Emre Yumlu 
Expectations are growing that the prolonged slowdown in the crypto market may be approaching its final phase. One of the key catalysts behind this shift is the CLARITY Act currently moving through the U.S. legislative process. According to Matt Hougan, Chief Investment Officer at Bitwise Asset Management, the bill has the potential to remove long-standing regulatory uncertainty and set the stage for a renewed expansion in Bitcoin and the broader digital asset market.
Why the CLARITY Act Matters
Introduced in May 2025 with bipartisan backing in the U.S. House of Representatives, the CLARITY Act aims to clearly define how digital assets should be regulated. Its primary objective is to resolve the long-running ambiguity around whether certain crypto assets fall under securities law or should be treated as commodities.
Under the proposed framework, assets categorized as digital commodities would largely fall under the oversight of the Commodity Futures Trading Commission (CFTC), covering spot markets, exchanges, brokers, and dealers. The Securities and Exchange Commission (SEC), meanwhile, would retain authority over securities-related activities and specific primary-market fundraising mechanisms. For market participants, this clearer division of responsibilities could significantly reduce compliance risk and unlock sidelined capital.
Market Sentiment Turns Constructive
Hougan has compared the CLARITY Act to a signal that could determine whether the crypto market remains stuck in winter or transitions into a new growth phase. In his view, passage and enactment of the bill could pave the way for fresh all-time highs across major digital assets. Failure, on the other hand, could prolong the current period of caution.
Market-based probability indicators suggest growing optimism, with traders increasingly pricing in the likelihood that the legislation will be signed into law within the year.
Is Bitcoin’s Four-Year Cycle Ending?
Beyond regulation, Hougan also questions whether Bitcoin’s historically referenced four-year cycle still applies. He argues that the halving’s impact has diminished as new supply growth has become relatively insignificant compared to overall market size.
Instead, structural forces such as institutional adoption, regulatory progress, and long-term infrastructure development are now playing a larger role in shaping Bitcoin’s trajectory. For the first time, Hougan suggests, Bitcoin’s fundamentals appear to be leading price rather than reacting to it.
A Structural Shift for Crypto Markets
When viewed together, potential regulatory clarity and evolving Bitcoin market dynamics point toward a transition away from short-term cyclical behavior. If realized, this shift could mark the beginning of a more mature phase for crypto—one defined by long-term trends, deeper institutional participation, and greater predictability within the global financial system.
This content is not investment advice.
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