Citigroup: The SEC's new regulations will become the next focal point for the cryptocurrency market

Citigroup stated in its latest market strategy program that the failure of the U.S. Senate to advance the CLARITY Act for formal review did not interrupt Bitcoin's rebound. After the procedural vote on the bill was blocked, Bitcoin remained strong, indicating that funds have begun to reduce their reliance on a single legislative node and are instead focusing on whether regulatory rules can continue to move forward.

Citigroup believes that the legislative blockage will limit the CFTC's ability to obtain a more comprehensive regulatory mandate for the crypto market in the short term, but the SEC can still advance some rule-making based on its existing authority. For the market, this means that the compliance process for the crypto industry still has room to continue, with the subsequent focus on the SEC's actual execution pace regarding trading, tokenized assets, and market access rules. Additionally, the macro environment remains a variable for Bitcoin's rebound.

The baseline judgment of Citigroup's economic team is that this round of interest rate hikes may be close to "one and done"; however, the quantitative macro team warns that if AI investments continue to support growth, and employment and wage pressures persist, interest rates may face further upward revision risks. Citigroup views Bitcoin's position above the mid-term moving average as a signal of warming risk appetite and notes that its correlation with Nasdaq performance is worth continued tracking.