Bitcoin faces volatility as CLARITY Act Senate vote and Fed rate hike loom
In brief
- Senate Republicans released final 635-page CLARITY Act Monday; procedural vote Tuesday at 2:15 pm requires 60 votes
- Federal Reserve widely expected to hike rates 25 basis points to 3.75-4%; market pause odds fell to 13.3%
- Bitcoin trading below key weekly support levels amid regulatory and monetary policy signals
- Oil prices surged above $100 per barrel; US consumer inflation expectations climbed to 4.6%
- Crypto policy insiders express optimism on CLARITY prospects despite uncertain passage in divided Senate
The CLARITY Act races toward a Senate vote
Senate Republicans released their final CLARITY Act proposal on Monday, calling it their "last, best and final offer" for crypto regulation. The updated bill spans 635 pages and aims to provide the crypto industry with a clear legal framework in the US.
A procedural vote is now scheduled for Tuesday at 2:15 pm, requiring 60 votes to pass. The threshold means bipartisan support is essential — neither party alone commands the chamber. Crypto policy insiders have signaled optimism. Tyler Williams, a former crypto adviser to US Treasury Secretary Scott Bessent, noted the momentum heading into the vote.
Fed rate decision adds pressure to Bitcoin
The Federal Reserve is widely expected to hike benchmark rates by 25 basis points to 3.75-4%. The shift in market expectations is stark. The CME Group's FedWatch Tool shows odds of rates staying at current levels at just 13.3% — down sharply from above 40% a week prior.
The timing creates friction at the highest levels. President Trump faces pressure from the Fed not to hike rates but to enact rate cuts instead — a tension that's unlikely to resolve before Wednesday's announcement.
Inflation and geopolitical risks fuel volatility
Oil prices have returned above $100 per barrel amid escalating Middle East tensions, adding to inflationary pressures. Meanwhile, US consumer inflation expectations have climbed to 4.6% over the coming year, underscoring the Fed's rationale for tightening.
Bitcoin traders are watching both fronts closely. Regulatory clarity could provide a floor for sentiment if CLARITY passes. A rate hike, by contrast, typically pressures risk assets in the near term. The week ahead will test whether one catalyst can offset the other.
