Bitcoin showed unexpected resilience this week, rebounding above $80,000 despite a series of developments that analysts had anticipated would pressure the cryptocurrency. The week saw three major headwinds: the failure of the CLARITY Act to advance in the US Senate, a Federal Reserve rate increase, and a Bank of Japan policy shift.
The week began with the CLARITY Act vote on Tuesday, which failed to proceed. Bitcoin dipped to $75,000 following the vote, a $5,000 drop from the previous day's rejection at $80,000. The decline was accompanied by what analysts described as a major capitulation event, with more than 23,000 BTC sent to exchanges at a loss.
The Fed raised its target rate range by 25 basis points to 3.75%-4%, marking its first increase since July 2023. Policymakers maintained a hawkish stance, citing elevated inflation and signaling the possibility of another rate increase later in the year. Higher interest rates typically strengthen competing yield-bearing assets and support the US dollar.
On Friday, the Bank of Japan raised rates by 25 basis points to 1.25%, the highest level in 31 years. The move has broader implications for global liquidity, as Japan has historically provided some of the world's cheapest funding.
Despite these setbacks, Bitcoin recovered significantly. By Friday, the cryptocurrency had crossed $81,000, shrugging off the Bank of Japan's decision and erasing much of its weekly losses.
Analysts offered explanations for the resilience. Some noted that the Fed rate increase was widely expected and largely priced in beforehand. Markets had also anticipated the CLARITY Act's failure. The Bank of Japan's rate increase did not immediately strengthen the yen, which weakened following the announcement.
Bitcoin still faces key technical levels. The first major test lies in defending $80,000, followed by reclaiming $81,700. Only after Bitcoin decisively reclaims these levels can analysts assess whether a new bull phase has begun.
