Bitcoin has fallen 21% this 12 months, Ethereum is down 33%, and Solana has dropped 37%, in keeping with Bitwise Chief Funding Officer Matt Hougan’s newest CIO memo. Hyperliquid gained 72% in a single month over the identical stretch, a divergence Hougan reads as a preview of what CLARITY Act passage would do to DeFi valuations relative to Bitcoin itself.
The CLARITY Act would draw a proper line between SEC and CFTC jurisdiction over digital property, changing years of enforcement-led regulation with a statutory framework. The Home handed the invoice 294-134 in July 2025, with 78 Democrats crossing the aisle, and Senate Banking Chairman Tim Scott pushed it by means of committee 15-9 on Could 14 after practically a 12 months of bipartisan negotiation.
JUST IN:
"Crypto needs the CLARITY Act to undergo," says Bitwise CIO Matt Hougan.
Polymarket at present places the chances at ~20%.
Hougan says a shock passage would spark a "new main market in crypto," however its failure means a "extra gradual path" ahead.pic.twitter.com/uY8sVtnceZ
— Bitcoin.com Information (@BitcoinNews) August 17, 2026
The ground is a distinct drawback. Republicans maintain 53 Senate seats towards a 60-vote threshold, and solely two Democrats on the committee backed the invoice, leaving DeFi remedy and stablecoin guidelines as unresolved sticking factors earlier than any full vote.
That uncertainty is doing actual harm to positioning. Hougan’s memo notes institutional capital is sitting out crypto solely in favor of AI equities buying and selling at document highs, a lower-friction guess that doesn’t carry the chance of a regulatory setback touchdown mid-quarter. Crypto ETFs are seeing outflows, and spot volumes sit at multi-year lows, circumstances that usually don’t reverse till the coverage query is definitely resolved in some way.
“Crypto can survive CLARITY failing or rally if the invoice passes. However it could’t thrive within the in-between,” Hougan stated within the memo.
The Tokenization Case for Uniswap, Hyperliquid, and Chainlink
Hougan’s memo treats the rotation into idiosyncratic outperformers because the extra attention-grabbing sign than the CLARITY Act headline itself. Hyperliquid’s 72% month-to-month achieve and Zcash’s 50% rise didn’t observe Bitcoin, Ethereum, or Solana in any respect, which Hougan attributes to fundamentals.
Separate reporting on Hougan’s feedback, by way of Coinpedia, extends that thesis right into a market-size argument for DeFi and infrastructure tokens particularly. Uniswap, Hyperliquid, and oracle community Chainlink at present commerce as in the event that they solely ever serve crypto’s roughly $2 trillion whole market.
Bitwise CIO says income is turning into the primary driver of crypto token worth
Matt Hougan (@Matt_Hougan) stated in a memo that tasks are routing protocol income into shopping for and burning their very own tokens, citing Hyperliquid's use of roughly 99% of payment income to repurchase… pic.twitter.com/i6v3pqDheQ— BSCN (@BSCNews) August 13, 2026
If tokenization expands as CLARITY’s backers count on, those self same protocols might plausibly begin serving the fairness market – round $150 trillion – or the bond market, nearer to $200 trillion, forcing a repricing of the overall addressable market {that a} compliant Bitcoin ETF merely doesn’t want.
Uniswap (UNI)24h7d30d1yAll time
That’s the excellence value sitting with: Bitcoin advantages from any sign of continued U.S. help for crypto broadly, but it surely doesn’t want new authorized plumbing to operate as a settlement asset. DeFi purposes and oracle infrastructure do, since institutional-scale tokenized equities and bonds require the form of SEC-CFTC readability that the CLARITY Act is designed to supply. That’s additionally the place the invoice’s unresolved DeFi-treatment language issues most, and it’s the identical jurisdictional ambiguity delayed SEC-crypto engagement has left hanging over the sector for months.
Commerce Crypto on Bybit and Get a Probability to Win Our $1,000 USDT Airdrop
What Breaks the Readability Act Stalemate
If the Senate schedules and passes the CLARITY Act earlier than year-end, Hougan’s framework suggests DeFi and infrastructure tokens re-rate quicker than Bitcoin, since their upside is tied on to a market-size growth Bitcoin doesn’t require. Merchandise already constructed round that thesis, together with Bitwise’s Hyperliquid ETF and a floated Solana ETF, given how a lot tokenized fairness exercise already runs on that chain, would achieve a direct distribution benefit.
Bitcoin (BTC)24h7d30d1yAll time
If the invoice stalls once more, count on the SEC and CFTC to maintain filling the hole by means of incremental rulemaking quite than statute, the identical sample merchants have watched play out throughout Ripple’s personal regulatory readability push.
Hougan’s personal math implies that state of affairs retains institutional capital parked in AI shares and large-cap crypto range-bound, since, per his memo, no sustainable large-cap rally arrives earlier than Congress really settles the query. The Senate’s subsequent scheduling determination, not the eventual vote tally, is what merchants needs to be watching.
Uncover: The Greatest Crypto to Diversify Your Portfolio
The submit Readability Act Uncertainty Retains DeFi’s Larger Market Guess on Maintain appeared first on Cryptonews.