Why Bitwise Says CLARITY Act Passage Marks the Bear Market Bottom

Bitwise named the CLARITY Act as one of the key catalysts for crypto markets in the third quarter, saying its passage could likely mark the bottom of the current bear market.

The asset manager laid out four catalysts in its Q3 2026 report. It added that this quarter is make-or-break for the market structure bill.

Why the CLARITY Act Tops Bitwise’s Q3 List

The CLARITY Act has been one of the most-watched bills for the crypto sector. However, it has faced key hurdles, with two issues now stalling its progress.

First, ethics provisions tied to the president’s family’s crypto interests have become a sticking point. Section 604, which shields non-custodial developers from money transmitter rules, has also drawn contested debate among lawmakers and law enforcement groups.

Prediction markets put the odds of the bill passing in 2026 near 40%. That figure has fallen sharply from 75% in mid-May.

Nonetheless, Bitwise remains cautiously optimistic about the bill’s chances. It said a successful vote would likely mark the bottom of this bear market. According to the firm, a failure would bring early volatility.

“If it passes, we believe it likely marks this bear market’s bottom. If it fails, expect volatility initially, then a clearing of uncertainty as the industry keeps building under a pro-crypto SEC and CFTC,” the statement read.

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The Other Q3 Crypto Market Catalysts on Bitwise’s Radar

In addition to the CLARITY Act, the asset manager outlined three more upcoming catalysts. Stablecoins sit second on the list. Regulators are due to finalize GENIUS Act rules this quarter, ahead of the law taking effect in January 2027.

Bitwise expects more large firms to announce stablecoin projects before go-live. It pointed to OpenUSD, backed by Stripe, BlackRock, Visa, Coinbase, and about 140 other firms. 

“Stablecoin supply has held near $300 billion since last fall, a quiet show of resilience through crypto’s selloff. We see accelerating stablecoin growth as a catalyst for chains like Ethereum and Solana in Q3, as attention builds ahead of January’s effective date,” it added.

The firm also flagged the new Federal Reserve under Chair Kevin Warsh, whose approach remains largely unknown to markets. He has held rates steady so far. Bitwise expects a much clearer read on his Fed by the end of the quarter. The direction of rates is still hard to call. However, the firm noted that the Fed shapes sentiment across all risk assets, so any rate decision could move markets.

Finally, Bitwise highlighted a quiet re-rating in Decentralized Finance (DeFi). In the past month, Bitcoin (BTC) fell about 22%, yet the firm’s DeFi index dropped just 4%. 

“DeFi usually swings much harder than Bitcoin, so holding up this well is unusual, and almost no one is talking about it. We think DeFi is quietly re-rating,” the report read. “We expect DeFi’s outperformance to keep playing out in Q3, the kind of shift the market tends to notice late.”

Bitwise’s outlook follows a punishing Q2, crypto’s third straight quarter of losses and its worst run since 2022. How the current quarter progresses will show whether that streak extends or breaks.

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