Bitcoin traded around $76,140 Wednesday morning, down 0.9% on the day and 4% for the week, following the Senate's rejection of the Digital Asset Market Clarity Act. Despite the legislative setback, analysts contended that the Federal Reserve's decision carries greater significance for Bitcoin's price trajectory.
Market participants assigned a 93% probability to a quarter-point rate increase, with focus shifting to the Fed's accompanying language. Stephen Wundke, strategy and revenue director at Algoz, noted that dovish signals suggesting a protective move could support crypto in the final quarter of the year, while hawkish remarks from Fed Chair Kevin Warsh could push Bitcoin to retest its $63,000 low.
Trading activity reflected investor caution ahead of the Fed announcement. Talos reported a 28% net buying tilt toward stablecoins compared to an average 8% selling tilt around previous FOMC meetings. Buying conviction fell from 10% to 3% in Bitcoin and from 23% to 9% in Ethereum, according to research analyst Cooper Duschang.
The market showed diverging positioning, with hedge funds maintaining a 25% net buying tilt while systematic and quantitative strategies shifted heavily toward selling. Investors appeared to be reducing risk and increasing liquidity holdings pending the Fed decision's outcome.
Tim Sun, senior researcher at HashKey, argued that the Clarity Act's failure may extend the market bottom, but the primary pricing mechanism remains U.S. dollar liquidity rather than congressional legislation. He emphasized that tighter financial conditions and uncertainty regarding Federal Reserve policy, amid rising Treasury yields and energy prices, present the core challenge facing the market.
Analysts noted that even regulatory passage would not directly trigger a major bull market rally. The CFTC's spot-market authority over Bitcoin and Ethereum extends only to fraud and manipulation, while the SEC and CFTC have indicated intentions to draft market structure rules using existing authority.
On prediction market Myriad, users placed a 72% chance on Bitcoin's next move taking it to $84,000.
