Bitcoin Faces Fresh Headwinds Amid Failing Regulatory Bill

Cryptocurrency markets are facing renewed pressure after the US failed to advance a key regulatory Bill. This has added to the woes of Bitcoin, which fell 4% in US trading before stabilizing at around $75,900 as of 8am in London.

The broader cryptocurrency market was also weaker after steep declines in the US. Investors had been looking to the Clarity Act, a crypto market structure Bill that has been under consideration for more than a year, to help the market break out of an 11-month malaise, but it is seen as having a low chance of progressing in the Senate this week.

The failure to progress the Clarity Act 'adds additional headwinds in the short term for a move up in Bitcoin', said Pratik Kala, a portfolio manager at digital-asset hedge fund Apollo Crypto. Until investors gain more certainty on the path of rates globally, risk assets would remain under pressure.

The impending Fed rate hike is also weighing on cryptocurrency markets. Inflation fears and soaring US bond yields are expected to push Fed chairman Kevin Warsh to raise rates on Sept 16, which could further damp demand for risk assets like Bitcoin.