The cryptocurrency market may face difficulties this summer if the U.S. Congress does not continue work on relevant legislation. This was stated by Bitwise’s Chief Investment Officer, Matt Hougan.
“My base scenario is that most crypto assets will reach new all-time highs this year, with Bitcoin rising above $200,000. But… I am often asked what could derail this. The answer is simple: people. More precisely, politicians,” he wrote in a weekly note to investors.
Hougan noted that the market grew following the November 2024 U.S. presidential elections on expectations of positive regulatory changes. Many of these were realized in the first 100 days of the Trump administration:
- a Bitcoin reserve was created;
- digital currencies were designated as a national priority;
- the U.S. Securities and Exchange Commission halted nearly all cases against industry participants and repealed the “draconian” accounting rules of SAB 121;
- the agency was headed by cryptocurrency advocate Paul Atkins;
- authorities ended Operation Choke Point 2.0, targeting the debanking of industry companies;
- venture capitalist David Sacks was appointed “crypto czar”.
However, all these changes originated from the White House and could be reversed by the next administration.
“To advance the crypto industry, we need progress to be legislatively enshrined by Congress. Passing even one cryptocurrency bill would show that Democrats and Republicans can unite on this issue, making it harder for future regimes to reverse,” Hougan emphasized.
He anticipated that the first such act would be a bill on stablecoin regulation. In March, the GENIUS Act received approval from the Senate Banking Committee. But over the past weekend, Democratic Party representatives withdrew their support.
Formally, politicians cited insufficient AML/KYC measures provided by the document. However, Hougan believes the real reason is the declining approval rating of President Donald Trump and discussions of a potential conflict of interest related to the president’s crypto projects.
In Hougan’s view, the GENIUS Act could create a “solid regulatory path” for major financial players to enter the digital asset market. However, efforts to expand its scope beyond the “stablecoin” segment are currently not aiding its progress.
“I think, in the end, the stablecoin law will be passed. It is too beneficial — for the U.S., for the dollar, for business — to be seriously stalled by behind-the-scenes maneuvering in Congress,” Hougan suggested.
The next few weeks will be crucial for the bill, and if it progresses, the bullish cryptocurrency market will be “unstoppable,” he believes.
Earlier, Bitwise experts identified favorable regulation in the U.S. as one of the potential drivers for Bitcoin’s growth in the second quarter.