Crypto investors look ahead to policy wins, propelling bitcoin to record high

Crypto investors are betting that a slew of long-sought policy wins for the industry, expected next week, could invite new investment in the asset class.

Those hopes helped propel bitcoin to another high on Friday and gave a boost to US-listed crypto stocks.

Starting on Monday, the House of Representatives will debate a series of crypto bills to provide the digital asset industry with the US regulatory framework it has long demanded. Those demands have resonated with US President Donald Trump, who has called himself the "crypto president" and urged policymakers to revamp rules in favour of the industry.

Trump himself is involved in several crypto ventures, including World Liberty Financial, a platform that his sons Eric and Don Jr run.

Members of Congress are set to vote on the Genius Act, the Clarity Act, and the Anti-CBDC Surveillance State Act during "crypto week," as the industry's strained ties with Washington continue to thaw. The most significant bill is the Genius Act, which would create federal rules for stablecoins.

"Even if final passage stalls, the optics of legislative engagement are bullish," said Jag Kooner, head of derivatives at crypto exchange Bitfinex.

Bitcoin's surge has triggered a broader rally in the crypto market, with strong and sustained inflows into the related spot exchange-traded funds driving prices higher, said Nicolai Sondergaard, research analyst at Nansen.

The world's largest cryptocurrency was last up 3.3% at $117,333.32, taking its gains for the year to 26%. The digital asset has surged nearly 41% in the last three months.

Bitcoin buyer and holder Strategy rose 1.9%, while crypto miners Riot Platforms, Hut 8, and Mara Holdings gained between 0.7% and 1.6%.

"Investors are racing to take positions ahead of the extra publicity this event could attract," said Dan Coatsworth, investment analyst at AJ Bell, referring to "crypto week."

Rising confidence in bitcoin is resulting in investors chasing higher returns in smaller tokens. Ether, the second-largest token, was last up 5.13%, while XRP and solana gained 9.7% and 0.8%, respectively.

The sector's total market value has swelled to about $3.67 trillion, according to data from CoinMarketCap.

'Crypto week'

The House of Representatives is set to pass a series of crypto-related bills next week, including a bill that would establish a regulatory framework for stablecoins after Trump subsequently approves it.

Stablecoins, a type of cryptocurrency designed to maintain a constant value, usually a 1:1 dollar peg, are commonly used by crypto traders to move funds between tokens. Their use has grown rapidly in recent years, and proponents say they could be used to send payments instantly.

The bill, dubbed the Genius Act, received bipartisan support in the Senate, with several Democrats joining most Republicans to back the proposed federal rules. It is expected to pass the House and would then head to Trump, who has said he will sign the bill into law.

The bill would require tokens to be backed by liquid assets - such as US dollars and short-term Treasury bills - and for issuers to publicly disclose the composition of their reserves on a monthly basis.

Crypto proponents say those rules could legitimise stablecoins, making banks, retailers, and consumers more comfortable with using them to transfer funds.

The House next week is also expected to pass a bill that aims to develop a regulatory regime for cryptocurrencies and would expand the Commodity Futures Trading Commission's oversight of the digital asset industry.

That bill, called the Clarity Act, has yet to be considered in the Senate, where it would need to pass before heading to Trump for final approval.

If signed into law, the bill would define when a cryptocurrency is a security or a commodity and clarify the Securities and Exchange Commission's jurisdiction over the sector, something crypto companies disputed during the Biden administration.

Crypto companies have argued that most crypto tokens should be classified as commodities instead of securities, which would enable platforms to more easily offer those tokens to their customers.

Sceptics raise red flags

Bitcoin's sharp rally has drawn caution from some corners of the market.

As crypto gets embedded in the traditional financial system, some analysts warned the hype may be outpacing reality.

"The (regulatory) backdrop has supported prices, and attention has turned to bitcoin's role in portfolios, with some likening the crypto-asset to 'digital gold.' This moniker is likely premature," said Dirk Willer, Citi's global head of macro, asset allocation, and emerging market strategy.

With likely volatility ahead, some analysts have cautioned investors to pause and weigh their time horizons before jumping in.

"It's hard not to be optimistic about bitcoin at this moment in time, but the risk of a fall in price or short-term pullback still exists," said Simon Peters, crypto analyst at online brokerage eToro.

Critics have argued the Trump administration is conceding too much to the crypto industry at the expense of protecting consumers and retail investors.

"I'm concerned that what my Republican colleagues are aiming for is another industry handout that gives the crypto lobby exactly its wish list," Democratic Senator Elizabeth Warren said this week.

Trump has faced criticism from political rivals and ethics experts over the potential for conflicts of interest regarding his family's crypto ventures.

The White House has said there are no conflicts of interest present for Trump and that his assets are in a trust managed by his children.