The digital asset market is facing a critical crossroads, according to crypto asset management firm Bitwise..
In a blog post published Monday, the investment manager warned that blocking the Clarity Act in Congress could shift the market from a speculative bull run to an exhausting “show me” phase.
The Senate Agriculture Committee postponed its hearing on marking up crypto market structure from today until Thursday, citing the winter storm that hit much of the United States over the weekend.
According to Matt Hougan, CIO of Bitwise, the Clarity Act is essential to solidifying the current pro-crypto regulatory environment into permanent law. Without it, the industry remains vulnerable to the whims of future administrations.
Hougan pointed out that market sentiment about whether the bill will become law has deteriorated recently. While traders at Polymarket in early January predicted an 80% chance that the bill would pass, those chances dropped to around 50% after figures such as Coinbase (COIN) CEO Brian Armstrong called the current plan unworkable.
Armstrong said his company withdrew its support for a sweeping digital assets bill after finding provisions that could have harmed consumers and stifled competition.
If legislation stalls, Hougan argued that crypto must follow the path of disruptive giants like Uber and Airbnb, which have survived regulatory gray areas by becoming too popular for lawmakers to ignore.
He suggests that the industry has about three years to make stablecoins and tokenized assets essential to the U.S. economy; if it succeeds, favorable regulations will necessarily follow, but if it remains on the sidelines, a change in Washington could prove disastrous.
This legislative uncertainty creates two distinct paths for market returns. Bitwise expects a strong recovery if a viable version of the Clarity Act is passed, as investors would immediately incorporate the guaranteed expansion of blockchain finance.
Conversely, failure to pass the bill would likely result in a “wait and see” market, where price appreciation is limited by regulatory skepticism and dependent on concrete evidence of real-world adoption. While the asset manager remains optimistic that the administration will deliver on its crypto promises, he advises investors to prepare for a “slower climb” if the legislative underpinnings remain shaky.
Wall Street brokerage Benchmark said failure to pass legislation would delay, not derail, the maturation of crypto, leaving the US market operating below its potential as investors favor bitcoin-centric exposure, strong balance sheets and cash flow infrastructure over regulation-sensitive segments such as exchanges, decentralized finance (DeFi) and altcoins.
Learn more: Market Structure Bill Delay Appears to Cap US Crypto Valuations, Benchmark Says
