Publication date: May 21, 2026

The crypto market experienced significant volatility again last week. Bitcoin fell toward $77,000, Ethereum lost ground and Solana also suffered a solid correction. Yet the price drop tells only part of the story. Indeed, beneath the surface, something more important seems to be happening: capital is not disappearing from crypto, but shifting to projects that may benefit most from new U.S. regulations.

On May 7, we already wrote extensively about the CLARITY Act and what exactly these new U.S. crypto rules could mean for the crypto market. To be fully informed about the background and the possible consequences for investors, we recommend reading that article as well: "The CLARITY Act: what U.S. crypto rules mean for investors."

Capital shifts within crypto market

Bitcoin experienced its weakest week since February. Its share price fell from about $81,000 to less than $77,000. Ethereum lost about 10% and Solana more than 11%. The immediate cause seemed to be geopolitical in nature.

After firm statements by US President Trump toward Iran, oil prices briefly rose above $112 per barrel, after which investors began to sell risky assets. Within 24 hours, about $657 million worth of crypto positions were liquidated.

Yet underlying capital flows show that investors are not abandoning crypto en masse. According to research firm CoinShares, nearly $1 billion flowed out of Bitcoin funds and about $249 million out of Ethereum funds last week. At the same time, XRP and Solana actually attracted fresh capital. XRP funds received about $67.6 million and Solana funds over $55 million in new inflows.

This suggests that investors are beginning to look more selectively at which crypto projects might benefit from the next phase within the sector.

New regulations could cause major shift

Last week's most significant development may not have come from the market itself, but from Washington. On May 14, a U.S. Senate committee voted in favor of the so-called CLARITY Act. This bill should finally create clear rules for the U.S. crypto sector.

The law distinguishes between crypto projects that are supervised by the SEC and those that are considered digital commodities supervised by the CFTC. Precisely this legal status has been the subject of much uncertainty in recent years. XRP and Solana, in particular, have had to deal with investigations and legal proceedings from regulators before.

This clarity is important for large institutional investors. Pension funds, banks and large asset managers are often only allowed to invest in assets whose legal status has been clearly established. Once projects like XRP and Solana are officially recognized as digital commodities, that could open the door for much larger capital flows toward this market.

Bitcoin benefits less from this development because it is already widely accepted institutionally. This may explain why investors are currently looking beyond Bitcoin.

The market has seen this before

The crypto sector has seen before what clear regulations can cause. In 2025, the United States introduced the GENIUS Act, which established clear rules for stablecoins such as USDC and USDT for the first time. Since then, the use of stablecoins grew rapidly and stablecoin company Circle managed to successfully go public.

According to many analysts, the CLARITY Act could have a similar effect on the broader crypto market. Once regulations become clearer, the threshold for large investors decreases.

What does this mean for investors?

The recent correction shows that macroeconomic factors remain important for now. Geopolitical tensions, inflation and expectations surrounding U.S. interest rate hikes continue to cause significant movement within the crypto market. Higher interest rates generally remain negative for risky assets such as crypto.

At the same time, a second trend is emerging that may become even more important for the longer term: regulations no longer seem to focus solely on Bitcoin, but on a broader group of crypto projects. As a result, investor attention is increasingly shifting to projects that can benefit from institutional adoption once new legislation is introduced.

The next few weeks are likely to revolve largely around further consideration of the CLARITY Act in the U.S. Senate. The outcome may become decisive as to which crypto projects will benefit most from the next phase of growth within the industry in the coming years.

Disclaimer: Investing involves risk. Our analysts are not financial advisors. Always consult an advisor when making financial decisions. The information and tips on this website are based on our analysts' own insights and experiences. They are therefore for educational purposes only.