Cryptocurrencies Slump as Senate Delays CLARITY Act; Bitcoin Drops Below $65,000

TradingKey - The CLARITY Act combined with rising pressure for a Federal Reserve rate hike triggered a collective plunge in cryptocurrencies.

On July 28, the cryptocurrency market experienced a collective plunge, with Bitcoin ( BTC) falling nearly 3% and losing the $65,000 threshold; Ethereum ( ETH) slumped nearly 4%, falling below $1,900; Binance Coin ( BNB) remained relatively resilient, falling by around 1%; other major coins all experienced varying degrees of decline.

Performance of the top 10 cryptocurrencies by market capitalization, Source: CoinMarketCap

On the news front, the highly anticipated CLARITY Act may be delayed. According to a CoinDesk report on July 28, under the schedule set by Majority Leader John Thune, the U.S. Senate will prioritize a sanctions bill against Russia and is unlikely to advance the CLARITY Act before then. John Thune explicitly stated that the CLARITY Act may not be passed before the summer recess (mid-July to late September), and the crypto industry currently views August 7 as an important window for the bill.

The delay of the bill instantly shattered the market's expectations for an "accelerated implementation of regulatory dividends," triggering profit-taking and safe-haven sell-offs by institutional funds and retail longs. In addition, the Federal Reserve (Fed) will hold its FOMC interest rate decision meeting from July 28 to 29, and market anxiety over the direction of monetary policy has further triggered short-term corrections and plunges in the cryptocurrency market. According to CME data, the market's expected probability of a Fed rate hike in July has risen to 37.9% (up from 31.5% yesterday), while the probability of keeping current interest rates unchanged stands at 62.1%.