Bitwise CIO Matt Hougan says crypto's bull run may not need the Clarity Act

Bitwise's Matt Hougan drops his six-week warning

Bitwise Chief Investment Officer Matt Hougan has changed his view on what happens to crypto markets after the failure of the Clarity Act, a bill that would have set rules for digital assets in the United States. He had previously said the bill's failure would likely bring about six more weeks of difficult markets.

The Clarity Act received 49 votes in Tuesday's Senate procedural vote, short of the 60 needed to move forward. Hougan had called the legislation crypto's “Punxsutawney Phil” and predicted a longer stretch of weak markets if it failed. In a note to clients late Wednesday, he wrote that he no longer thinks that is the most likely path, adding that the bill's failure “may matter far less than today's headlines suggest.”

His reasoning rests on what has already happened in the market. Bitcoin, the largest cryptocurrency, has climbed since July 1, when it bottomed at around $57,950, reaching above $80,000 by Sept. 4.

Prices rose while the bill's odds fell

• Hougan had expected six more weeks of difficult crypto markets if the Clarity Act failed.
• The bill got 49 votes in Tuesday's Senate procedural vote; 60 were needed to advance.
• Bitcoin rose from a low of about $57,950 on July 1 to above $80,000 by Sept. 4.
• Over the same period, prediction market Polymarket's odds of the Clarity Act becoming law this year fell from 39% to 14%.
• Bitcoin fell about 4% after the vote news. Hougan pointed to concerns about interest rates and oil as possible contributing factors.

Hougan summed up the price and odds move this way: “If the bull market depended on Clarity's passage, you would have expected falling odds to mean falling prices. We got the opposite.”

Wall Street kept building without the law

Hougan said large financial firms have continued expanding their crypto businesses rather than waiting for the Clarity Act. He pointed to Robinhood launching its own blockchain, Morgan Stanley launching a Solana exchange-traded fund, and DTCC settling its first batch of tokenized stock trades. An exchange-traded fund, or ETF, is a listed product that lets investors get exposure to an asset without buying it directly.

He said those firms took comfort in having what he called an extraordinarily pro-crypto SEC and CFTC in place until 2029. The SEC is the U.S. Securities and Exchange Commission and the CFTC is the Commodity Futures Trading Commission; both are federal regulators.

Regulators say they can write their own rules

SEC Chair Paul Atkins has said the agency is prepared to address the issues covered by the Clarity Act through its own rules. CFTC Chair Mike Selig has also said the agency is ready to move ahead with its own crypto rulemaking.

Hougan described crypto's position on regulation as a “heads we win big; tails we still win” situation, though he expects the current market weakness to last until the regulators announce their next proposals.

What is confirmed

The Senate procedural vote result, Hougan's previous and current position, the bitcoin price levels he cited, the Polymarket odds he cited, and the public statements from the SEC and CFTC chairs are all reported by the source. Hougan's market view is his own analysis and forecast, not a confirmed outcome.

What remains uncertain

Hougan acknowledged limits to the regulator-first path. Rules written by agencies can be reversed by a future administration. Only Congress can give the CFTC broader authority over spot crypto markets, which are markets for buying and selling the asset itself. He also said the Clarity Act would have provided more durable regulatory certainty.

The source also does not confirm why bitcoin fell about 4% after the vote. Hougan suggested interest rates and oil as possible factors, which is his assessment rather than a confirmed cause. He added that “the bull market ahead of us has a few more speed bumps.”

Why the Clarity Act still matters

The bill would have set crypto rules through legislation, which is harder to undo than agency rules. Without it, the shape of U.S. crypto regulation depends more on the current regulators and on how long they stay in place.

Sources

• The Block

Read also: Kevin O'Leary says the Clarity Act will return after the midterms