Bitcoin is entering a week that could determine the future direction of the entire cryptocurrency market. Investors are keeping a close eye on the U.S. Senate vote on the CLARITY Act, the Fed’s decision on interest rates, and the continued outflow of capital from bitcoin ETFs. Market sentiment is also being affected by concerns surrounding artificial intelligence and new security incidents.
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CLARITY Act could change the rules for cryptocurrencies in the US
The U.S. Senate is set to decide whether the CLARITY Act will move to the next stage of deliberation. This requires 60 votes. Meanwhile, the bill has grown to more than 630 pages and addresses, among other things, rules for DeFi protocols, regulatory powers, and ethical requirements for federal officials. However, passage of the law is still not guaranteed, and even a successful vote would represent only another step in the legislative process.
At the same time, sentiment around bitcoin itself has worsened. At the end of the week it was trading around $76,800, having lost about four percent over the week. U.S. spot bitcoin ETFs have also seen significant outflows. Hundreds of millions of dollars left the funds over just a few days, even though they had attracted roughly $3.8 billion over the preceding three weeks. Ethereum ETFs, by contrast, maintained a positive balance.
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Fed decision and tech risks could bring further volatility
Another key factor will be the decision of the U.S. central bank. According to the article, markets are pricing in a high probability of a 0.25 percentage point rate hike. Higher rates can help fight inflation, but they also make financing more expensive and put pressure on risk assets, including cryptocurrencies. For bitcoin, the Fed’s outlook for the coming months may therefore prove even more important than the decision itself.
Market nervousness is also being fueled by issues surrounding artificial intelligence and cybersecurity. Anthropic CEO Dario Amodei has warned about the risks of autonomous AI agents, while hackers made off with approximately 4,000 BTC in an attack on the Liquid Network. Blockstream subsequently rejected the attackers’ demand for a ransom in exchange for returning part of the funds. The combination of regulation, monetary policy, and security risks could therefore have a major impact in the coming days—not just on bitcoin, but on the entire cryptocurrency sector.
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