Key facts
- Bitcoin was trading around $76,140 on Wednesday morning.
- The Digital Asset Market Clarity Act failed to pass the Senate.
- Analysts believe the Federal Reserve's policy decision is more impactful on Bitcoin's price than the Clarity Act.
- Talos reported a 28% net buying tilt toward stablecoins ahead of the Fed decision.
- Buying conviction in Bitcoin has fallen from 10% to 3%, and in Ethereum from 23% to 9%.
- Users on prediction market Myriad placed a 72% chance on Bitcoin's next move being up to $84,000.
Bitcoin was trading around $76,140 on Wednesday morning, down 0.9% for the day and 4% for the week, following the Senate's failure to pass the Digital Asset Market Clarity Act. Analysts suggested that the legislative outcome was less significant for Bitcoin's price than the Federal Reserve's upcoming policy decision.
Stephen Wundke, strategy and revenue director at Algoz, noted that the market largely anticipates a quarter-point interest rate increase from the Fed, making the central bank's forward guidance the key focus. He suggested that dovish signals could support a strong fourth quarter for crypto, historically Bitcoin's best-performing period. Conversely, hawkish remarks could lead Bitcoin to retest its $63,000 low.
Trading data indicated a shift in investor behavior, with Talos observing a 28% net buying tilt toward stablecoins, a significant increase compared to previous Federal Open Market Committee (FOMC) meetings. Research analyst Cooper Duschang noted a decline in buying conviction for both Bitcoin and Ethereum. Hedge funds remained net buyers, while systematic and quantitative strategies moved towards selling, suggesting investors are reducing risk and increasing liquidity ahead of the Fed's decision.
Tim Sun, senior researcher at HashKey, argued that U.S. dollar liquidity and Federal Reserve policy uncertainty, rather than congressional legislation, are the primary pricing mechanisms for the current market downturn. He suggested that the market needs to see a "liquidity bottom" rather than a policy bottom to trigger a new bull market rally. On the prediction market Myriad, users expressed a bullish outlook, assigning a 72% probability to Bitcoin reaching $84,000.
Despite the Clarity Act's failure, Wundke stated it was not a fatal blow to the crypto industry, as regulators are expected to develop new rules. CFTC Chair Michael Selig has directed staff to draft a crypto market structure regime, and SEC Chair Paul Atkins has indicated readiness to do the same. However, Sun cautioned that agencies can only interpret existing authority and cannot invent new powers, potentially leading to increased costs for DeFi and smaller projects seeking regulatory certainty.