Bernstein Warns CLARITY Act Failure Could Hit an Already Weak Crypto Market

• CLARITY Act delays, falling crypto trading volume, weakening crypto market liquidity, and pressure on the Bitcoin price are weighing on the broader crypto market, according to Bernstein
• Bernstein warns failure to pass the CLARITY Act this year could trigger a short-term crypto selloff
• Kaiko says shrinking liquidity could amplify market volatility as trading activity falls to its lowest level of 2026

The mayhem surrounding the Clarity Act is now hitting new panic levels. With the delays blocking its approval at the moment, Wall Street’s leading brokerage firm, Bernstein, has now stepped into the picture. The firm shared how failure to pass the bill this year may trigger a notable crypto selloff, putting pressure on the Bitcoin price and other crypto assets. This warning coincides with the current crypto trading volume hitting its lowest level of 2026. Per the latest KL Post, the crypto trading market volume has hit new lows this year, with average daily spot trading dropping around $20B.

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Why the Clarity Act Matters More Than Ever

Bernstein believes the Clarity Act is synonymous with the overall success of the crypto market. It remains one of the most important crypto market structure bills in US history. The legislation is set to help the country establish clear crypto rules and regulations, helping the sector legitimize its position while encouraging broader institutional participation. However, the chances of the bill passing before the Senate heads into recess have now weakened, spurring panic among investors. Bernstein analyst Gautam Chhugani, in the Monday report, later shared:

“Clarity is the most consequential crypto market structure bill in U.S. history, but the chances of its 2026 passing seem to be dwindling.”

Bernstein was quick to add how failure to approve the bill this year may trigger an immediate negative reaction for the Bitcoin price. The broader crypto market could also come under pressure.

This development may trigger a short-term sell-off in the market as investors react to another regulatory delay, putting additional pressure on the broader crypto market in the near term.

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Weak Liquidity Could Amplify the Market Reaction

Bernstein’s comments coincide with the falling crypto trading volume at the moment. The latest report by The Kobeissi Letter explains the situation in depth. It adds that the crypto market is already experiencing thinner liquidity. This could leave the market more vulnerable in the long term. Even modest selling pressure may pose bigger risks for the market in its entirety. Stats shared by Kaiko are also concerning. Daily trading volume across 44 spot crypto exchanges fell to nearly $15B last week. That marks the lowest level recorded in 2026.

“This marks a -70% decline from January peak levels. By comparison, in February, there were two trading days when volume exceeded $100 billion. As a result, the average daily volume trend has fallen -50% since December 2025, to $20 billion, the lowest this year. Meanwhile, trading volume remains heavily concentrated, with the six largest exchanges accounting for more than 60% of total activity. Crypto market liquidity is drying up.”

Bernstein was quick to later add how this selloff might be temporary. The firm mentioned that, in case the Clarity Act stalls, the US SEC and CFTC are expected to continue expanding rulemaking under President Trump’s Project Crypto initiative. The brokerage believes this could provide greater regulatory clarity while continuing to support innovation across the digital asset industry, even if the legislation is delayed.

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