Bernstein Warns Of A Short Term Crypto Correction

The crypto market could lose its main political catalyst in the United States. With the Senate’s summer recess just days away, the passage of the CLARITY Act is slipping out of reach, reigniting fears of a regulatory void. According to Bernstein analysts, this stalemate risks triggering an immediate correction for Bitcoin and altcoins. Yet behind this short-term threat lies a more nuanced scenario, where a legislative setback today could still reshuffle the deck for the industry in the months ahead.

En bref

• L’échec pressenti du CLARITY Act au Sénat américain menace de provoquer une chute brutale et immédiate des cours des cryptos d’ici la pause parlementaire estivale.
• Face à cet enlisement législatif, les investisseurs anticipent un point bas du marché avant d’espérer un rebond tactique entre la fin du troisième et le début du quatrième trimestre 2026.
• Pour combler ce vide politique, la SEC et la CFTC s’apprêtent à prendre le relais via l’initiative Project Crypto afin d’offrir un cadre réglementaire direct aux acteurs de la DeFi et aux émetteurs de tokens.
• Ce blocage au Capitole s’explique principalement par la pression du lobby bancaire traditionnel contre les rendements sur stablecoins et par de violentes désaccords éthiques entre démocrates et républicains.

CLARITY Act: A Threat to Prices and a Collapse in Market Confidence

U.S. Congressional inaction threatens to trigger a negative knee-jerk reaction within the crypto industry. According to Bernstein, the Senate’s failure to pass the CLARITY Act before its summer recess risks causing another leg down for the sector’s overall valuations. The wealth management firm’s forecasts fit into a very specific timeframe.

In their note to investors, Bernstein analysts state: ‘From a tactical standpoint, we expect the crypto market to bottom and start showing momentum towards late Q3 and early Q4 prior to the mid-terms.’ The market will therefore need to show resilience, weathering a potential purge before hoping for momentum to return ahead of the mid-term elections.

This caution displayed by analysts is backed by a clear deterioration in confidence indicators across the sector :

• Marked pessimism across prediction markets: on the Polymarket platform, the probability of the CLARITY Act being signed into law before the end of the year has dropped to just 27%, down 7% over one week and 9% over one month, with nearly $3.7 million wagered by bettors ;
• Early institutional revisions: as early as June 26, investment firm Galaxy Digital cut its odds of the legislation becoming law in 2026 to 50 %, warning that the Senate was running out of time before its summer recess.

The Regulatory Pivot by the SEC and CFTC via Project Crypto

In the face of legislative inertia, regulation of the sector could paradoxically accelerate through the direct push of federal agencies. Bernstein highlights that the Senate stalemate could prompt the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) to adopt a proactive stance and speed up their rulemaking initiatives under ” Project Crypto “.

Initially announced by SEC Chairman Paul Atkins in July 2025 and expanded to the CFTC in September 2025, this joint program aims to build a functional framework by leveraging the existing authority of both agencies. According to the report, regulators could ramp up guidance on token taxonomy, clarify decentralized finance (DeFi) regulations, and fast-track the implementation of the innovation exemption—a mechanism allowing certain tokens to avoid security status for a set period.

Technical details provided by analysts show that this shift toward agency-driven regulation offers a pragmatic alternative while Congress reworks its bill. By clarifying token classifications and providing a temporary safe harbor for token issuances, the SEC and CFTC aim to prevent a prolonged legal void. This joint initiative would help maintain a baseline level of innovation on U.S. soil without waiting for a lengthy and uncertain legislative process on Capitol Hill.

Banking Bottlenecks and Washington’s Political Imbroglio

The stalemate stalling the legislation in the Senate is driven by fierce pushback from traditional banks alongside intricate political maneuvering in Washington. The American Bankers Association (ABA) together with state banking associations have voiced strong opposition to the bill’s stablecoin terms, claiming the current iteration enables crypto companies to pay yield on stablecoins without facing bank-like regulatory standards.

At the same time, the political side has been weighed down by ethical considerations. According to reports by journalist Eleanor Terrett, the White House is reviewing a bipartisan ethics counterproposal stemming from discussions between Republican Senator Thom Tillis and Democrat Ruben Gallego.

This counterproposal introduces a novel legal layer that further complicates the bill’s path to passage. Notably, the proposed compromise would allow state attorneys general to sue the Department of Justice if it fails to enforce ethics rules on federal officials. This interplay between financial stakes—stemming from competition between banks and stablecoin issuers—and political feuds over federal ethics largely explains why Senate debates have ground to a halt.

Thus, the congressional gridlock reveals a major transition in U.S. crypto governance. While legislative delays exert immediate downward pressure on prices, the crypto ecosystem could find a second wind through direct regulatory clarification initiated by the SEC and CFTC.

While the prospect of a market bottom between late Q3 and early Q4 appears to be holding true according to Bernstein, regulators’ ability to provide operational exemptions for DeFi and token creation will determine how fast the industry can kickstart its recovery ahead of the mid-term elections.