A week ago, it felt as if the world was about to fall apart for bitcoin and the wider crypto market. Most participants expected a Fed rate hike and the Clarity Act’s failure in the Senate to trigger a sharp sell-off.
But it didn’t—even though the Fed hiked rates and the Clarity Act failed in the Senate. Market participants are split on what drove the resilience and what it means for the near-term outlook.
Ahead of the Senate vote on the night of Sept. 14, bitcoin fell as pre-vote jitters grew and rumors circulated about partisan gridlock over stablecoin yields and the bill’s ethics amendments. However, market analysts believe bitcoin remains insulated from legislative issues and could continue its upward trend.
By the time the senators on Capitol Hill prepared to cast their ballot, bitcoin was already approaching the $75,000 level, where, despite the failure to pass the key crypto bill, it appeared to shrug off the outcome.
Derivatives traders largely anticipated the Senate’s failure to approve the law, according to Jag Kooner, head of derivatives at Bitfinex. The modest spot reaction reflects a market that was already not positioned for a legislative breakthrough, he said.
"There was little evidence that traders had positioned themselves for its passage ahead of the vote," Kooner noted. "With few market participants betting on the bill’s approval, there were correspondingly few positions to unwind. The more important consequence is that the industry remains without clear statutory rules, prolonging regulatory uncertainty."
The spot price remained resilient even though the 49-50 Senate cloture vote failure triggered an immediate wave of violent liquidations. In the first 24 hours after the vote, crypto traders holding long, or bullish, futures positions saw $571 million liquidated. It also hit U.S.-focused crypto infrastructure providers, with publicly traded firms like crypto exchange Coinbase Global (COIN) and stablecoin issuer Circle Internet (CRCL) sliding 10% in the aftermath of the vote. Both shares rebounded Friday.
Price consolidation and positive regulatory outlook
Ilya Kalchev, an analyst at Nexo Dispatch, said bitcoin’s recovery after the Clarity vote, the Federal Reserve’s rate hike, and the long liquidation event point to consolidation rather than an immediate breakout.
“Bitcoin’s next move is now linked to a catalyst that it does not have yet,” Kalchev said. “Having absorbed three separate shocks this month without a real repricing, the more likely near-term path is range-bound trading rather than a breakout.”
Kalchev said $77,950 is the first level bitcoin needs to clear, followed by $79,300 and $80,000. A move above $80,000 could open the way to $81,400, while a fall below $75,000 would put the recovery in question.
The regulator story favors upside. After Senate’s rejection of the Clarity Act, analysts expect the SEC and CFTC to deliver the goods, meaning the cryptocurrency regulation in the U.S. is shifting entirely from a permanent, statutory approach to an agency-driven, rule-based approach.
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