Asset management company Bitwise has described the CLARITY Act, expected to shape the regulatory framework of the cryptocurrency market in the US, as a critical turning point for the market. According to the company’s third-quarter outlook report, the passage of this law could be one of the most significant catalysts signaling the bottom of the current bear market.
Bitwise noted that the third quarter is a crucial period for the CLARITY Act. According to the company, the bill has the potential to clarify how and by which institution the cryptocurrency market will be regulated, and how the structural framework of the sector will be shaped. Therefore, the fate of the law is of great importance not only in terms of regulatory uncertainties but also in terms of market psychology and institutional capital flows.
The report states that forecast markets are currently pricing in a 40% probability of the CLARITY Act becoming law this year. This represents a significant drop compared to the 75% seen in mid-May. Bitwise argues that the market has become more cautious about the regulatory process in recent weeks, but that its passage would significantly boost confidence in the crypto market.
According to the company, the enactment of the CLARITY Act could signify the bottom of the current bear market. Such a scenario, with the long-awaited regulatory clarity, could strengthen expectations of a medium-term market recovery. On the other hand, a warning is issued that volatility could increase in the short term if the bill is rejected or delayed.
Despite this, Bitwise believes that uncertainty will not be permanent, even in a negative scenario. The company maintains the view that the sector will gradually gain a clearer framework thanks to the US Securities and Exchange Commission (SEC) and the Commodity Futures Commission (CFTC) adopting a more constructive approach towards crypto. Therefore, Bitwise considers the CLARITY Act not just a bill, but a strategic threshold that could determine the direction of the market.
*This is not investment advice.
