Bitwise CIO: Crypto survives CLARITY defeat, not limbo

In a memo, Bitwise Chief Investment Officer Matt Hougan wrote that crypto can survive the CLARITY Act failing but cannot thrive while lawmakers leave its fate unresolved. He urged that ending regulatory uncertainty is more important than the bill’s ultimate outcome.

The CLARITY Act would set statutory lines between Securities and Exchange Commission and Commodity Futures Trading Commission jurisdiction and replace an enforcement-led approach with explicit rules. The House approved the bill 294-134 in July 2025, with 78 Democrats voting in favor. The Senate Banking Committee advanced the measure 15-9 on May 14 after nearly a year of bipartisan talks. Passage in the full Senate faces a higher threshold: Republicans hold 53 seats, 60 votes are required and only two committee Democrats supported the bill. Remaining floor disputes include how to treat decentralized finance protocols and which rules should apply to stablecoins.

Hougan wrote the memo as major crypto assets traded sharply lower and spot trading volumes hit multi-year lows. He tied recent market weakness and low volume in part to policy uncertainty. He noted prediction markets price year-end approval odds at about 51 percent, while his Washington contacts place probabilities between roughly 5 percent and 30 percent.

“Crypto can survive CLARITY failing or rally if the bill passes. But it can’t thrive in the in-between,” Hougan wrote.

Market data in the memo showed Bitcoin down about 21 percent year-to-date, Ethereum about 33 percent, Solana about 37 percent and XRP around 31 percent. Crypto exchange-traded funds have recorded outflows, and Hougan said institutional investors are choosing to allocate capital to assets without an imminent risk of regulatory reversal, including artificial intelligence and other tech equities.

Hougan pointed to selective token rallies that he said reflect underlying revenue growth rather than momentum trading. He highlighted Hyperliquid, whose token rose about 72 percent in a month, and privacy coin Zcash, which gained roughly 50 percent over the same period. He described those moves as driven by idiosyncratic fundamentals.

Hougan wrote he does not expect a sustained large-cap crypto rally until Congress provides clarity. He added that Senate scheduling and the timeline for resolving policy disputes may matter more to near-term prices than whether the CLARITY Act ultimately passes or fails.