A forecast says bitcoin and major cryptocurrency valuations could fall another step if the U.S. Senate fails to act on the Clarity Act.

On Aug. 3 local time, blockchain outlet Cointelegraph reported that asset manager Bernstein sees the odds of passing the Clarity Act, a digital asset market structure bill, as weakening as the Senate is set to begin its summer recess late this week.

Bernstein said the market could react immediately and negatively if the Senate fails to pass the bill. The report called this the industry's “knee-jerk reaction” and said an additional decline could open up for bitcoin and the broader crypto market.

Bernstein also presented a view that there are not only short-term negatives. “From a tactical perspective, the crypto market will build a bottom and show momentum again from late third quarter and early fourth quarter ahead of the midterm elections,” Bernstein analysts wrote in the report. It means that even if passage is delayed, policy expectations could be reflected in prices again as the year-end approaches.

On the regulatory front, a forecast said the executive branch agencies could move faster. Bernstein said that if legislation stalls in the Senate, the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission could provide more active policy support based on “Project Crypto.” It said this process could bring forward interpretive guidance on token classification frameworks, clearer rules for DeFi, and a token issuance innovation exemption that waives the application of securities status for a set period.

Project Crypto is a regulatory plan first announced in July 2025 by Paul Atkins, the SEC chair. It was later expanded in September that year into a joint working-level initiative between the SEC and the CFTC. Its aim is to use existing agency authority to build a digital asset regulatory framework until Congress completes the Clarity Act.

Prediction markets also see low odds of passage. On Polymarket, the chance of the Clarity Act passing by the end of 2026 was priced at 31 percent. That is down 7 percentage points over the past week and 9 percentage points over the past month. About $3.7 million has been staked on the betting market.

In politics, a compromise is also under discussion. White House officials are reported to be reviewing a bipartisan ethics alternative received on July 30 after weeks of negotiations by Republican Senator Thom Tillis and Arizona Democratic Senator Ruben Gallego. The proposal would allow state attorneys general to sue the Justice Department if enforcement of the ethics law for federal officials does not take place.

The Clarity Act has been pushed as legislation to create the United States' first digital asset regulatory framework. But the banking sector is opposing it, saying the current draft could allow crypto firms to provide stablecoin yield services without the same requirements as traditional financial institutions.

The market has also shown moves that reflect the possibility of delays. Galaxy Digital on June 26 lowered to 50 percent the likelihood that the Clarity Act will be enacted into law in 2026. At the time, Galaxy Digital warned the Senate lacked time to handle a market structure bill before the August recess.

As a result, market attention is expected to narrow to two tracks. One is whether the Senate can actually move the bill forward before recess. The other is how far the SEC and CFTC will go, under Project Crypto, in issuing regulatory interpretations and exemption measures if legislation is delayed.