Why do I think Bitcoin won’t drop back to $40k again? Four major bullish factors are brewing!

Let’s talk about my views on the outlook for the next phase of the market.

Right now, there are still many people in the market who are very bearish, believing that there is still a “final big drop.”

For example, yesterday, Yilihua (aka “Yeo老板”) said that even if Bitcoin later breaks above $68k, it could still fall back toward around $55k. In other words, if it can’t even break $68k, the market may drop even deeper.

But my view is exactly the opposite.

I believe that the market’s overall sentiment and fundamentals no longer support Bitcoin dropping back below $60k—let alone $40k or $50k.

Why am I making this judgment? Mainly for the following reasons.

1. The CLARITY Act has entered the final sprint stage

Currently, the U.S. CLARITY Act (Digital Asset Market Structure Act) has completed key negotiations and is expected to enter the voting stage in August.

Meanwhile, Trump previously signed ethical rules regarding government officials’ involvement in businesses related to digital assets. Controversy around conflicts of interest has been eased, which also reduces some political resistance.

If the CLARITY Act is ultimately passed, it will mean:

• The digital asset regulatory framework becomes even clearer;
• Token issuance rules become more complete;
• SEC and CFTC regulatory responsibilities become more clearly defined;
• More traditional financial institutions can enter the Crypto market with confidence.

For RWA, DeFi, stablecoins, and public-chain ecosystems, this is a major long-term positive.

Therefore, before the bill is formally implemented, I believe it’s hard for the market to see a true, systemic negative catalyst.

If the vote isn’t completed in August, it would most likely be delayed to September or October, rather than the direction changing.

2. More and more traditional financial institutions are entering Crypto

In the previous bull cycle, the largest incremental capital came from institutions like BlackRock and Fidelity launching Bitcoin ETFs.

And this year, traditional finance has moved into a new stage—directly providing crypto trading services.

For example:

• Morgan Stanley’s E*Trade has already launched trading for cryptocurrencies like BTC and ETH;
• The largest U.S. retail brokerage Charles Schwab (Charles Schwab & Co.) has supported spot trading in BTC and ETH, so users no longer need to switch to an exchange.

If the CLARITY Act passes smoothly, in the future there may be more major financial institutions joining, such as:

• Bank of America
• Wells Fargo
• Merrill Lynch (a brokerage under Bank of America)

More “regulars” mean the industry is gradually becoming mature.

In the long run, this will be one of the biggest positives for the entire Crypto industry.

3. ETF net inflows have resumed

Not long ago, Bitcoin ETFs saw consecutive outflows, and market sentiment was quite pessimistic for a period.

But in recent days, ETFs have already returned to net inflows. Daily capital amounts are roughly between tens of millions of dollars and $200 million.

Of course, I don’t think there’s any need to “mythologize” ETFs.

U.S. investors also chase and sell; when prices fall they sell, and when prices rise they buy. They’re not permanently “smart money”—they’re also just retail “leeks.”

However, the biggest significance of ETFs is that they act like a market accelerator.

When prices rise, it makes the bull market climb faster; when prices fall, it makes the bear market drop faster.

So, in the future, the market may not experience a prolonged bear market lasting a year or more like in the past.

Also, I’ve always believed that:

To judge bull vs. bear, you shouldn’t only look at time cycles—you should look at global capital flows.

If sectors like AI and semiconductors keep attracting global capital (for example, they keep rising without dropping until mid-2027), then the crypto sector won’t have a bull market by 2027.

4. Inflation is cooling, and rate-cut expectations remain

This is equally important.

Although the Federal Reserve has not officially cut rates yet, at least the market no longer has expectations for further rate hikes.

Recent data—whether CPI or employment—indicates that U.S. inflation pressure is easing.

I said this after watching Kevin Warsh’s first public remarks:

He’s more like a “dove wearing an hawkish coat.”

As for future rate cuts, I think it’s only a matter of time.

Right now, the market generally expects the first rate cut to occur in December this year to January next year—of course, there’s also the possibility it happens earlier.

On the other hand, we’re currently in the U.S. stock earnings season.

The recent rebound in the semiconductor sector is, to a large extent, also driven by market expectations for earnings.

But what happens after earnings season ends?

In the fourth quarter, many tech companies will face higher pressure on earnings. Especially after a big rally over the past year, many AI and semiconductor companies have already partially priced in future expectations ahead of time.

If the market then undergoes a correction, rate cuts by the Fed—aimed at stabilizing the financial environment—could actually become a new policy tool.

So whether it’s late this year or early next year, rate cuts are expected to bring liquidity support back to global risk assets again, and Crypto is undoubtedly one of the beneficiaries.

Final summary

Taking everything together, I believe the market’s biggest positives have started to form a “resonance” effect:

• The CLARITY Act is expected to push U.S. digital asset regulation into a new era;
• Traditional financial institutions continue entering Crypto, with ongoing increases in long-term incremental capital;
• ETF net inflows have resumed, and institutional sentiment is improving;
• Inflation continues to cool, and rate-cut expectations still exist.

So, at least from where things stand now, I haven’t seen any major negative catalyst that would be enough to push Bitcoin back down to $40k or $50k.

On the contrary, I think the second half of the year will most likely see a clear improvement in the market.

Of course, the market can’t rise in a straight line—there will definitely be consolidation and pullbacks along the way.

But if you’re still fixated on waiting to get in at $30k or $40k, I think what you’ll ultimately wait for won’t be an opportunity—it’ll be missing the move.