Central Banks Set Stage for Bitcoin Price Action
The Federal Reserve's interest rate hike on Wednesday and the Bank of Japan's expected decision on Friday will have a greater impact on Bitcoin than the failed Clarity Act in Congress.
The Senate voted down the bill by a margin of 49 to 50, with no Democrats supporting it. The market responded immediately, with Coinbase falling 10.1%, Circle dropping 11.5%, and Galaxy declining 7.6%. However, Bitcoin only dropped 3.6%.
The reason for this disparity is that companies like Coinbase and Circle rely on the Clarity Act to operate cleanly in the US. A dead bill directly affects their earnings, while Bitcoin has no earnings to be affected by a bill's passage or failure.
Bitcoin's price is more closely tied to interest rates, which central banks control. As interest rates rise, holding Bitcoin becomes less attractive due to the sacrificed yield. The Federal Reserve's decision on Wednesday and the Bank of Japan's expected decision on Friday will have a significant impact on Bitcoin's price.