Five Days, Slim Odds
The Senate has only 5 days left to pass the Clarity Act, the biggest crypto bill the US has ever tried to move, before members leave for summer recess. No floor vote this week means no vote before recess, and the chance of it returning to the calendar in September before the midterm elections is slim. Being straight about it: the Clarity Act likely does not clear the Senate floor this week and likely does not pass before the midterms. The odds sit in single digits. There is still a chance, just a small one.
The Optimistic Case
Coinbase's head of institutional strategy stays hopeful for three reasons. First, the smartest and most ethical people he knows are working hard on the bill and remain optimistic, and they are on the ground talking to the right people with the right message behind an innovative path. Second, the country eventually does the right thing. Third, the GENIUS Act, which people now remember as passing easily, was actually hard fought until the bitter end. So the current wave of loud, misleading tweets from politicians, bankers, and opponents reads as the desperate final throws of an opposition that knows it is fighting against history.
Even the banking industry has come around on most of it. The American Bankers Association CEO said on CNBC that there is a lot of good in the Clarity Act, that financial institutions need it, and that it is good for banks. Banks support 98% of the bill. They are not fully on board with the stablecoin part, but that is the only sticking point. The bill runs about 600 pages, and the ABA suggests only two paragraphs of tiny surgical edits so the bill does exactly what senators intend. Crypto and banking can coexist; the US can be both the crypto capital and the banking capital of the world. A supervisory framework over digital assets matters, and so does innovation in the US.
What Happens If It Fails
Two scenarios: the Clarity Act passes, a hugely bullish fundamental catalyst, or it does not pass, which is how crypto has operated for the last 16 years.
The former CFTC chairman, Chris Giancarlo, offers a calmer view: stop making such a big deal out of clarity. The industry keeps shouting that it needs clarity. It does. But the internet has run for 30 years with no authorizing statute, and innovation goes on. He would like to see the bill pass because it holds real value, including reauthorizing LabCFTC, the innovation center he started at the CFTC. He wants every financial regulator, in fact every regulator, in Washington to have its own innovation center with in-house expertise, the way LabCFTC did for the CFTC. Still, brace for the bill failing, because the world will go on.
SEC chair Paul Atkins says the SEC is ready to set crypto rules even if Congress fails to pass the Clarity Act. This is not being priced in the way it should be. Atkins is optimistic Congress will pass the bill and says the SEC is offering technical help to answer lawmakers' questions. But a statute is the way to future-proof direction. The SEC stands ready, willing, and able to issue rules covering the same issues in Clarity and other parts of the crypto market, either to implement the Clarity Act or to fill the gap if Congress does not act. Even so, the certainty of a statute is what gives clear direction going forward.
Market Read
Crypto has entered August. July closed green. August is historically one of Bitcoin's weakest months: only 4 of the past 13 Augusts have been green. If the Clarity Act passes, there is a strong chance August finishes green. If it does not, expect a weak month. Setting aside 2021 and 2017, both bull-market years, Bitcoin's August returns over the past 10 years have been poor. The last green August was in the raging bull market of 2021; the four years since have all been red. If Clarity passes, this year can finish strong. If it fails, expect a few more months of churn before reassessing.
Ethereum held on exchanges keeps dropping and has done so for about two years, sitting very low now. This cannot keep falling without building toward a big supply squeeze. When interest and capital return, there will not be much Bitcoin or Ethereum left on exchanges to go around.
For angry, tense holders: this will pass. And this is a great time to be in crypto, much like 2022 and 2018.
Hoskinson Loses Patience
Cardano founder Charles Hoskinson snapped at a podcaster who asked about his origins with Ethereum. He called the question lazy and told the host to do basic research. It has been 12 years, and he has answered the question 400 times in nearly every interview, spending 30 minutes to two hours going back and forth on it across hundreds of interviews. He worked at Ethereum for six months, 12 years ago, and books have been written about it. He would rather discuss the 12 years spent building Cardano into a $100 billion ecosystem and solving hard problems in computer science than rehash six months from over a decade ago. When a traumatic event is over and you have said your piece, it is not appropriate for people to keep badgering you about it. He is tired of talking about Ethereum.
The Bigger Frame
From a recent interview, the Bitwise CIO called this a magical time to invest in crypto. The hero stories people tell are about those who came in during the depths of 2022 or 2018-2019. This moment is like that, except the bull market is visible on the horizon fairly clearly. The catalysts are stacking up: stablecoins, tokenization, and large wealth-management platforms finally putting money into crypto. Across eight-plus years at Bitwise, this honestly feels like the best moment to invest in crypto.
