AI takes a breather, crypto sneezes… in a good way 📈

Bitcoin and Ether led a broad cryptocurrency rally on Tuesday as US lawmakers closed in on long-awaited digital-asset legislation and a cooling AI trade drew fresh attention back to digital markets. Bitcoin ($BTC) briefly climbed above $67,000, while Ether ($ETH) neared $1,950, lifting crypto-linked equities including Coinbase (COIN), which gained 12%, American Bitcoin (14%) and Cipher Digital (17%).

The advance followed comments from US Treasury Secretary Scott Bessent, who said negotiators were at the "1-yard line" on the CLARITY Act, a bill that would delineate regulatory authority between the Securities and Exchange Commission and the Commodity Futures Trading Commission over digital assets. Bessent's update helped fuel optimism after months of debate over how US agencies would oversee the sector.

Beyond the regulatory momentum, some analysts pointed to waning enthusiasm for AI-linked stocks as a potential catalyst for capital rotating back into crypto. "With Bitcoin at the top end of the range, we see the path of least resistance being higher and an elevated likelihood of a breakout of the range as the AI trade slows and the market becomes more comfortable with the path of interest rates," FRNT Financial CEO Stephane Ouellette told Bloomberg.

AI-related equities have dominated speculative positioning since the launch of ChatGPT in late 2022, attracting waves of venture funding and retail interest that often pulled capital away from digital assets. The Philadelphia Semiconductor Index (SOX), a benchmark for chipmakers powering the AI build-out, had surged roughly 110% before entering a technical bear market last week after falling more than 20% from its recent high as investors weighed stretched valuations and the risk of overcapacity in AI infrastructure.

With both policy clarity and shifting macro flows now in play, market participants said the setup could set up Bitcoin for a decisive breakout from its recent range, though any further move would hinge on upcoming economic data and continued progress on the legislative front.