Ethereum (ETH) declined after the Crypto Clarity Act failed to pass the Senate. Analysts had viewed the bill as a potential tailwind for the second-largest cryptocurrency by market capitalization.
ETH fell approximately 3% over the past week, dipping to $2,388 following the vote failure before rebounding to $2,400. In comparison, other major altcoins such as XRP and Hyperliquid dropped more than 8% during the same period. US-listed spot Ethereum exchange-traded funds recorded their largest outflow since January.
Market Signals Before and After the Vote
Selling pressure preceded the Senate vote. Exchange deposit data showed roughly 709,400 ETH moved into Binance on September 11, the highest daily total since June. Large exchange inflows can indicate coins becoming available for potential selling, though deposits alone do not confirm transactions occurred.
Following the vote failure, approximately $275 million in crypto long positions were liquidated within 20 minutes, with Ethereum falling below $2,400 and Bitcoin declining $2,200 to $74,900.
Supply Dynamics Support Longer-Term Outlook
Despite short-term volatility, Ethereum's supply metrics remain supportive. Exchange reserves have fallen to 14.6 million ETH, the lowest level since 2016, and have declined steadily since 2022.
Staking continues to absorb supply, with total staked Ethereum reaching approximately 43 million ETH, or roughly 35% of total supply. Staked coins cannot be sold until validator exit queues clear, reducing the available ETH trading pool.
Valuation indicators suggest market strength. Ethereum's MVRV ratio moved above 1 and remained there for several sessions, while ETH trades above its realized price near $2,300.
Demand Picture Remains Unclear
Demand signals remain mixed. The Coinbase Premium Index sits near -0.08, indicating softer US spot demand relative to offshore markets. Some analysts argue crypto markets can advance without the Clarity Act, shifting focus to macroeconomic factors.
The Federal Reserve raised interest rates on Wednesday, with officials signaling potential future tightening. Market observers noted that traders now await clarity on whether this increase represents a one-time adjustment or signals continued rate hikes ahead.
