Ethereum Price Plummets After Clarity Act Fails in Senate
The Clarity Act's failure to pass in the Senate has sent shockwaves through the crypto market, causing Ethereum (ETH) and Bitcoin prices to plummet. The bill had been touted as a major tailwind for ETH, but its defeat has left investors scrambling for new catalysts.
Ethereum price dropped around 3% over the past week, dipping to $2,388 after the CLARITY Act failed, before rebounding to $2,400 shortly after. In comparison, other major altcoins like XRP and Hyperliquid have dropped over 8%. US-listed spot Ethereum funds also saw heavy selling, recording their largest outflow since January on Tuesday.
Exchange data points to a large influx of ETH into Binance four days before the vote, which can signal that more coins are becoming available for potential selling. However, an exchange deposit does not mean those coins were sold.
CryptoQuant's analysis shows that exchange reserves have fallen steadily since 2022 and remain at 14.6 million ETH, the lowest level since 2016. Staking continues to absorb supply, with a total of 43 million ETH staked, a record or close to 35% of supply.
Analyst Leon Waidmann notes that coins in a validator cannot be sold until the queue is cleared, leaving a smaller pool of ETH available to trade than in any previous cycle. Valuation has improved alongside it, with ETH's MVRV ratio above 1 and trading above its realized price near $2,300.
However, CryptoQuant's Coinbase Premium Index sits near -0.08, indicating softer US spot demand relative to offshore. The signals are not clean, though, and the supply backdrop remains supportive, but demand has yet to provide a clear counterweight to the recent selling pressure.