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JPMorgan sees potential for a crypto market surge in the second half of the year if US legislation passes. The bank says clear rules from market-structure laws could unlock institutional investment. Senate talks are stuck over whether crypto platforms can offer rewards for stablecoin holdings. The Clarity Act passed the House, but the Genius Act signed by Trump in July remains a point of contention. Bitcoin hit $126,000 in October 2024 but has since pulled back, now in consolidation. Crypto analysis suggests regulatory progress could shift market sentiment.

TL;DR

• JPMorgan identifies US crypto legislation as the key variable for markets.
• Senate negotiations remain stalled over stablecoin reward payments to users.
• Bitcoin hit $126,000 in October 2024 but later erased those gains.

JPMorgan rarely flags speculative scenarios without concrete backing. That’s what makes the bank’s latest research note worth reading carefully. Rather than pointing to on-chain data or macroeconomic tailwinds, JPMorgan identifies a legislative trigger as the most consequential variable for digital assets before year-end. The argument is grounded in policy, negotiation, and regulatory power concentrated in Washington.

The bank’s position is clear: if Congress passes comprehensive market-structure legislation for digital assets by mid-year, the sector gains something it has never had in its modern history — genuine regulatory clarity. For JPMorgan, that clarity removes the single biggest barrier keeping institutional capital on the sidelines.

Large funds have consistently delayed meaningful exposure to crypto not because of price volatility alone, but because operating without defined rules creates legal and compliance risks that most portfolio managers refuse to absorb. A formal framework changes that calculation entirely.

Beyond institutional access, the bank highlights another consequence of passing the law: the end of enforcement-driven regulation. For years, federal agencies pursued crypto firms through legal action rather than published rules, creating an environment where companies built products without knowing whether those products were compliant. That uncertainty penalized legitimate operators and rewarded those willing to accept legal risk. Legislation would replace that ambiguity with written standards.

The Clarity Act already cleared the House of Representatives, but Senate progress stalled. Lawmakers disagree on how to address gaps left by the Genius Act— the first federal law to establish a framework for stablecoin issuance, signed by President Trump in July. That law represented a concrete step forward, but it left enough unresolved questions to fuel the current legislative deadlock.

Who Gets to Profit From Stablecoins Is the Real Fight

At the core of the Senate impasse sits a question with trillion-dollar consequences: should crypto trading platforms be allowed to pay users rewards for holding stablecoins in their accounts? Traditional banks say no. Their argument centers on the risk of deposit outflows from regulated financial institutions toward higher-yielding crypto accounts, which they claim could pressure financial stability. Crypto firms counter that restricting those rewards hands incumbent banks a competitive advantage with no technical justification.

The dispute turned openly political in January when Coinbase CEO Brian Armstrong withdrew his support for the draft legislation. His exit forced a new round of negotiations that included multiple meetings at the White House, bringing together crypto executives, industry groups, and banking lobbyists. Last week, Armstrong stated publicly that a viable path forward exists, though no formal agreement has materialized yet.

Bitcoin hit an all-time high above $126,000 in October 2024, driven by expectations that a second Trump administration would favor the sector. What followed was an extended correction that wiped gains, pushed retail investors out, and left the asset drifting sideways without clear direction.

Matt Hougan, chief investment officer at Bitwise Asset Management, described the current phase with clinical precision. Crypto downturns don’t end when headlines turn positive or when a single trading session prints a big gain.

That collective disinterest, Hougan argues, is the real signal that a bottom is forming. He also warned that the consolidation process will be uneven and drawn out, with the possibility of additional lows before any sustained directional move takes hold.

JPMorgan’s thesis isn’t built on optimism. It’s built on a condition. Without legislation, regulatory uncertainty remains the dominant obstacle to institutional participation at scale. With legislation approved, that obstacle disappears and the setup for the second half of the year shifts materially.