crypto Assets ("Reg Crypto"), the first set of U.S. securities rules designed specifically around the offer and sale of crypto assets. Reg Crypto is a constructive step, and one of the clearest signs yet that the SEC is not waiting for Congress to modernize its own rulebook.

First, the proposal would create a lawful path to sell certain tokens to the U.S. public, including non-accredited buyers, without a registered offering. Second, it would create a formal, dated mechanism for the investment contract associated with a token to cease to exist. For most of the past decade, a U.S. token issuer effectively chose between registering (which almost none could practically do) and issuing offshore. Reg Crypto offers a third option, along with an off-ramp for thousands of tokens already trading with unresolved legal status.

The rule would apply only to a crypto asset that is not itself a security but was offered or sold as part of an investment contract under which the issuer promised to build something. Tokenized stocks and bonds, and arrangements that bundle a token with equity or other securities, sit outside the framework. Within that perimeter, the proposal follows four stages: raise, disclose, build, and exit.

The proposal would also preempt state registration and qualification requirements for covered primary offerings and certain secondary transactions while the issuer remains current with its obligations. It does not address exchanges, brokers, dealers, or custody, and it is not the separate innovation exemption the SEC has discussed for tokenized securities and onchain trading. All three sitting commissioners - Chairman Paul Atkins and Commissioners Hester Peirce and Mark Uyeda - issued supportive statements. While comments are due in 60 days, adoption before 2027 would be a fast timetable.

The disclosure regime is the clearest evidence that the Commission understands the assignment. It asks for supply and release schedules, mint-and-burn mechanics, smart-contract permissions, a source-code link, the structure of the ecosystem, and a running account of what the issuer promised to build and how far along it is. These are the facts that matter to a token buyer, and they are not the same facts that matter to a buyer of corporate equity. The Commission is recognizing something it did not recognize under Atkins’ predecessor, Gary Gensler: a token issuance differs from an equity issuance in both form and function, and the disclosure investors need should differ accordingly.

The proposal makes an equally important recognition about time. Equity is permanently a security. Under Reg Crypto, the investment contract associated with a token can begin at issuance, govern the issuer's obligations while the project is being built, and then end on a publicly recorded date even though the token continues to exist and trade. That is more than a new exemption. It is a workable theory of the token lifecycle, translated into an administrable rule.

Whether issuers will use the fundraising exemptions is the open question. Rule 506 under Regulation D remains available with no offering cap, no SEC qualification process, and no ongoing public-reporting regime. Against that, Reg Crypto offers lawful public distribution to non-accredited buyers, unrestricted securities that can be transferred immediately, and preemption of state registration requirements. For a project that wants its token to circulate rather than sit in venture capital investors' wallets, the absence of a federal holding period may be the most underrated provision in the entire proposal. The price is a real disclosure and reporting burden and, for the larger exemption, a substantial U.S. nexus.

That last condition creates another test. Token projects have frequently used offshore foundations for reasons extending beyond U.S. securities law, including governance, treasury management, and tax treatment. The larger Reg Crypto exemption asks many of those projects to bring the issuer, management, business administration, and a majority of assets substantially onshore. Until the U.S. tax treatment of token-sale proceeds and treasury allocations becomes clearer, that requirement may be enough to preserve existing structures. The startup exemption has no equivalent U.S.-incorporation requirement and could see disproportionate early uptake for that reason alone, despite its $5m ceiling.

If those questions resolve favorably, the interesting scenario is an ICO 2.0 that is actually legal. One of crypto's early use cases was capital formation: allowing projects to raise money from their prospective users rather than relying exclusively on venture investors and traditional placement infrastructure. The 2017 cycle demonstrated both the demand for the initial coin offering model and the consequences of attempting it without credible disclosures, investor protections, or enforceable rules. Reg Crypto supplies much of what was missing: exemptions sized for different raises, disclosure written for the asset, lawful retail participation within a cap, and a defined endpoint for the issuer's securities-law obligations.

A new services layer would almost certainly emerge around it. Securities lawyers, auditors, technical-disclosure specialists, launchpads, and compliance providers would all benefit from helping projects prepare offering materials and transition reports, much as Regulation A+ produced its own cottage industry. The likely first movers are teams that already have U.S. entities, relatively clean organizational structures, and the resources to absorb the reporting burden. The SEC estimates that a transition report under the standalone safe harbor would require an average of 30 burden hours, including outside professional services, which suggests that even the "exit" will rarely be a do-it-yourself filing.

In the near term, however, the exit matters more than the raise. The first visible effect of Reg Crypto is more likely to be a cleanup of legacy tokens than a resurgence in U.S. token sales. That alone would be significant: the market has spent years trying to infer from speeches, settlements, and litigation when an investment contract ends. (Remember “sufficiently decentralized”?) Reg Crypto would replace that ambiguity with a filing and a date.

But this remains a proposal, not a rule, and even an adopted rule would remain vulnerable. Atkins used his own statement to argue that legislation is indispensable to prevent a future regulator from unwinding the SEC's work, which is an accurate assessment of how reversible this regime would be. State regulators may also challenge the proposal's broad preemption provisions.

Reg Crypto could provide meaningful regulatory clarity, but only Congress can make that clarity durable.

003 Coinbase Enters Tokenized Stock Fray on Third-Party ‘Wrapper’ Side

The march to tokenize stocks continues, though yet again the activity is offshore. Coinbase launched tokenized equities on its layer-2 network Base on Aug. 24. According to the launch announcement, “a Coinbase Tokenized Stock is a real share that you actually own, onchain. Authorized participants, which are institutional market makers, buy the shares. Those shares go to Alpaca, a regulated broker and custodian, in a bankruptcy-remote structure supervised by Abu Dhabi Global Market’s (ADGM's) regulatory authority. If you hold the token, you hold a direct claim on the share. Coinbase Tokenized Stocks are the real deal.” Tokens are built on the company’s previously announced B20 standard.

Coinbase launched with four stocks in the first batch: NVIDIA (NVDAc), Meta (METAc), Apple (AAPLc), and Alphabet (GOOGLc). In total, about $7.5m worth of share supply in these four stocks currently exists on Base. Coinbase has created contracts for 13 stocks in total, but only those four have any circulating supply. The others are AMZN, COIN, CIRCL, INTC, MSFT, MSTR, SNDK, SPCX, and TSLA.

These tokenized stocks are not accessible to Americans, though with a VPN they can be accessed through the Uniswap or Aerodrome frontends. Coinbase also announced that it is allowing its tokenized stocks to be used as collateral in Aave on Base.

Coinbase’s design, as with most tokenized stocks today, is the “third-party issuer” variety. There is no evidence that NVIDIA, Meta, Apple, or Google consented to the tokenization of their stocks in this manner. We’ve previously noted that third-party issued stocks obviate the relationship between issuer and shareholder potentially to the detriment of both. The question of “what you actually own” when you buy a third-party issued token, such as those issued by Ondo, xStocks, or now Coinbase, is a real one. The trickiness of the situation was highlighted in Coinbase’s own launch announcement, in which it called the stock tokens are “a real share that you actually own” but, just two sentences later, said “you hold a direct claim on the share.” Which is it? A real share, or a claim on a share?

In these wrapped setups, the tokenholder’s relationship is actually to a third-party structure of some kind (in this case, Coinbase Onchain SPV Ltd., a special-purpose vehicle incorporated in Abu Dhabi), not the issuer of the underlying equity. The extent to which shareholder rights are passed to the tokenholder is determined by the third-party issuer’s terms and conditions. In the case of Coinbase Tokenized Stocks, the token represents a beneficial interest in the pool of deposited shares and economic interest in the shares’ value, while legal title generally will remain with the trust, and tokenholders’ ability to exercise shareholder-related rights is essentially determined by the SPV (more details on that in the prospectuses for the tokens; AAPLc, for example).

Tokenized GLXY, on the other hand, is an issuer sponsored tokenized security, because we (Galaxy, the issuer) explicitly honor it as Class A Common Stock, and it is tracked and maintained by our own SEC-registered transfer agent, Superstate. This is the core of the dispute in the marketplace on this topic: third-party issued tokenized stocks scale better but have legal drawbacks, while issuer-sponsored tokenized stocks are less scalable to launch because each issuer needs to take action to enable it, but they carry much clearer shareholder rights. (For a fuller explanation of the terms “third-party issued” and “issuer-sponsored,” read our writeup on the SEC’s security token taxonomy from January.)

For the U.S., the market is still waiting for the Securities and Exchange Commission (SEC) to publish its long-awaited “innovation exemption,” a time-limited exemptive relief that we expect will allow for the trading of Reg NMS stocks in decentralized finance trading protocols.

While Regulation Crypto Assets (“Reg Crypto”), as we discussed in the previous section, published by the SEC on Aug. 18, is a formal rulemaking proposal relating to the primary issuance of non-security tokens (and primarily modifies compliance obligations under the Securities Act), the innovation exemption relates to the secondary trading of securities under the Exchange Act.

Assuming the “innovation exemption” will ultimately be a time-limited sandbox meant to pilot stock trading onchain, participants need sufficient time to surface issues to inform eventual rulemaking. Then the rulemaking itself will take a long time, and it’s also likely to result in litigation. And presumably this needs to progress from sandbox to adopted rule in the next 28 months before the Trump administration leaves office.

It’s still unclear where the SEC is going to come down on this issue for the innovation exemption, or when the SEC will publish the innovation exemption at all. Ultimately, we hope the exemption will allow for innovation and experimentation, albeit within limits and under the SEC’s watchful eye, so that the market will have an opportunity to decide the best way forward.

004 Our Takeaways and Predictions

In September, the Fed is a source of uncertainty. At the time of writing, the official August payrolls are not yet released, and the CPI read is a week out. The two releases will play an important role in deciding the September rate decision, as the Fed remains split and unanchored.

Separately, the U.S.-Iran tension has resurfaced again, with fresh strikes near the Strait of Hormuz. The ceasefire is still fragile and we expect the same slow-burning geopolitical risk premium to carry into September.

Overall, crypto's setup looks constructive. Both BTC and ETH broke through key resistance levels during August's rally with continued momentum into early September. The technical picture leaves room for further upside even if the pace of the move is unlikely to repeat. We remain constructive on the asset class heading into next month, though continue to watch for signs of overextension given how sharp August's advance was.

Key Events to Watch:

• September 10: European Central Bank Interest Rate Decision

• September 16: Fed Interest Rate Decision

• September 17: Bank of England Interest Rate Decision

• September 29-30: Robinhood’s HOOD Summit

• September 30: OpenAI DevDay

Key Macroeconomic Data Releases:

• September 10: Initial Jobless Claims

• September 10: PPI (MoM)

• September 11: CPI

• September 23: Manufacturing PMI, Services PMI

To learn more about the topics covered in this month's newsletter, contact our team or reach out to your Galaxy representative.

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