CLARITY Act Failure Could Trigger More Bitcoin Pain, Grayscale Says

Bitcoin’s Next Price Test Narrows Around the CLARITY Act

The CLARITY Act has moved to the center of market focus as it faces a compressed Senate calendar, with regulatory progress emerging as a key catalyst for bitcoin’s direction. Grayscale Research said June 26 that developments around the bill could play a decisive role in shaping sentiment and market structure in the near term.

The Senate Banking Committee advanced the bill in a 15-9 vote, but it still requires 60 votes in the full Senate, coordination with the Senate Agriculture Committee, and reconciliation with the House version. Galaxy Research has reduced its estimated odds of passage in 2026 to 50-50, pointing to the absence of a scheduled floor vote, no motion to proceed, and a lack of a unified committee draft.

Zach Pandl, Grayscale Head of Research, said Strategy and other digital asset treasury (DAT) firms that hold bitcoin on their balance sheets could deleverage further if market conditions tighten. He stated:

“In a downside scenario, the CLARITY Act does not pass this year, Strategy and other DATs deleverage further, and the Fed is forced to raise rates due to persistent inflation.”

Crypto advocates now point to a short Senate window from July 13 to Aug. 7, before the August recess crowds out floor time. While some supporters still see a path for the measure, negotiations over ethics, anti-money laundering rules, and committee differences remain unresolved.

Senate Delay Could Leave Bitcoin Exposed to Further Selling

Market structure uncertainty has become a direct price issue for bitcoin as investors weigh policy risk alongside liquidity pressure. Grayscale cited CLARITY Act uncertainty, Strategy’s levered balance sheet, deleveraging among digital asset treasuries, and quantum-computing security concerns as factors weighing on crypto markets.

The rate backdrop adds another constraint. Grayscale said expectations changed after President Donald Trump nominated Kevin Warsh, viewed as relatively hawkish, instead of Kevin Hassett, viewed as relatively dovish. With inflation still elevated, markets now expect the Federal Reserve to raise rates rather than cut them this year.

The Grayscale head of research detailed:

“If downside risks materialize, we could see bitcoin fall moderately further.”

“Prior cycles have seen bitcoin’s price fall ~80%, but we do not think the peak-to-trough drawdown this cycle will be as deep this time around, due to the more muted bull market and stickier institutional demand for digital assets,” the crypto asset management firm noted.

U.S. Senator Cynthia Lummis (R-WY) has warned that failure to act could push comprehensive crypto legislation to 2030, leaving developers, consumers, exchanges, and enforcement agencies without a clearer federal framework. Crypto advocacy group Stand With Crypto has also urged Senate leaders to schedule a vote before election priorities tighten the calendar.