Bitcoin and crypto industry can’t hold CLARITY Act bump as it heads to Senate

The CLARITY Act finally cleared the Senate Banking Committee in a 15-9 vote on Thursday, representing “crypto’s largest political win since the GENIUS Act became law last summer,” according to Benchmark Managing Director Mark Palmer. It will now head to the full Senate.

Patrick Witt, executive director of the president’s Council of Advisors for Digital Assets, said last week that the administration was targeting a July 4 passage.

“One small step for the Clarity Act and one giant leap for digital assets,” Senator Cynthia Lummis, who has championed the regulation, said in a statement.

Bitcoin rose to $82,000 while Circle, the stablecoin giant, jumped after the vote, but neither could hold those gains long.

Richard Green, director of institutional and ecosystem at Rootstock Labs, told Sherwood News, “The real fireworks were in crypto equities: Coinbase up 10%, Strategy up 6.6%.” 

But on Friday morning, the entire sector slumped.

Nic Puckrin, cofounder of Coin Bureau, told Sherwood that bitcoin’s short-lived rally has completely fizzled out under strong sell pressure.

Right now, he said, bitcoin is far more sensitive to macro tailwinds and geopolitical tensions than a little bit of positive regulatory news, especially considering the bill is still hanging in the balance.

“On the macro side, a hot inflation print and a lack of resolution in the US-Iran talks heading into the weekend are making investors nervous. That’s why bitcoin has failed to move past the $82,000 barrier — a key resistance level that it has repeatedly failed to conquer,” Puckrin said, adding that unless there is a meaningful move past that level on strong trading volume, he’s not convinced that bitcoin is out of the woods.  

Paul Howard, senior director at Wincent, told Sherwood, “Whilst some pundits were eagerly awaiting a strong breakout, I stand by my view (of gradual ascent) that price appreciation will take time given the bill has a few more hurdles to jump in the race to become law; those being the Senate and House.”

Meanwhile, bitcoin ETFs, following a massive $635.23 million exodus on Wednesday (the largest exit since January 29), reverted to inflows, with $131.3 million, according to SoSoValue.

With one day to go, the funds have registered $709.88 million in outflows so far this week, which would be the first weekly outflow since March 27 and the largest since January 30.

Johanna Collins-Wood, general counsel and head of compliance at Bitwise, told Sherwood that in the short term, CLARITY matters most where the rules have been least clear: stablecoins, tokenization, and DeFi — areas where crypto assets and networks like ethereum and solana play a much bigger role. 

Yet, while the picture for bitcoin is different, it’s still meaningful, she said.  

Collins-Wood said that if CLARITY continues to advance and the proposed language around digital assets remains in the version signed into law, it will codify bitcoin’s regulatory status as a non-security firmly into law.

“This may help bring in slower-moving institutional investors, such as pensions, insurers, and sovereign wealth funds, whose investment processes often require legal certainty,” she said.

Still, several points of contention remain unresolved in CLARITY, such as ethics and conflict-of-interest issues, and it faces many opponents, including the American Bankers Association, which is pushing back against stablecoin rewards.

Tim Sun, a senior researcher at HashKey, told Sherwood that while uncertainties persist, CLARITY’s potential to be signed into law this July would undoubtedly be one of the few major catalysts for bitcoin and the broader industry so far this year.

“This ‘bullish’ development isn’t just about short-term buying pressure triggered by regulatory clarity; more importantly, US federal legislation serves as a critical compass for the industry’s evolution. Clearer regulatory frameworks are a prerequisite for sustained institutional capital inflows,” Sun said.