Bitcoin heads into Wednesday’s Federal Reserve decision without two tailwinds bulls hoped would carry it back above $80,000.
The cryptocurrency briefly fell below $75,000 after the US Senate failed to advance the CLARITY Act, while markets moved towards near-certainty that the Fed will raise rates by 25 basis points.
Bitcoin later recovered and is now trading near $75,500.
That rebound makes one level more important than the expected policy move. If buyers defend $75,000 after regulatory disappointment, 5% Treasury yields and tighter policy have already been absorbed; the reaction could reveal more about underlying demand than the Fed headline.
Bitcoin lost a regulatory catalyst
The Senate voted 49-50 on Tuesday against advancing the CLARITY Act, leaving the bill short of the 60 votes required to move forward.
The legislation would create a US framework for digital assets and clarify the roles of the Securities and Exchange Commission and Commodity Futures Trading Commission.
Bitcoin fell to about $74,888, roughly 4.3% below its earlier high, as expectations around the vote deteriorated.
Tim Enneking, managing partner at Psalion, told Forbes before the vote that Bitcoin’s decline was “due directly” to pushback over the legislation.
The bill is stalled rather than necessarily dead, as a procedural step by Senator Thom Tillis preserved the possibility of reconsideration.
However, traders have lost a catalyst. That leaves macro conditions carrying more weight into Wednesday.
The Fed hike is expected, but guidance matters
Bitcoin’s late-August recovery coincided with softer Treasury yields and improving risk appetite. That backdrop has reversed as persistent inflation and expensive oil pushed the 10-year Treasury yield above 5% this week.
Markets now assign a 90% probability to a quarter-point Fed increase, meaning the move itself should contain little surprise if policymakers deliver as expected.
Independent financial researcher Joseph Edwards told Reuters that a hike “would likely put a damper on the recent rally.”
More important is what Chair Kevin Warsh says afterwards.
A signal that September begins a broader tightening cycle would reinforce competition from yielding assets and keep liquidity restrictive. Morgan Stanley now expects another quarter-point increase in December.
Conversely, presenting Wednesday’s move as a limited recalibration could remove some uncertainty.
$75,000 is becoming Bitcoin’s real test
Wintermute OTC trader Jasper De Maere identified $75,000 and $82,000 as the key levels heading into the September 15-16 FOMC meeting, telling CoinDesk that the market was increasingly “trading rates rather than anything crypto-specific.”
Bitcoin has now tested that lower boundary.
A sustained defence would show buyers are willing to absorb a failed legislative vote, yields around 5% and another expected rate increase without allowing the late-summer recovery to unravel.
The drop also flushed leverage from the market. More than $98 million of long positions were liquidated during Tuesday’s selloff, potentially reducing one source of forced selling.
Below $75,000, traders would have to determine whether the move represents a brief liquidity sweep or deeper breakdown.
Wintermute’s earlier framework placed the next important downside area around $72,000, while $82,000 remains key upper resistance.
That makes Wednesday less about the first Fed reaction and more about whether real demand appears around $75,000.
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