Crypto Stocks Are Roaring Back. The Clarity Act Could Decide What Comes Next
Crypto has spent most of 2026 in a deep freeze. Bitcoin entered this week roughly 43% below its October 2025 peak, dragging crypto-linked stocks down with it. Then two catalysts hit at once, and the sector came roaring back.
What broke the freeze
Treasury Secretary Scott Bessent surprised bond markets by increasing buybacks of longer-dated government debt. That pulled long-term Treasury yields lower, which weakened the dollar and sent investors scrambling toward riskier assets.
Crypto was first in line. The yield move alone was enough to spark a rally, but it was quickly amplified by a massive short squeeze. Roughly $2.7B in crypto short positions were liquidated in a single session, according to CoinGlass.
A short squeeze happens when traders who bet against an asset are forced to buy it back as prices rise, accelerating the move higher.
Bitcoin gained more than 11% across two days, breaking above $72K to reach its highest level since June. The rally spilled into crypto stocks, lifting Coinbase, Circle, Strategy, and Mara Holdings.
Trump's meeting changed the calculus
On the same day yields fell, the White House hosted the CEOs of Coinbase, Kraken, Robinhood, Ripple, and ChainLink. President Trump used the room to pressure Congress directly.
"We need Congress to take the next step by passing the Clarity Act — a fair version of the Clarity Act."
Donald Trump, President of the United States
The Clarity Act would define whether individual cryptocurrencies qualify as securities or commodities. That distinction determines which regulator (the SEC or the CFTC) has jurisdiction over them.
Without that framework, regulations remain vulnerable to shifting political winds and court challenges, according to industry executives and analysts.
Investors had largely written off the bill. The Senate left for its August recess without a vote, and negotiations remained deadlocked over an ethics provision.
Many Democrats, and some Republicans, have insisted on language that would ban political officials from profiting from crypto ventures. Trump disclosed more than $1.4B in earnings from his family's crypto ventures in 2025, which has stiffened opposition.
A procedural vote is now scheduled for Sept. 15. Missing that deadline would likely end the bill's chances this year, as midterm election priorities take over.
Clear Street analyst Owen Lau said the market had priced in a very low probability of passage, and that even a slight increase in those odds was enough to move prices.
Who stands to gain and who's still underwater
Beyond the core names, Hyperliquid Strategies was a standout. Trump specifically named Hyperliquid, saying the CFTC was working to bring the exchange into the US in a fully compliant legal fashion.
RBC Capital Markets analyst Ashish Sabadra noted that if US regulations allowed perpetual-style futures products, established exchanges like Cboe could launch their own versions, making this regulatory shift potentially broader than it first appears.
The SEC also released a proposal this week to exempt certain digital assets from security registration requirements. Lau noted that even without the Clarity Act, the SEC or CFTC could proceed with rulemaking on their own.
Still, the rally has only partially reversed a brutal drawdown. Strategy remains 80% below its highs, while Circle is down 70% and Coinbase more than 60%.
Bitcoin itself is still down roughly 18% this year and 43% from its record. The crypto stocks rally this week is large in percentage terms but small in absolute recovery.
The path ahead
The Sept. 15 procedural vote is the clearest near-term binary for this sector. If it clears that hurdle, the Clarity Act stays alive and regulatory momentum builds. If it fails, the bill is effectively shelved until after the midterms.
Naeem Aslam, chief investment officer at Zaye Capital Markets, said Trump's openness to crypto has encouraged major financial institutions to take the ecosystem seriously, but institutional conviction will stay cautious until law replaces rhetoric.
The ethics impasse around Trump's personal crypto profits remains the most concrete obstacle between here and a signed bill.