TL;DR
- Matt Hougan, CIO of Bitwise, revised his position and no longer believes the failure of the Clarity Act will generate weeks of difficult crypto markets.
- Bitcoin surpassed $80,000 on September 4 while the bill’s approval odds fell from 39% to 14%, the opposite of what was expected.
- The SEC and CFTC are willing to move forward with their own regulation, although agency rules can be reversed by future administrations.
Matt Hougan, Chief Investment Officer of Bitwise Asset Management, publicly revised his stance on the impact of the Clarity Act’s failure on crypto markets.
The executive had previously compared the legislation to the “Punxsutawney Phil” of cryptocurrencies, anticipating six more weeks of bear market if the bill failed to advance. However, in a note sent to his clients on Wednesday evening, he acknowledged that this is no longer the most likely trajectory.
The Clarity Act received 49 votes in the Senate procedural vote, falling short of the 60 needed to advance. Bitcoin dropped approximately 4% after the result was announced, though Hougan noted that concerns over interest rates and oil prices may also have contributed to the decline.
Hougan: The Resilience of the Bull Market
Hougan’s central argument rests on market behavior between July and early September. Bitcoin bottomed near $57,950 on July 1 and climbed above $80,000 on September 4, while the odds of the Clarity Act becoming law this year fell from 39% to 14% during the same period. “If the bull market depended on the law’s passage, you would have expected falling odds to imply falling prices. We got the opposite,” the CIO wrote.
Hougan also highlighted that major Wall Street firms continued expanding their crypto businesses without waiting for the legislation to pass. He mentioned the launch of Robinhood’s blockchain, Morgan Stanley’s Solana ETF, and DTCC’s settlement of its first batch of tokenized equity trades. “These firms found confidence in the fact that we have an extraordinarily pro-crypto SEC and CFTC through 2029,” he stated.
The Role of the SEC and CFTC
SEC Chair Paul Atkins stated that the agency is prepared to address the issues covered by the Clarity Act through its own rulemaking. CFTC Chair Mike Selig made similar remarks. Even so, Hougan acknowledged the limitations of this path: agency rules can be reversed with a change in administration, only Congress can grant the CFTC broader authority over spot cryptocurrency markets, and the Clarity Act would have provided more durable regulatory certainty. “The bull market ahead of us has a few more bumps in the road,” he concluded.
