Bitcoin Tests Key Level as Regulatory Hopes Fade
The Bitcoin price has lost two major tailwinds ahead of the Federal Reserve decision on Wednesday. The cryptocurrency briefly fell below $75,000 after the US Senate failed to advance the CLARITY Act, which would have created a US framework for digital assets and clarified the roles of regulatory bodies.
Bitcoin later recovered but is now trading near $75,500. Experts believe that if buyers can defend this level despite regulatory disappointment, it could reveal more about underlying demand than the Fed's policy move.
The Senate voted 49-50 against advancing the CLARITY Act on Tuesday, leaving the bill short of the required 60 votes. The legislation is not necessarily dead, but traders have lost a catalyst, and macro conditions are now carrying more weight into Wednesday's decision.
Bitcoin's late-August recovery coincided with softer Treasury yields and improving risk appetite, but this backdrop has reversed as inflation and expensive oil pushed the 10-year Treasury yield above 5% this week. Markets assign a 90% probability to a quarter-point Fed increase, which is expected to contain little surprise if policymakers deliver as expected.