Clarity Act Defeat Delivers Direct Blow…Bitcoin Plummets, Now Fed-Induced Shock Remains

▲ Bitcoin (BTC) crash/ChatGPT generated image ©

As Bitcoin (BTC) plummeted 3.25% in a single day due to the failure of the U.S. cryptocurrency market structure bill, the Clarity Act, to pass a Senate vote, market attention is now shifting to the Federal Reserve. BTC, which fell below the $76,000 mark, saw $450.33 million withdrawn from spot ETFs, and is now in a situation where it must also be wary of the Fed's signals for further tightening after the interest rate hike.

According to investment media outlet FXStreet on September 16 (local time), Bitcoin closed at $75,644 after a 3.25% drop the previous day and continued its weakness below $75,600 today. The Clarity Act failed to secure the 60 votes required for cloture in the Senate, with 49 votes in favor and 50 against. Despite negotiations and legislative efforts by U.S. President Donald Trump and Republican lawmakers, it fell 11 votes short of the benchmark.

Dean Chen, an analyst at BitUnic, assessed the vote result as a significant setback for U.S. cryptocurrency regulation but explained that the bill itself is not dead. He stated that future amendments and renegotiations are possible, and ethical/conflict of interest provisions, stablecoin policy and banking sector concerns, and differences in regulatory jurisdiction between the Senate and House remain key issues. He pointed out that if congressional legislation is delayed, the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) could use their existing authority to establish a regulatory framework, but this might offer less policy certainty than congressional legislation. From the perspective of institutional investors, he mentioned the possibility that the entry of large-scale funds into the U.S. cryptocurrency market might be delayed rather than thwarted.

Institutional demand is also showing an unstable trend. According to SoSoValue, U.S. Bitcoin spot ETFs turned from a net inflow of $160.04 million on Monday to a net outflow of $450.33 million on Tuesday. Analysis suggests that investors are adopting a cautious stance amid escalating tensions in the Middle East and ongoing uncertainty surrounding the Fed's monetary policy decisions.

The market is focusing on the future policy direction rather than the Fed's interest rate hike itself. The probability of a 0.25 percentage point interest rate hike, reflected in the CME FedWatch Tool, exceeds 90%, and Dean Chen expects the benchmark interest rate to be raised to 3.75-4.00%. As the interest rate hike is already largely priced in, the Fed's economic outlook, dot plot, and the Fed Chair's press conference are considered key variables that will determine BTC's short-term direction. It is explained that if the Fed signals prolonged high interest rates or the possibility of further tightening, given that oil prices and inflation remain high and Treasury yields are near multi-year highs, demand for Bitcoin spot ETFs could be pressured by rising dollar and Treasury yields and increased institutional funding costs.

Technically, despite the bearish trend, BTC is trading above its major Exponential Moving Averages (EMAs), maintaining a mid-term bullish structure. The 50-day EMA is at $73,567, the 200-day EMA at $73,105, and the 100-day EMA at $71,384. However, the Relative Strength Index (RSI) has fallen to a neutral level of 48, and the Moving Average Convergence Divergence (MACD) has further decreased in the negative territory, indicating weakening short-term upward momentum. In case of a decline, $73,567-$71,384 is a major support zone, with $66,500 and $62,300 suggested as additional support levels. Conversely, in case of an uptrend, $85,000 is a key resistance level; an analysis suggests that if it breaks this and the daily closing price settles above it, the possibility of a rally towards new highs could reopen.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*