Crypto Defies Downturn Expectations After CLARITY Act Failure and Fed Rate Hike

Crypto prices rallied unexpectedly after the CLARITY Act failed to pass and the Federal Reserve raised interest rates, defying predictions of a market downturn. Bitcoin reached $86,000 on September 21, its highest level since January 28.

Analyst John Gillen attributes this reaction to the fact that both events were already priced in by traders before they occurred. The Fed rate hike was seen as almost inevitable, and the CLARITY Act's failure was viewed as a relief after weeks of uncertainty weighed on prices.

Gillen argues that the CLARITY Act had quietly evolved into legislation designed to protect banks rather than help crypto, making its failure a 'max bullish outcome' for the industry. The SEC's rapid response to fill the gap created by the bill's collapse was seen as 'very bullish and very constructive', opening up new opportunities for innovation.

The real momentum in the market is building in altcoins, with Ethereum reaching $2,700 and Sui surging 30% in 24 hours. Bitcoin has largely traded sideways-to-up since August, but its reclaiming of its 50-week moving average is seen as a reversion to the mean rather than a breakout signal.