Bitcoin Rises 6% Despite Regulatory Setbacks and Rate Hike
The past week was marked by two significant events in the crypto space: the failure of the Clarity Act and a rate hike by the Federal Reserve. The Clarity Act, which aimed to provide regulatory clarity for digital assets, fell short in the Senate with 49 votes in favor and 50 against. Despite this setback, Bitcoin rose by 6% over the week.
On the day of the vote, Coinbase and Circle dropped around 10%, while Bitcoin briefly dipped below $75,000 from near $80,000. The next day, the Federal Reserve raised interest rates for the first time since July 2023, with a unanimous decision to increase the federal funds rate by 25 basis points.
However, the market's reaction was more muted than expected. Bitcoin hovered between $75,000 and $76,500 on the day of the decision, closing at $76,200. The recent accumulation zone identified by Glassnode at $76,000-$82,000 remained intact, and ETF capital experienced a net outflow of $746 million over September 15 and 16.
The following day, the SEC released an order allowing tokenized U.S. stocks to be traded on public chains using liquidity pools. This exemption order marked a significant step forward for regulatory clarity in the crypto space. Tokenized real-world assets on public chains total just over $30 billion, including BlackRock's BUIDL fund at approximately $2.8 billion.
The market responded positively to this news, with Uniswap's UNI surging roughly 30% within 24 hours to a 10-month high, and Ondo rising 7.39%. The similarities between the current market and the 2023 pump-then-dump scenario are clear, but the differences cannot be ignored. New demand has stalled, with on-chain capital inflows halting after 27 consecutive days of growth.