The digital asset market is facing a critical fork in the road, according to crypto asset management firm Bitwise.
In a Monday blog post, the investment manager warned that the stalling of the Clarity Act in Congress could shift the market from a speculative bull run into a grueling “show me” phase.
The Senate Agriculture Committee postponed its crypto market structure markup hearing from today to Thursday, citing the winter storm that hit much of the U.S. over the weekend.
According to Bitwise CIO Matt Hougan the Clarity Act is essential for cementing a current pro-crypto regulatory environment into permanent law. Without it, the the industry remains vulnerable to the whims of future administrations.
Hougan pointed out that market sentiment on whether the bill will become law has soured recently. While Polymarket traders in early January priced in an 80% chance of the bill passing, those odds have plummeted to roughly 50% after figures like Coinbase (COIN) CEO Brian Armstrong labeled the current draft unworkable.
Armstrong said his firm pulled 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 crypto must follow the path of disruptive giants like Uber and Airbnb, which survived regulatory grey areas by becoming too popular for lawmakers to ignore.
He suggests the industry has roughly three years to make stablecoins and tokenized assets indispensable to the American economy; if it succeeds, favorable regulations will follow by necessity, but if it remains on the fringes, a change in Washington could prove disastrous.
This legislative uncertainty creates two distinct pathways for market returns. Bitwise expects a sharp rally if a workable version of the Clarity Act passes, as investors would immediately price in the guaranteed expansion of blockchain finance.
Conversely, a failure to pass the bill would likely result in a “wait and see” market, where price appreciation is capped by regulatory skepticism and contingent on hard evidence of real-world adoption. While the asset manager remains optimistic that the administration will deliver on its pro-crypto promises, it advises investors to prepare for a “slower ascent” should the legislative foundation remain unsettled.
Wall Street broker Benchmark said failure to pass legislation would delay, not derail, crypto’s maturation, leaving the U.S. market operating below its potential as investors favor bitcoin-centric exposure, strong balance sheets and cash-flowing infrastructure over regulatory-sensitive segments such as exchanges, decentralized finance (DeFi) and altcoins.
Read more: Market structure bill delay seen capping U.S. crypto valuations, Benchmark says
