Article by Bao Yilong, Wall Street View
Bitcoin surged past $85,000, reaching its highest level in eight months. Amid setbacks in U.S. cryptocurrency regulatory legislation, digital assets did not continue to face pressure but instead rapidly recovered their losses. Bitwise Chief Investment Officer Hougan declared that the "crypto winter" is over and the market has entered the "crypto spring."
Hougan definitively concludes that the nearly year-long "crypto winter" has ended and anticipates this could become the strongest and longest-lasting bull market in cryptocurrency history.
Over the past five days, Bitcoin has risen more than 7% cumulatively, and over the past three months, it has gained nearly 35%. From a technical perspective, BTIG analysts believe that as long as Bitcoin holds support near $75,000, bulls could push further toward the $90,000 region.
This rebound occurred against the backdrop of the Digital Asset Market Clarity Act failing to pass a procedural vote in the Senate, challenging the simplistic notion that legislative failure equals a negative market signal, as the market begins to reassess the true impact of regulatory uncertainty.
Legislative setbacks have not halted the rebound
Wall Street Journal reported that last week, the Digital Asset Market Clarity Act failed to advance in the Senate procedural vote, receiving 49 votes in favor and 50 against, falling short of the 60 votes required.
The bill aims to establish a more comprehensive regulatory framework for the U.S. digital assets market, clarifying the regulatory division of responsibilities between the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), and is regarded by the crypto industry as one of the most significant regulatory legislations in recent years.
Disagreements over issues such as government official conflicts of interest, stablecoin rewards, and impacts on the banking sector were the main points of contention in the negotiations. After the voting results were announced, Bitcoin and certain cryptocurrency-related stocks briefly declined but quickly rebounded.
Hougan believes that, in the absence of the Clear Act passing, the SEC and CFTC can still rely on their existing authority to issue rules in the short term, and legislative failure does not necessarily mean the regulatory environment will inevitably deteriorate.
Strategy's Executive Chairman Michael Saylor also called the bill's setback a "positive turning point" for the digital assets industry, arguing that rather than accepting potentially entrenched restrictions, the industry should leverage the existing regulatory framework to advocate for more favorable rules. Over the next two years, the more important task will be to expand the real-world adoption of digital financial products.
Funds Flow Back to AI: The Core Logic of the Crypto Spring
Hougan's primary indicator that the "crypto winter" has ended is not merely a price rebound, but the divergence between price and fundamentals.
He noted that while cryptocurrency prices have declined over the past period, industry fundamentals have not deteriorated in tandem: on-chain transaction activity has increased, and major financial institutions like BlackRock have further entered the digital assets market, creating a dynamic of "price cyclical decline with structural improvement in fundamentals."
He expects that cryptocurrency prices may further catch up with fundamental changes later this year.
More notably, there has been a shift in capital flows. Hougan noted that investors are rotating back from AI stocks into cryptocurrency. He added that the previous AI boom “had almost absorbed all of the market’s attention, with any momentum-seeking investor focusing solely on AI. Now, as the AI rally has begun to stabilize, we’re starting to see capital flow back into the cryptocurrency market.”
If this assessment holds true, it means that the driving force behind Bitcoin's current rally has shifted from purely safe-haven demand or policy expectations toward broader asset allocation rebalancing, with reduced trading congestion in AI-related assets providing additional capital inflows to crypto assets.
The $90,000 level is the next key observation point.
From a longer-term perspective, Bitcoin has not yet fully emerged from its previous correction.
Bitcoin reached a historical high of approximately $126,000 in October last year, then dropped by nearly half, falling to a low of around $57,600 in early July this year; even after its recent strong rebound, the current price remains about one-third below its all-time high.
This suggests that the current rebound is more akin to a recovery from a deep correction rather than confirmation of a new all-time high. Analysis indicates that whether $90,000 can be effectively broken through will be a key indicator of the strength of the "crypto spring":
- If the price encounters resistance and reverses near $90,000, the market may need to reassess the sustainability of capital rotation.
- A breakout on increased volume would further reinforce Hougan’s view of “the strongest and longest-lasting bull market in history.”
You can monitor the Federal Reserve’s interest rate path and the trend in long-term U.S. Treasury yields, as they remain key macroeconomic factors influencing crypto asset valuations.