Gains in the cryptocurrency market have stalled as optimism waned over progress on a key U.S. regulatory bill this week.
The probability of the Clarity Act passing this year had surged above 30% on Polymarket during U.S. trading hours, but dropped back to 18% during early Asian trading on Tuesday. As a result, BTC—representing about 60% of total crypto market value—fell from a high of $79,586 at 8:40 a.m. Singapore time to below $78,000.
U.S. Senator Mark Warner told reporters at the Capitol that a group of Democratic negotiators would present a counter-proposal to Republicans ahead of a crucial procedural vote on the Clarity Act tomorrow. The comprehensive cryptocurrency regulation bill has been stalled for a year due to partisan disagreements. Since most Senate legislation requires 60 votes to pass, the bill needs several Democratic senators to cross the aisle to move forward and ultimately become law.
Stefan von Harnisch, Managing Director and Head of BitGo Prime, said, “Markets are approaching tomorrow’s vote with considerable caution. Bitcoin is holding up well, while crypto stocks are performing even stronger, indicating investors are giving some weight to the prospect of clearer U.S. regulations.”
Senators have committed to launching the procedural vote later this week. Prior to that, Republican senators released the final draft of the bill, incorporating revisions aimed at addressing some of the most contentious issues.
The new version grants the Treasury Secretary authority to intervene when deposit flight causes “harm” to community banks. It also introduces new ethics rules for the president and other elected officials holding cryptocurrencies—a key concern for Democrats. Under these new guidelines, the president would be required to divest virtual assets or place substantial holdings into a blind trust, or face financial penalties. The rules also empower state attorneys general to play a role in enforcing them.
“The market generally believes procedural hurdles can be overcome. That said, the path to becoming actual law remains long, and if the process stalls, I expect crypto stocks to fall further than Bitcoin,” said Adam McCarthy, research director at trading firm LO:TECH.
However, for some industry observers, the Federal Reserve’s interest rate decision may prove the most market-moving event for digital assets.
Lacie Zhang, research analyst at Bitget Wallet, noted, “The market currently expects an 86% to 87% chance of a 25-basis-point Fed rate hike on Wednesday, and BTC appears to have already priced in much of that base case, holding around $70,000 without breaking through August’s price structure. A greater risk of price adjustment would come from unexpectedly hawkish language in the statement.”
