Bitcoin is “transitioning out of its most stressed phase”

The lower-than-expected CPI print and optimism around the amended Digital Asset Market Clarity Act seem to be buoying bitcoin this morning. Meanwhile, bitcoin ETFs started the week with modest inflows ($116.7 million), according to SoSoValue.

Timothy Misir, head of research at Blockhead Research Network, said that on-chain metrics suggest bitcoin is transitioning “out of its most stressed phase.”

“Price now sits above the Active Investors Mean ($87.7K) but remains well below the Short-Term Holder cost basis at $98.9K. This configuration implies reduced forced selling pressure, but also highlights the scale of overhead supply that must be absorbed for a sustained breakout,” Misir said.

One potential headwind for bitcoin is the trajectory of the probe of Fed Chair Jerome Powell, a situation Farzam Ehsani, CEO of VALR, called “paradoxical.”

While weakening confidence in dollar policy traditionally increases interest in decentralized assets as a hedge against political and currency risk, abrupt political maneuvers within the government are increasing instability, triggering short-term outflows from risky assets and high-volatility markets, Ehsani said.

He said investors should exercise “extreme caution” in the coming weeks, as the crypto market could react sharply to the conflict’s outcome.

“If the Fed holds firm, the market could return to its fundamental scenario. If the White House is able to push through a rate cut and launches stimulus measures, bitcoin and gold could surge higher,” Ehsani said.

Finally, “this week may mark the beginning of the end of crypto’s regulatory limbo,” Benchmark analysts wrote in a note, as the Senate committee will vote on Thursday on the amended Digital Asset Market Clarity Act.

“We believe a successful committee process culminating in floor consideration would represent a material de-risking event for crypto markets,” the analysts wrote. “That regulatory clarity is the key prerequisite for institutional adoption of both crypto tokens and crypto-related equities. In our view, such clarity would unlock a level of liquidity that only institutions could provide, and liquidity is the foundation upon which sustainable crypto valuations are built.”

Some are pessimistic that the bill will move forward. Nic Puckrin, cofounder of Coin Bureau, said he is “not holding his breath” for the bill to pass this month.

“I wouldn’t be surprised to see further delays as committee members grapple with the implications of the proposed amendments. And any delays will weigh heavily on a digital asset market that has struggled with momentum for months,” Puckrin said.