The Clarity Act and the recess clock
Congress heads into its August recess soon, and the Clarity Act still sits unfinished. The House passed the bill last year. It now rests with the Senate Banking Committee. The sticking point is stablecoins, specifically two questions: whether stablecoins count as payments or as deposits, and how the bill's language handles that split. Jamie Dimon's view: if you allow deposits on stablecoins, the issuer should be treated as a bank and fall under bank rules.
Congress has a crowded agenda. The odds of a Senate vote before recess have dropped hard. On Kalshi, a prediction market, the chance sat near 80% around July 20th; it has since fallen to 51%, close to a coin flip. Recess begins next Friday. If no vote comes before then, the next window is tough: midterms are coming, a vote before them looks unlikely, and after the midterms the makeup of Congress is an open question. So passage before recess is far from assured, though anything can happen at 51%.
For crypto bulls, the logic is simple. Any clarity on payment rails, stablecoins, and digital assets at the federal level should drive more adoption, and that would be bullish for the sector.
Closing the crypto wash sale loophole
A separate push in Congress would close the crypto wash sale tax loophole. A Republican introduced a bill in June to put digital assets under the same tax rules that govern securities.
Here is how the wash sale rule works for stocks: if you hold a stock and sell it at a loss, you cannot buy it back within a set time period and still claim the tax loss, unless you change your portfolio. For crypto, that rule does not exist today. You can sell Bitcoin or Ether at a loss, book the tax benefit, and buy it back right away.
Why does this come up now? Bitcoin is down 50% from its October high. If you bought at 125k, you could sell, take the tax loss, then repurchase.
A key detail: the loophole applies to the actual coins, since Bitcoin and crypto are classified as property. The ETFs and exchange-traded products that hold Bitcoin or Ether already fall under securities law, so the wash sale rule already touches them.
Is it a big deal? Net net, closing it is probably not bullish for crypto, because it removes an edge that direct crypto ownership held over stocks. There is a workaround under discussion: even if the wash sale rule applies to crypto, you might sell Bitcoin and buy Ether, arguing the two are not identical and so the sale falls outside the rule. Because this lands squarely in tax territory, anyone holding crypto, ETPs, ETFs, or similar products should talk to a tax advisor about the implications before acting.
Bitcoin technicals: holding a key line
Bitcoin has improved modestly and holds above 60,000, but it stays stuck in a lowered range. On a weekly chart, the 200-week simple moving average matters. Back in February, Bitcoin fell to around 60,000, found support, and dipped as low as 57,850. Some technicians call 58,000 support. The 200-week average sits near 61k. For a couple of months, Bitcoin has consolidated between 60 and 65.
Two points stand out. First, it holds above the 200-week average. Second, its relative strength has improved. The semiconductor index (the socks) is down 25% in about five weeks. The Nasdaq and Nasdaq 100 are both down about 10%, a correction. Bitcoin used to be treated as a speculative tech, Nasdaq-style risk asset, yet it has held a bid over the past couple of months while those fell. That is real relative strength.
For bulls, the setup: hold above the 200-week average and wait for seasonality to kick in around September and October. This ties to the four-year cycle. The size of these drawdowns varies, but their length stays fairly consistent, so the timing of a rebound is somewhat predictable. Staying sideways until September or October would bode well from a seasonal view. It is not a guarantee, just the best case. Clarity Act passage would be a wildcard on top of that.
Ethereum leads the pack
Ethereum shows the clearest relative strength. It is up about 25% off its lows. On a daily chart, Ether futures have climbed back above the 50-day simple moving average.
The likely driver is the Clarity Act. Roughly 50 to 60% of stablecoins run on the Ethereum network. If clarity brings more adoption and heavier use of that network, the thesis is that Ether's price benefits. Over the last two months, Ethereum looks the best in the crypto world.
