Bitcoin Braces for Double Whammy of Rate Hikes and Regulatory Setbacks

The crypto market is facing another setback after the Senate failed to advance the Clarity Act, which had been seen as a potential catalyst for growth. This development comes on top of higher interest rates and tighter liquidity, which have historically proven unfavorable for non-yielding Bitcoin.

Bitcoin was little changed at around $76,000 following the decision, while shares of Bitcoin-treasury firms Strategy Inc. and Strive Inc. were lower. Adam McCarthy, head of research at trading firm LO:TECH, said 'Prices could be quite range bound and even trade lower into year-end as we reassess the outlook,' describing the rate hike shift as a 'double whammy.'

The failure of the Clarity Act had always been seen as a long shot, but its rejection hardly explains crypto's malaise in the longer term. Several headwinds have already exacerbated the bear market, including declining prices for Bitcoin exchange-traded fund shares and waning demand from retail investors.