Bitcoin in a Rut but JPMorgan Sees New Law as the Spark

Bitcoin and the broader crypto market remain stuck in a prolonged rut, but JPMorgan analysts believe a single piece of U.S. legislation could serve as the decisive catalyst to reignite prices. In a report published on February 28, a team led by strategist Nikolaos Panigirtzoglou pointed to the Clarity Act -- a proposed market structure bill -- as the force most likely to propel digital assets higher in the second half of 2026.

What Is the Clarity Act and Why Does JPMorgan See It as a Catalyst?

The Clarity Act is a proposed U.S. market structure bill that would establish regulatory boundaries between the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) by classifying digital tokens as either commodities or securities. JPMorgan analysts said that approval of this legislation, most likely by mid-year, "could serve as a positive catalyst for crypto markets into the second half of the year," even as overall sentiment remains negative.

At its heart, the proposal would place major tokens under CFTC jurisdiction, a move JPMorgan's team argues would reduce compliance burdens and legal uncertainty. A "grandfather" clause within the bill would designate tokens tied to spot exchange-traded funds listed before January 1, 2026 -- including XRP, Solana, Litecoin, Hedera, Dogecoin, and Chainlink -- as commodities, shielding them from the stricter securities framework.

The legislation would also permit new crypto projects to raise up to $75 million annually without completing full SEC registration, provided they comply with disclosure rules. JPMorgan's analysts noted this grace period could revive onshore token issuance, venture funding, and deal activity that has increasingly shifted overseas.

Stalled Markets Await Regulatory Clarity

Crypto markets have been devoid of conviction as traders search for a spark strong enough to push prices out of their current slump. Bitcoin has hovered around mid-$60,000 levels, ether is trading near $2,000, and volumes across major exchanges have thinned considerably. Both retail and institutional participants remain hesitant, with regulatory ambiguity weighing on sentiment and deterring larger investors from deploying fresh capital.

Without tangible progress on a coherent regulatory framework, sidelined capital is unlikely to return in force, according to market participants. Large asset managers, pension funds, and corporate treasuries have remained cautious about increasing allocations to digital assets. JPMorgan believes that if the Clarity Act passes, the resulting wave of institutional participation could deepen liquidity, compress volatility, and unlock new product development from structured offerings to broader tokenized assets.

Senate Gridlock and Coinbase Opposition

Despite its promise, the leading U.S. effort to codify federal crypto rules has stalled in the Senate after months of negotiations and missed timelines. A scheduled Senate Banking Committee markup was postponed in early 2026 after Coinbase, the largest U.S. crypto exchange, publicly withdrew its support for the bill. The company argued the current text could hamper innovation, weaken competition, and restrict features such as stablecoin rewards.

Coinbase's decision exposed divisions among industry players and lawmakers, even as some analysts and banking voices maintain the bill's core objectives -- clearer SEC and CFTC oversight and defined regulatory pathways -- keep its momentum alive. CEO Brian Armstrong said earlier this month that banking trade groups, rather than individual banks, were largely responsible for the impasse over market structure legislation.

While sentiment remains negative in crypto markets, we continue to believe that a potential approval of the market structure legislation most likely by mid year could serve as a positive catalyst for crypto markets into the second half of the year.

— Nikolaos Panigirtzoglou, JPMorgan Strategist

What Does This Mean for Bitcoin Going Forward?

A decisive regulatory breakthrough could serve as the kind of catalyst that does not merely stabilize prices but propels them sharply higher, according to JPMorgan. With clearer rules of the road, institutional capital on the sidelines would gain the confidence and compliance cover needed to enter the market at scale. The bank's analysis suggests mid-2026 remains the critical timeline for whether the Clarity Act advances or languishes in legislative limbo.

For now, Bitcoin and the broader digital assets market remain trapped in a holding pattern, with traders and investors alike watching Washington for signals. Whether the Senate can overcome internal divisions and Coinbase's opposition to deliver a workable framework will likely determine the trajectory of crypto prices for the remainder of the year.