A week ago, the global situation appeared to be collapsing for bitcoin and the broader crypto market. Traders anticipated a Federal Reserve rate increase and the Senate passage of a bill’s rejection of the Clarity Act to trigger a sharp sell-off. But it didn’, even though the Fed raised rates and that bill failed in the Senate.
The spot price stayed steady near $75,000, despite the 49-50 Senate cloture vote failing to pass and sparking an immediate wave of violent liquidations. Within the first 24 hours after the vote, crypto traders holding long, or bullish, futures positions watched $571 million get liquidated. Both shares rebounded Friday.
The Senate vote and the liquidation wave
Before the Senate vote on the night of Sept. 14, bitcoin declined as pre-vote jitters grew and rumors circulated about partisan gridlock over the bill’s ethics amendments and stablecoin yields. When the senators on Capitol Hill cast their ballot, bitcoin was already approaching the $75,000 level, where it seemed to ignore the result.
The Senate failed to pass the law, and traders of derivatives were mostly expecting it, according to Jag Kooner, who leads derivatives trading at Bitfinex. The small response in spot markets shows that a breakthrough was never the market’s assumption.
“There was little evidence that traders had positioned themselves for its passage ahead of the vote,” Kooner noted. “With few market participants betting on the bill’s approval, there were correspondingly few positions to unwind. The more important consequence is that the industry remains without clear statutory rules, prolonging regulatory uncertainty.”
What Kalchev expects next
Ilya Kalchev, an analyst at Nexo Dispatch, said bitcoin’s recovery after the Clarity vote, the Federal Reserve’s rate hike, and the long liquidation event point to consolidation rather than an immediate breakout.
“Bitcoin’s next move is now linked to a catalyst that it does not have yet,” Kalchev said. “Having absorbed three separate shocks this month without a real repricing, the more likely near-term path is range-bound trading rather than a breakout.”
Kalchev described $77,950 as the starting point bitcoin must pass before reaching $79,300 and $80,000. A rise past $80,000 might open the path to $81,400, whereas a drop beneath $75,000 would throw the recovery into doubt.
The SEC’s Innovation Exemption
The narrative leans toward a positive outcome on the regulatory front. Following the Senate’s rejection of the Clarity Act, analysts are looking to the SEC and CFTC to actually produce results, which points to the U.S. cryptocurrency regulation moving away from a permanent, statutory approach and toward an agency-driven, rule-based approach instead.
The leaders of the crypto industry believe the SEC and the CFTC will keep relying on their current legal powers to make rules for the field. That regulatory progress started Thursday, when the SEC released an Innovation Exemption for crypto platforms that qualify, letting users trade tokenized U.S. stocks.
“The SEC’s move gives investors a reason to look beyond the failed vote,” said Luke Davis, founder and chief market strategist at Bull Market Blueprint. “I expect bitcoin to finish the year higher, with liquidity conditions and the debasement trade carrying more weight in my forecast than the timing of any individual bill.”
Hougan’s take on the Clarity Act
According to Matt Hougan, CIO at Bitwise Asset Management, the U.S. will maintain a pro-crypto regulatory approach for another two and a half years. That period, he says, gives the industry time to keep moving forward.
Hougan remains bullish on crypto. “I don’t think it will stop investors from considering smaller-cap assets with strong tokenomics and links to real-world assets.”
However, he added, “had the Clarity Act passed the Senate vote, I think crypto would have been the consensus ‘smart money trade’ in Q4, and prices would have ramped back toward all-time highs.”
But because it failed, “I think the road ahead is bumpier,” Hougan said. “I don’t think it’s changed too much from where it was Monday before the vote.”
Hougan said the Clarity Act was and remains irrelevant to bitcoin, so if bitcoin’s price continues to drop, it has more to do with sentiment than fundamentals. “If bitcoin sells off in the short-term due to Clarity Act vibes, I’d consider that an opportunity,” he said.
Budki on the bottom
Sigma Capital’s managing partner and CEO, Vineet Budki, has said that bitcoin’s recovery and the long-liquidation flush do not yet establish that the bottom is in.
“I’m not ready to make that call,” Budki said. “I’d rather give it a quarter and let the pr
The full quote ends at Budki’s line; nothing follows after it in the source. The meaning is clear, though: nobody is calling the bottom, and the recovery has not undone the risk that remains beneath the market.
What traders should watch
The three levels that matter are $77,950, $79,300, and $80,000. A push beyond $80,000 would mark a breakout. A drop beneath $75,000 would endanger the recovery.
The SEC’s Innovation Exemption demonstrates that regulatory progress can press ahead regardless of the Clarity setback, even when statutory clarity is still missing. The CFTC, for its part, is expected to move ahead with crypto rules through its existing authority.
| Event | Date | Bitcoin’s reaction |
|---|---|---|
| Senate vote | Sept. 14 | Pre-vote jitters; then shrug-off |
| Rate hike | This week | Price held near $75,000 |
| Clarity Act failure | Senate vote night | Spot price resilient |
| Liquidations | First 24 hours | $571 million unwind |
| First level | Near-term | $77,950 |
| Breakout level | Near-term | Above $80,000 |
The market’s digestion of the Senate vote was fast. Traders had largely anticipated both the rate hike and the bill’s failure, so neither landed with the force the industry had feared.
The Clarity Act’s failure prolongs statutory uncertainty, but investors expect the SEC and CFTC to advance crypto rules through existing authority as economic data and fund flows shape bitcoin’s next move. That path is rule-based rather than statutory, and it is proceeding.
Kalchev’s point is that bitcoin absorbed three separate shocks this month without a real repricing, which shows traders had already priced in the bad news. The vote landed on the market with no panic, because the market was ready for it when it came.
Hougan’s view is that the road ahead is bumpier, even if no one is declaring a bottom. Kalchev said the near-term path is range-bound trading, which he described as the most likely course, though not the only one. The route to $80,000 remains open.
Bitcoin remained unaffected by the failure of the Clarity Act, a legislative effort that did not succeed. The SEC’s’s Innovation Exemption moved forward anyway. Traders who were not positioned for the bill’ move had no prior action to unwind, and the market took the news calmly.
Risk remains beneath the market despite the rebound, and Budki’s’s point stands: the bottom has not been found yet. But the market has weathered the week’ experience with shocks without a collapse describes what has happened so far.
Source material: “Crypto traders braced for a total wipeout this week but Bitcoin had other plans,” CoinDesk.
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