How Clarity Act and two more triggers will set off ‘next major liquidity cycle’ for Bitcoin price

Bitcoin is back above $70,000 — and this time, bulls argue it is not just a technical bounce. It is the opening bell of a broader liquidity cycle.

Connor McLaughlin, head of enterprise at Digital Ascension Group, says three forces are lining up behind the world’s largest cryptocurrency: easing geopolitical tensions, lower US interest rates, and the prospective passage of the Clarity Act.

“For a long time, crypto has effectively been cut off from its own fundamental catalysts,” McLaughlin told DL News. “The entire setup is starting to unwind.”

Here’s why McLaughlin says we’re in the early stages of “the next major liquidity cycle” for cryptoassets.

Ceasefire resets inflation fears

Investors are digesting a two-week ceasefire between the US and Iran, a development that cuts straight to the heart of worldwide inflation: the Strait of Hormuz.

Roughly a fifth of the world’s oil flows through that narrow sea corridor. The regional conflict has left markets weary about the seaway being cut off, which would drive fuel prices higher and force governments to tighten their monetary policies to curb inflation. Central banks cannot ease into an oil-driven inflation spike. The ceasefire changes that equation, McLaughlin argued.

Now, even with tensions simmering and negotiations uncertain, the immediate threat of a prolonged energy shock has eased.

“We saw oil react sharply around the ceasefire headlines, but that ultimately reset us back into a more disinflationary backdrop,” McLaughlin said.

In this environment, McLaughlin argues that a new Federal Reserve chair aligned with President Donald Trump is likely to lean toward rate cuts.

Trump has named Kevin Warsh to replace Jerome Powell when his term ends in May. Warsh is yet to be confirmed. Polymarket punters give him a 64% chance of being confirmed before Powell’s term ends on May 15.

Rate cuts inject more money into financial markets. Liquidity is the fuel that drives rallies in risk assets, from tech stocks to digital tokens like Bitcoin.

Clarity Act 

Adding to the macroeconomic tailwinds, the Clarity Act will be passed, according to McLaughlin.

The crypto industry has spent much of the past year squeezed by regulatory uncertainty. The Clarity Act, a flagship market structure bill, would remove a major structural barrier, he said.

Industry insiders including BitMEX CEO Stephan Lutz, Evernorth CEO Asheesh Birla, and Steady Labs CEO Pierre Person, told DL News this week that they expect passage of the bill.

The bill has already cleared Congress, but is now stuck in the Senate Banking Committee, where disagreements over whether stablecoins should offer interest are holding it up.

Banks have warned that allowing stablecoin holders to earn yield would lead to massive losses among smaller lenders. This week, White House economists weighed in with a new report that downplayed some of the fears

“In short, a yield prohibition would do very little to protect bank lending, while forgoing the consumer benefits of competitive returns on stablecoin holdings,” the report read.

Experts say failing to pass the bill could weaken the US’s position as a global leader in crypto.

Time is also running short. With midterm elections in November, Democrats are projected to take control of Congress, which would make it much harder for the Trump administration to pass the bill

“If Clarity doesn’t pass committee by the end of April, odds of passage in 2026 become extremely low,” Alex Thorn, a New York-based senior researcher at the crypto and data centre operator Galaxy Digital, said in March.

Crypto market movers (UPDATE CMS)

• Bitcoin is down 1% over the past 24 hours, trading at $71,011.
• Ethereum is down 2.9% over the past 24 hours at $2,182.

What we’re reading 

• Morgan Stanley Bitcoin ETF gets off to a strong start with $33m debut — DL News
• Quantum threat to Bitcoin ‘neither existential, nor novel,’ Bernstein says — DL News
• World Liberty Financial Partnered With Firm Linked to Sanctioned Cambodian Crime Network — Unchained
• Retail Is Quitting Crypto at the Worst Possible Time w/ Guy Wuollet — Milk Road
• XRP winning institutional interest amid Clarity Act momentum, insiders say. So why's the price down? — DL News

Lance Datskoluo is DL News’ Europe-based markets correspondent. Got a tip? Email him at [email protected]