Crypto Markets Show Resilience as CLARITY Act Fades

Crypto markets have shown surprising resilience in the face of fading hopes for near-term U.S. crypto legislation, particularly the CLARITY Act. According to Charles Schwab equity research director Adam Lynch, the bill is 'pretty much dead,' and he does not expect significant progress on it soon.

Lynch noted that Bitcoin has held firm above $65,000 after a brief dip to around $62,500 at the beginning of August, while Ethereum has performed even better with an approximate gain of 18% since June 1. In contrast, XRP has lagged behind the largest cryptocurrencies, falling around 5% over the past month.

The CLARITY Act's muted response suggests that its passage was not heavily priced into cryptocurrency valuations. Lynch attributed this to investors shifting toward spot Bitcoin ETFs rather than self-custodying their assets, with $754 million of inflows into BTC ETFs this month compared to around $195 million for Ethereum products.

Lynch sees inflation and monetary policy potentially becoming more important drivers for crypto prices in the near term. He noted that an acceleration in inflation could encourage investors to rotate toward Bitcoin due to its independence from government-controlled monetary supply, while the Federal Reserve's September meeting could present a downside risk if interest rates rise.