Congratulations, You Got What You Wanted

Markets & Macro — Issue No. 48 — Monday, May 25, 2026

Bitcoin is at $75,860. The CLARITY Act just passed committee. BlackRock's IBIT bled $448 million in a single session. Please, tell me more about how regulatory clarity is a bullish catalyst.

For two years, the dominant story in crypto was that the industry was being strangled by regulatory ambiguity. The SEC was hostile. The CFTC and SEC were fighting over turf. Nobody knew what was a security, what was a commodity, what was a prayer. Every earnings call from Coinbase contained some variation of the same lament: if Washington would just give us rules, the institutional money would flood in and everything would be wonderful.

Washington gave them rules.

Bitcoin dropped six thousand dollars.

This is, in the most technical sense, hilarious. The Senate Banking Committee advanced H.R. 3633 — the Digital Asset Market Clarity Act — by a 15-9 vote on May 14. The bill would resolve the SEC-CFTC jurisdictional standoff that has defined crypto regulation since approximately forever. Coinbase, Circle, and Ripple backed it. The industry had been lobbying for something like this since 2022. Bitcoin briefly broke back above $81,000 on the news. Then, over the following week, US spot Bitcoin ETFs shed roughly $1.55 billion across six consecutive outflow days — the most sustained institutional exit since these products launched. IBIT alone dropped $448 million on May 18. That was its second-largest single-day redemption of 2026.

The market-structure bill that crypto spent three years begging for arrived, and the response from professional capital was: hard pass, actually.

What "Sell the News" Looks Like When the News Is Everything

The charitable interpretation is that this is simply mechanics. Traders who bought Bitcoin at $76,000 in anticipation of regulatory progress took their profit once the headline hit. Clean. Rational. Textbook. The uncharitable interpretation is that the "regulatory clarity will unlock institutional demand" thesis was always partly circular — a story the industry told itself to explain why prices would eventually go up, rather than a genuine analysis of what institutions actually need before allocating capital to an asset that spent February capitulating 30% while the Strait of Hormuz closed.

Both interpretations are probably right, in different proportions for different participants.

What's genuinely interesting is the divergence within crypto flows. XRP spot ETFs pulled in $60.5 million during the same week that Bitcoin was hemorrhaging. Ethereum spot ETFs recorded $255 million in redemptions. Capital is rotating, not fleeing. The story isn't that institutions have lost faith in digital assets — the tokenized RWA market hit $34.5 billion in May, up more than 100% year-on-year, with BlackRock's BUIDL fund and Ondo Finance pulling in institutional money at a pace that would have seemed science fiction eighteen months ago. The story is more specific and more uncomfortable: at current prices and under current macro conditions, Bitcoin the speculative asset is less interesting than the on-chain infrastructure building around it.

Six consecutive outflow days. $1.55 billion. This is what the most-anticipated regulatory development in crypto's recent history looks like when you zoom out from the headline.

The Macro Trap Nobody Wants to Talk About

Here is the thing about Bitcoin and inflation that the bulls never quite squared: Bitcoin was supposed to be a hedge against fiat debasement and monetary excess. When the Fed was printing, BTC was the answer. That was the brand. The problem is that the same conditions that produce inflation — energy shocks, supply disruptions, geopolitical instability — also produce a strong dollar, rising real yields, and risk-off positioning. All of which are headwinds for Bitcoin.

The 30-year Treasury at 5.19%. The 10-year near 4.7%. Moody's stripped the US of its Aaa rating in May — the third ratings agency to do so — citing a "growing debt burden and deteriorating fiscal outlook." Bond yields moved higher on the news. The dollar strengthened. Both are, historically, brutal for BTC. A stronger dollar tightens global liquidity. Higher yields make non-yielding assets less appealing on a relative basis. The inflation hedge narrative runs directly into the rising-rate reality, and rising rates win almost every time.

Strategy purchased another 24,869 BTC during this period, absorbing some of the selling pressure. One company's conviction trade is doing meaningful work in a market that, without it, would probably look worse than it does. That is not a stable foundation.

Meanwhile, in the Part of Crypto Nobody Is Panicking About

While everyone stares at the BTC price ticker, something quieter is happening that will matter more over a five-year horizon. The tokenized real-world asset market — Treasuries, money market instruments, private credit on-chain — tripled between early 2025 and Q1 2026. BlackRock filed two new tokenized fund applications with the SEC on May 8. Not one — two. Tokenized US Treasuries alone sit at $15.2 billion in market cap, with BlackRock and Circle leading inflows. Ondo Finance ran from $0.26 to nearly $0.47 during the May breakout before giving it back.

The GENIUS Act already created a regulatory framework for payment stablecoins, with a July 2026 deadline for follow-on rules. The CLARITY Act, if it passes the full Senate, resolves the SEC-CFTC turf war that has kept institutional product development in a holding pattern. Standard Chartered projects the tokenized asset market reaching $30 trillion by 2034. That number sounds insane until you run the math on what fraction of global fixed income it would represent and realize it's actually conservative.

None of this helps Bitcoin at $75,860. In the short term, BTC lives and dies on macro: oil, yields, the dollar, and whether Kevin Warsh's first FOMC meeting produces language that sounds more hawkish than the market expects. If Hormuz reopens in earnest and Brent retraces toward $80, the inflation story softens, real yields compress slightly, and risk assets including BTC catch a bid. That's the bull case, and it's genuinely plausible.

But the Bitcoin as inflation hedge, regulatory clarity as unlock narrative has taken a serious beating this month. The thing that was supposed to happen when Washington delivered clarity — didn't happen. The thing that was supposed to happen when inflation ran hot — also didn't happen, in the way promised.

At some point the story has to square with the data.

Data references: BTC spot price, IBIT/FBTC/ARKB daily ETF flows (Farside Investors), CoinShares fund flow report May 18, CLARITY Act Senate Banking Committee vote May 14, tokenized RWA market cap (RWA.xyz), Moody's US credit downgrade, Strategy BTC purchase disclosures. All figures as of May 22–23, 2026.