Bitcoin Rises Above $85,000 to Hit Eight-Month High: Legislative Failure Becomes Catalyst, Funds Flow Back from AI to Crypto

Bitcoin surged past $85,000, reaching its highest level in eight months. Against the backdrop of setbacks in US crypto regulatory legislation, digital assets not only avoided prolonged pressure but quickly regained lost ground. Bitwise Chief Investment Officer Hougan has thus declared that the “crypto winter” is over and the market has entered a “crypto spring.”

Hougan made a clear assessment that the nearly year-long “crypto winter” has ended and predicted that this may become the strongest and longest-lasting bull run in crypto history.

In the past five days, Bitcoin has risen over 7%, with gains of nearly 35% in the past three months. From a technical perspective, BTIG analysts believe that as long as the $75,000 support holds, bulls can further push toward the $90,000 region.

This rebound occurred after the Digital Asset Market Structure Clarity Act failed to pass a procedural vote in the Senate, breaking the simple logic of “legislative failure equals negative impact,” as the market began to reassess the real impact of regulatory uncertainty.

Legislative Failure Does Not Stop the Rebound

Wallstreet.cn reported that last week, the Digital Asset Market Structure Clarity Act failed to reach the required threshold of 60 votes in a Senate procedural vote, getting 49 in favor and 50 against.

The act aimed to establish a more comprehensive regulatory framework for the US digital asset market, clarifying the regulatory roles of the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The crypto industry regarded it as one of the most important regulatory legislations in recent years.

Disagreements over issues such as government officials’ conflicts of interest, stablecoin incentives, and the impact on the banking industry were the main points of contention during negotiations. After the vote, Bitcoin and some crypto-related stocks initially declined but then quickly rebounded.

Hougan believes that even with the Clarity Act's failure, the SEC and CFTC can still rely on existing authorities to set rules in the short term, and legislative failure does not necessarily mean the regulatory environment will inevitably worsen.

Strategy Chairman Michael Saylor also described the setback for the bill as a “positive turning point” for the digital asset industry, arguing that instead of accepting potentially entrenched restrictions, the industry should use the current regulatory framework to strive for more favorable rules. The more important task over the next two years is to expand the practical scale of digital financial products.

Funds Flowing Back From AI: The Core Logic of Crypto Spring

Hougan's core basis for judging the end of the “crypto winter” is not merely the price rebound, but rather the divergence between prices and fundamentals.

He pointed out that while crypto asset prices fell recently, industry fundamentals did not deteriorate in tandem: on-chain transaction activity increased, and major financial institutions like BlackRock further participated in the digital asset market, creating a pattern where “prices cyclically decline while fundamentals structurally improve.”

He expects that crypto asset prices may further catch up with these changes in fundamentals later this year.

More noteworthy is the shift in capital flows. Hougan said that investors are rotating out of AI stocks and back into cryptocurrencies. He added that the previous AI frenzy “sucked up almost all the market’s attention. Any investor chasing momentum focused on AI. Now, as the AI rally steadies, we are starting to see money flow back into the crypto market.”

If this analysis holds, it means that the driving factor behind this round of Bitcoin’s rally has shifted from mere safe-haven demand or policy expectations to a broader asset rebalancing, with the less crowded AI trade providing incremental capital for digital assets.

$90,000 Becomes the Next Key Level to Watch

From a longer-term perspective, Bitcoin has not fully emerged from the previous correction.

Bitcoin set a historical high of around $126,000 last October before being halved, then fell to about $57,600 in early July this year; even after the recent sharp rebound, the current price is still about one-third below the all-time high.

This means the current rebound is more of a recovery from a deep correction rather than confirmation of a new all-time high. Analysts believe that whether $90,000 can be effectively breached will be the key point to test the strength of this “crypto spring”:

• If prices encounter resistance near $90,000 and fall back, the market may need to reassess the durability of the capital rotation;
• If there is a high-volume breakout, it will further strengthen Hougan’s view that we are in “the strongest and longest-lasting bull run in history.”

Going forward, attention should be paid to the Federal Reserve’s rate path and the direction of long-term US Treasury yields, as these remain the core macro variables affecting crypto asset valuations.