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Ethereum and Solana may be setting up for their next big breakout, but one thing could decide everything: regulation.
According to Bitwise Chief Investment Officer Matt Hougan, both blockchains could hit new all-time highs if the U.S. passes the long-discussed Clarity Act, a bill designed to clearly define how crypto assets are regulated.
Ethereum has already shown strength this year. After falling close to $1,500 earlier in the cycle, ETH rebounded sharply and nearly tripled at its peak. That recovery has helped restore investor confidence, especially among institutions watching from the sidelines.
Solana’s story is more complicated. While its technology and ecosystem continue to grow, some investors remain unsure whether SOL can push past previous highs. Hougan believes regulation could change that mindset quickly.
“The whole world is moving on-chain,” he said, pointing to growing interest in tokenized stocks, bonds, and real-world assets. Even U.S. regulators have suggested that traditional financial markets could shift onto blockchains in the coming years.
The problem, Hougan explained, is uncertainty. Crypto’s current progress relies heavily on supportive regulators rather than permanent laws. If political leadership shifts, that support could disappear overnight. Large financial institutions, he said, will not fully commit billions of dollars without clear legal foundations.
That’s where the Clarity Act comes in. If passed, it would provide long-term certainty and signal that the U.S. is serious about a blockchain-based financial future. Hougan says that could unlock markets worth hundreds of trillions of dollars.
In that scenario, today’s valuations for Ethereum and Solana could look surprisingly small. Solana, in particular, remains well below a $100 billion market cap, something Hougan says would be hard to justify in a fully regulated on-chain economy.
Still, timing remains uncertain. Washington moves slowly, and lawmakers are juggling multiple priorities. While some officials suggest progress could come early next year, nothing is guaranteed.
For now, Ethereum and Solana sit at a crossroads. If regulation brings clarity, history suggests the market may not keep them down for long.
