Bitcoin digested the twin headwinds of the U.S. Senate’s rejection of a regulatory framework bill and the Federal Reserve’s interest rate hike, reclaiming the $81,000 level. After confirming support near the $75,000 mark over the weekend and staging a successful rebound, market attention has shifted to whether further upside is in store.
As of 9 a.m. on the 21st, Bitcoin was trading at $81,309, according to crypto market data platform CoinGecko. Ethereum was at $2,654. Per CoinMarketCap data as of 8 a.m., Bitcoin was at $81,192, down 0.04% from 24 hours earlier.
Bitcoin had faced a barrage of negative news last week after the U.S. Senate failed to pass a procedural vote on the CLARITY Act, a digital asset market structure bill, followed by the Federal Reserve raising its benchmark rate by 0.25 percentage point. Immediately after the Senate vote, roughly $570 million in long positions were liquidated, and U.S. crypto-related stocks such as Coinbase (COIN) and Circle (CRCL) briefly slid around 10%.
However, spot prices recovered their losses relatively quickly. Market analysts note that the possibility of the bill’s defeat had already been largely priced in, limiting the actual shock. Jag Kooner, head of derivatives at Bitfinex, assessed that “the market never had high expectations for the Senate to pass the bill in the first place.”
The positioning structure in derivatives markets also helped prevent a steeper decline. “Because very few traders had bet on the bill passing before the vote, there were correspondingly fewer positions to liquidate,” Kooner said. “The more important outcome is that the industry is left without clear legal rules, prolonging regulatory uncertainty.”
Institutional Flows Provide a Floor
The most visible factor underpinning prices is institutional buying through spot exchange-traded funds (ETFs). U.S. spot Bitcoin ETFs saw net inflows of $159.5 million on the 17th, followed by approximately $433 million on the 18th, marking two consecutive sessions of inflows — the first such streak since September 3.
The fact that institutional capital continues to flow in even amid a rising-rate environment is seen as a factor limiting sharp price corrections. Ilia Kalchev, an analyst at Nexo, said that “while the market has absorbed a series of negative developments, range-bound trading is likely to persist until a new catalyst emerges.” He pointed to “sustained inflows into U.S. spot Bitcoin ETFs and a recovery in spot buying as the key variables that would confirm a genuine uptrend.”
Technical analysis also leans toward range-bound movement. Kalchev suggested Bitcoin first needs to clear $77,950, followed by resistance at $79,300 and $80,000. A break above $80,000 could open the door to $81,400, but a drop below $75,000 could jeopardize the recovery itself.
Easing Regulatory Uncertainty
Despite the CLARITY Act’s defeat, regulatory efforts by U.S. financial authorities are supporting investor sentiment. The market expects that even with the bill stalled, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) will continue institutional reforms using their existing authorities.
In fact, on the 17th, the SEC approved a temporary innovation exemption that conditionally permits on-chain trading of tokenized U.S. equities for certain platforms and liquidity providers over a five-year period. A CFTC proposal on digital asset trading and market regulation also entered review at the White House Office of Management and Budget (OMB) the same day.
This signals that U.S. crypto regulation is shifting from a congressional legislation-centric approach to a rulemaking model led by financial regulators. Luke Davis, founder and chief market strategist at Bull Market Blueprint, said “the SEC’s action gives investors a reason to look beyond the failed vote,” adding that “liquidity conditions and demand for a hedge against currency debasement will have a greater impact on Bitcoin’s price than the timing of any individual bill.”
Matt Hougan, chief investment officer at Bitwise Asset Management, believes the U.S. still has roughly two and a half years of a pro-crypto regulatory regime ahead. “Had the CLARITY Act passed the Senate vote, crypto would have become the ‘smart money trade’ of the fourth quarter,” he said. “With its defeat, the road ahead has become more difficult, but little has changed from the Monday before the vote.”
Hougan emphasized that the CLARITY Act is fundamentally unrelated to Bitcoin. “If Bitcoin’s price continues to fall, it will be due to sentiment rather than fundamentals,” he said. “In the short term, if selling pressure emerges from the CLARITY Act fallout, I would view it as an opportunity.”
Monetary Policy Caution Persists
On the other hand, the Fed’s tightening stance remains a constraint on further gains. The Fed recently raised its benchmark rate to 3.75–4.00%, and officials continue to signal that inflationary pressures remain elevated. On the 20th, Minneapolis Fed President Neel Kashkari told Fox News that “even excluding volatile energy and food prices, inflation is still too high given where the economy is headed.”
Investors are also watching the scheduled summit between U.S. President Donald Trump and Chinese President Xi Jinping on the 24th. An agreement to ease trade tensions between the two countries would be positive for risk-asset sentiment, but if disagreements come to the fore, volatility in crypto markets could spike again.
Market sentiment remains at optimistic levels. CoinMarketCap’s Crypto Fear & Greed Index stood at 72, indicating “Greed” territory — higher than the previous day’s 64 and last week’s 66. A higher reading on the index signals stronger optimism.
Vinit Budki, managing partner and CEO at Sigma Capital, struck a cautious tone, saying Bitcoin’s rebound and the long-position liquidations do not necessarily confirm a bottom. “It’s too early to be confident. I would want to observe price action for about a quarter before determining direction,” he said. “High interest rates and a slowing U.S. housing market could push investors toward risk aversion.”
The next tests are likely to be the September jobs report due October 2 and the Consumer Price Index (CPI) released on October 14. Analyst Kalchev stressed that sustained ETF inflows or a recovery in spot buying would be the clearest signals that Bitcoin is preparing to break out of its trading range.