Bitcoin’s recent breakout is being fueled by U.S. regulatory progress rather than broader macroeconomic trends, according to analysts at Citi and Bernstein. The rally follows a period of outflows from Bitcoin ETFs, which peaked between May and June at nearly $7 billion—equivalent to roughly 10% of assets under management—but have since reversed, with inflows totaling $1.1 billion through August 20.
Total Bitcoin ETF assets now exceed $85 billion, up from $70 billion in June, as market sentiment shifts. Citi analysts noted that the price momentum lagged key regulatory announcements, including the Treasury’s buyback proposal, while Ethereum outperformed Bitcoin during the rally. The firm described U.S. regulatory developments as a more durable driver of the move than traditional macro factors such as currency debasement concerns.
Political momentum for crypto legislation has further bolstered sentiment. Todd Ault, founder of Ault Blockchain, highlighted President Trump’s endorsement of the CLARITY Act—scheduled for a vote on September 15—as a pivotal moment. Ault stated that the market is beginning to recognize the potential significance of U.S. regulatory clarity for the crypto sector.
Bernstein analyst Gautam Chhugani attributed earlier crypto market apathy in part to tighter financial conditions following geopolitical tensions, such as the Iran conflict, and strong capital expenditure in AI and semiconductors diverting liquidity. However, as AI-related capex increasingly relies on debt markets, expanded liquidity could redirect toward Bitcoin as a hedge. Chhugani also noted that regulatory clarity from the SEC and CFTC is likely to persist regardless of the CLARITY Act’s outcome.
Ethereum’s outperformance during the rally was linked to its broader exposure to stablecoins, tokenization, and real-world asset adoption, according to Chhugani. Meanwhile, companies like MicroStrategy have maintained limited Bitcoin sales, with selling restricted to 0.8% of holdings, and cash reserves sufficient to cover 2.8 years of dividend payments. The firm is expected to resume Bitcoin purchases as the STRC’s nominal value approaches $100.
