Bitcoin Loses Two Major Tailwinds as CLARITY Act Stalls

Bitcoin has lost two major tailwinds heading into the Federal Reserve's decision on Wednesday. The US Senate failed to advance the CLARITY Act, which would have created a framework for digital assets in the US and clarified the roles of regulatory bodies. This legislation was seen as a potential catalyst for Bitcoin's price.

The market had also been influenced by expectations around the Federal Reserve's decision on interest rates, with markets assigning a 90% probability to a quarter-point increase. A hike would likely put a damper on the recent rally in Bitcoin, according to Joseph Edwards of Reuters.

However, traders are now focusing on whether buyers will defend $75,000 after the regulatory disappointment. If they do, it could reveal more about underlying demand for Bitcoin than the Fed's decision itself. The price has already recovered from a brief dip below $74,888 and is currently trading near $75,500.

The importance of defending $75,000 was highlighted by Wintermute OTC trader Jasper De Maere, who identified it as one of two key levels heading into the FOMC meeting. If buyers can maintain this level, it could indicate that they are willing to absorb a failed legislative vote and higher interest rates without allowing the late-summer recovery in Bitcoin to unravel.