Senate Kills CLARITY Act as Bitcoin Slides to $75K and Fed Rate Hike Looms

The U.S. Senate on Tuesday failed to advance the CLARITY Act, the most comprehensive federal digital asset framework yet attempted, in a cloture vote that fell short 49-50, well below the 60 votes required to proceed. The defeat drove Bitcoin from roughly $77,000 to an intraday low below $75,000, a decline of more than 5% on the day, before the price partially recovered to around $75,900 to $76,000. XRP suffered the sharpest losses among major tokens, falling more than 8% to below $1.30, while Ethereum, Solana, Dogecoin, Chainlink, Cardano and Stellar also posted significant declines. The legislative failure triggered $669.71 million in forced crypto liquidations across the market.

The regulatory setback compounded outflows already hammering crypto exchange-traded funds. U.S. spot Bitcoin and Ethereum ETFs shed a combined $591.80 million on Tuesday, their worst single-day outflow in months. Bitcoin ETFs alone accounted for $450.33 million of that figure, their largest single-day withdrawal since June 25 according to SoSoValue data. With lawmakers heading toward recess before the midterm elections, analysts warned that any new attempt at comprehensive federal crypto legislation faces a lengthy delay.

Attention shifted quickly to the Federal Reserve, which is widely expected to deliver its first interest rate increase since 2023 at its Wednesday meeting. Markets priced a roughly 92% probability of a 25-basis-point hike, with the 10-year Treasury yield holding near 5% and the 2-year at 5.409%. Bitcoin has decoupled from the Dollar Index and U.S. equities in the runup to the decision, with analysts arguing that dollar liquidity conditions rather than congressional action will set the floor for crypto from here. Fed Chair Kevin Warsh's post-decision commentary is seen as potentially more consequential than the rate move itself, with CryptoSlate noting that $70,000 represents a critical test for Bitcoin should Warsh signal an aggressive tightening path.