Bitcoin's Resilience Tested by Central Banks Amid Regulatory Uncertainty
The Clarity Act, a significant regulatory push for the crypto industry, failed to pass in the Senate on Tuesday, September 15. The bill's demise led to a sharp decline in crypto stocks, with Coinbase and Circle plummeting by 10.1% and 11.5%, respectively. However, Bitcoin only dropped by 3.6%, a relatively smaller decline compared to its peers.
The reason behind this discrepancy lies in the fact that Bitcoin is not an earnings-driven asset like Coinbase and Circle, which rely on rules written by statute to operate cleanly in the US. Bitcoin, on the other hand, is considered a store of value and a medium of exchange, and its price movements are less tied to specific regulatory developments.
The focus has now shifted to central banks, particularly the Federal Reserve, which raised interest rates on Wednesday, September 16, and the Bank of Japan, expected to follow suit on Friday. The increase in interest rates will likely impact the appeal of holding Bitcoin as a store of value, given its lack of earnings compared to traditional assets.