It should have been the year Bitcoin finally shone. In the U.S. Congress, a bill poised to legitimize crypto assets was under debate; the industry had seen no more scandals of exchange thefts or stablecoins collapsing. Bitcoin should have risen with confidence. Yet, instead, it has steadily declined since its October peak of $126,000, now hovering around $60,000—nearly halved, hitting its lowest level in 21 months. Compared to past “crypto winters” with drops of 80% or more, this decline isn’t the steepest—but it’s more insidious, as investors have slowly and steadily lost faith.

Note: This article is for academic and policy research purposes only and does not constitute any investment or legal advice.

I. When "Digital Gold" Becomes a Risk Asset

When Bitcoin was introduced, it claimed to bypass banks and create a new payment system, but its slow transaction speeds, high fees, and volatile price made it unfit to be called “money.” Believers then rebranded it as “digital gold,” a hedge against inflation.

This narrative did play out for a while after the 2022 low—Wall Street asset managers collectively bought Bitcoin ETFs as allocation tools, pushing the price up. But these new owners consistently make calm, pragmatic decisions: as interest rates rise, non-yielding assets make way. Amid geopolitical risks from Iran’s situation and inflation concerns, Bitcoin did not act as a safe haven; instead, it moved in tandem with risk assets like tech stocks, while market risk appetite increasingly flowed toward AI-related stocks. The script of “central bank printing money, Bitcoin preserving value” simply never played out this time.

Two, Thaler's bet begins to wobble

The biggest indicator in this space is Strategy, led by Michael Saylor. In early June, the world’s largest corporate holder of Bitcoin sold 32 bitcoins, cashing out $2.5 million—a modest amount, but the first sale since December 2022. Although the transaction was small, the market viewed it as a significant signal; within the following week, Bitcoin dropped below $60,000, hitting its lowest level in nearly 21 months.

In 2020, Thiel transformed his software company into a "shadow stock" of Bitcoin, accumulating over 4% of the float, adhering for years to one simple creed: buy and never sell. Since last year, he has launched multiple high-yield preferred stock financing products, driving the stock price far above the net asset value of its Bitcoin holdings. But the market soon recognized a mathematical problem: The underlying asset generates no income—what supports the dividends? Over the past year, Strategy’s stock price has plunged more than 70%, and Thiel’s creed is facing its most substantial test since inception.

III. The CLARA Act: Passed the House, Stuck on the Senate Calendar

The industry's biggest hope is that the CLARITY Act will establish regulatory clarity for tokens like Bitcoin—following the GENIUS Act, which defined the regulatory framework for stablecoins, this bill aims to clearly delineate regulatory boundaries between the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC).

The bill passed overwhelmingly in the House in July and cleared the Senate Banking Committee in May; it now sits at No. 423 on the Senate legislative calendar, awaiting scheduling—but no one has pushed it forward. The target of signing it on Independence Day has already been missed. Since the Senate returned from its July 13 recess, there are only two or three weeks left before the August recess—and beyond that lies the November midterm elections, making passage this year significantly less likely. Predictive markets have lowered the probability of passage from around 80% at the start of the year to roughly 40%.

The core issue lies in several politically entrenched deadlocks: the Republican Party holds 53 seats in the Senate, and Hawley and Rand Paul are likely to vote against it, meaning at least seven to nine additional Democratic senators would need to be persuaded to reach the 60-vote threshold required to overcome a filibuster. Democrats are already reluctant to endorse a bill that could benefit Trump and his associates’ crypto assets, and the scale of Trump’s latest financial disclosures related to crypto activities has further intensified the controversy.

Section 604 of the bill, which seeks to exclude blockchain developers from the definition of "money transmitter," has also drawn opposition from law enforcement agencies—in late June, the National Association of State Prosecutors wrote to the White House Digital Assets Advisory Committee, warning that this exemption could create loopholes for money laundering.

Four, the answer to price is not in the candlestick chart.

This downturn is different from previous ones: past winters could often be traced to a specific event, and prices naturally rebounded once sentiment recovered; this time, there’s no black swan—only an increasing number of institutional investors treating Bitcoin as a high-beta asset that moves in tandem with Fed policy and market risk appetite, competing for the same pool of capital as AI-themed stocks—and losing means losing.

Bitcoin has long moved from the experiment of fringe tech enthusiasts to the balance sheets of Wall Street and the legislative agendas of Congress; its price is the result of a collective vote by institutional capital, corporate belief, and regulatory progress. Right now, this vote is casting a “bearish” ballot.

Reference: Cresswell, C. (2026, July 17). Why this Bitcoin slump is different. Bloomberg.

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