Bitcoin Hovers at $76K as Analysts Argue the Fed Matters More Than Clarity Act

• BTC-USD

Bitcoin traded around $76,140 Wednesday morning, down 0.9% on the day and 4% for the week, a day after senators <a href="https://decrypt.co/378286/crypto-clarity-act-fails-clear-senate-bitcoin-slides” rel=”nofollow noopener” target=”_blank”>blocked the Digital Asset Market Clarity Act. Analysts argued that the legislation’s failure, while “disappointing,” is less consequential for Bitcoin’s price than today’s Fed decision.

Stephen Wundke, strategy and revenue director at Algoz, put the odds of a quarter-point increase at 93%, in line with CME FedWatch, so the decision “appears to be a given,” putting the focus on the language. Those odds were 33.1% a month ago.

Crypto Reacts: Bitcoin Slides as Clarity Act Fails to Clear Senate Vote

“Dovish signals about this being a protective move” could give crypto a strong last quarter of the year, Wundke said, noting that October and November are historically Bitcoin’s best-performing months. Hawkish remarks from Fed Chair Kevin Warsh could see Bitcoin retest its $63,000 low, he cautioned.

Trading data suggest investors have already stepped back, with Talos seeing a 28% net buying tilt toward stablecoins ahead of the decision, against an average 8% selling tilt around previous FOMC meetings. Buying conviction in Bitcoin has fallen from 10% to 3% and in Ethereum from 23% to 9%, said research analyst Cooper Duschang in a note shared with Decrypt.

The two ends of the market are moving in opposite directions: hedge funds remain net buyers at a 25% tilt, while systematic and quantitative strategies have swung heavily toward selling. Investors are “reducing risk and holding greater liquidity ahead of the Fed,” Duschang said, potentially leaving capital “available to deploy once the decision removes some of the uncertainty.”

He pointed to the last time the Fed raised rates, in July 2023, when Bitcoin barely moved because the increase had been priced in beforehand. Order-book depth has stayed broadly stable this week, he added, and the signal to watch afterwards is “whether stablecoin capital moves back onto exchanges.”

Tim Sun, senior researcher at HashKey, argued that while the Clarity Act’s failure to pass may extend the market bottom, the “true pricing mechanism” for this downturn remains “U.S. dollar liquidity, rather than congressional legislation.”

“Even if this bill had passed, it would not have directly triggered a new major bull market rally,” Sun argued, pointing to “tighter financial conditions alongside uncertainty regarding Federal Reserve policy” as U.S. Treasury yields move back toward 5% alongside increasing energy prices and inflationary pressures. “What the market truly needs to wait for may not be a policy bottom, but a liquidity bottom,” he argued.

Source: finance.yahoo.com