The digital asset market faces a critical fork in the road, according to crypto asset management company Bitwise..
In a blog post on Monday, the investment manager warned that the Clarity Act stalling in Congress could cause the market to go from a speculative bull run into an exhausting “show me” phase.
The Senate Agriculture Committee postponed its hearing on cryptocurrency market structure from today to Thursday, citing the winter storm that hit much of the US over the weekend.
According to Bitwise CIO Matt Hougan, 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 noted that market sentiment over whether the bill will become law has soured recently. While Polymarket traders in early January priced an 80% chance of the bill passing, those odds have plummeted to about 50% after figures like Coinbase (COIN) CEO Brian Armstrong called the current draft unworkable.
Armstrong said his company withdrew support for a sweeping digital assets bill after finding provisions that could have harmed consumers and stifled competition.
Should the legislation stall, Hougan argued that cryptocurrencies should follow the path of disruptive giants like Uber and Airbnb, which survived regulatory gray areas by becoming too popular for lawmakers to ignore.
It suggests that the industry has about three years to make stablecoins and tokenized assets indispensable to the US 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 to market profitability. Bitwise expects a strong rally if a viable version of the Clarity Act is passed, as investors would immediately value the guaranteed expansion of blockchain finance.
By contrast, 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 strong evidence of real-world adoption. While the asset manager remains optimistic that the administration will deliver on its pro-cryptocurrency promises, he advises investors to prepare for a “slower rise” in case the legislative basis remains unresolved.
Wall Street broker Benchmark said failing to pass the legislation would delay, rather than derail, the maturation of cryptocurrencies, leaving the US market operating below its potential as investors prefer bitcoin-focused exposure, strong balance sheets and cash flow infrastructure over regulation-sensitive segments such as exchanges, decentralized finance (DeFi) and altcoins.
Read more: Delay in Market Structure Bill Considered Limiting Crypto Valuations in US, Benchmark Says
