Bitcoin Slides as CLARITY Act Passage Odds Fall
Bitcoin dropped 1.7% from midnight UTC to $76,862 on Tuesday, reversing much of Monday’s advance as the probability of the U.S. CLARITY Act becoming law this year fell sharply on Polymarket.
BTC had climbed from $75,806.11 to $79,427 on Monday before giving back those gains the following day. At $76,862, bitcoin was 6.6% below its monthly peak of $82,284 reached on Sept. 4. Ether fell 1.6% to $2,474.76, while Solana declined 2% to $100.43.
Polymarket’s odds for the CLARITY Act being signed into law this year followed the same reversal. After reaching 34% on Monday, the probability dropped to 17%. The shift came after Democrats reportedly prepared a counterproposal following their rejection of a revised Republican draft circulated Sunday.
The main disagreement involves ethics provisions covering crypto holdings by public officials, rather than the bill’s market-structure provisions.
The Senate is due to vote at 2:15 p.m. ET on whether to invoke cloture and move the legislation toward a vote. Passage would take the crypto industry closer to establishing its first clear U.S. framework for determining regulatory authority. If the procedural effort fails, lawmakers may not revisit market-structure legislation until after the November midterm elections.
The broader crypto market also came under pressure. Ninety-two of the 100 assets tracked by the CoinDesk 100 declined, sending the index 1.6% lower.
Traditional markets, meanwhile, moved higher. Nasdaq 100 futures rose 0.43%, while S&P 500 futures advanced 0.35% as some of Monday’s AI-related losses were recovered. The Dollar Index added 0.17%, indicating that Tuesday’s weakness was largely concentrated in crypto and reversing the previous day, when crypto had been the only major asset class in positive territory.
Derivatives Market Shows Mixed Signals
Futures positioning stays balanced: The long-short taker-volume ratio across crypto futures remained close to neutral ahead of the Senate vote. Total open interest declined 1% over 24 hours to $135 billion, while trading volume increased 54% to $207 billion. The figures suggest traders are closing existing positions more rapidly than new positions are being opened.
Bitcoin sees taker selling: Marex analysts noted that bitcoin’s overnight decline toward $77,000 was accompanied by taker selling in futures. These traders execute orders against available liquidity instead of placing passive limit orders. Bitcoin futures open interest remains below 680,000 BTC, reflecting weak demand for leveraged exposure.
Open interest weakens across major tokens: Ether, Solana and XRP futures have also seen declining open interest. Solana futures open interest recently reached 58.81 million SOL, its lowest point since May, according to CoinGlass.
CVD remains negative: Major cryptocurrencies are showing negative 24-hour open-interest-adjusted cumulative volume delta readings. This indicates that sellers remain influential, with a growing portion of short-side activity being executed through market orders instead of passive limit orders.
XLM remains an exception: Stellar’s XLM has bucked the broader trend. Its spot price is up 4% over 24 hours, while futures open interest has increased more than 10% to 1 billion XLM. The combination is generally associated with long accumulation and bullish positioning. Annualized funding rates are around 10%, suggesting continued demand for upside exposure without obvious overheating.
Funding rates lean bullish: Funding remains moderately positive across most major cryptocurrencies, including bitcoin. Ether and SOL have mildly negative rates, pointing to a modest short bias. If the CLARITY Act vote advances, those short positions could potentially help trigger a short squeeze. TRX remains an outlier, with deeply negative open interest continuing from recent sessions.
Volatility moves higher: Bitcoin and ether 30-day implied-volatility gauges, BVIV and EVIV, have risen but remain close to recent levels and well below their February and June highs. The increase suggests slightly stronger hedging demand ahead of the Senate vote, which could influence the market’s short-term direction.
Calls remain popular: Deribit’s implied-volatility curve remains normal and upward sloping, suggesting traders are not pricing an extreme volatility spike over the next 24 hours. Higher-strike bitcoin calls account for much of the top-five options volume, with ether displaying a similar setup.
Altcoins Under Pressure
Filecoin’s 27% surge on Monday is also reversing. The rally had coincided with a 70% increase in futures open interest, but FIL has since fallen 5.1% from midnight UTC to $0.89 and is down 13% over 24 hours. Futures open interest has dropped 23% to $106 million.
AI and computing-related tokens remained among the weakest performers for a second consecutive session after Anthropic CEO Dario Amodei called over the weekend for a slowdown in AI development. Internet Computer fell 6% to $2.58, while Theta Network declined 4.5% and NEAR Protocol lost 3.7%.
Uniswap moved against the broader DeFi decline, gaining 1% to $6.60 and rising 4.8% over 24 hours. The token remains one of the DeFi assets with significant exposure to the outcome of Tuesday’s vote.
Venice Token, which reached a record high last Wednesday following a token burn and short covering rather than sustained buying, has now retraced roughly 20%. It fell another 4.5% Tuesday to $22.05.
Privacy coins continued their five-session divergence. Monero gained 0.37% to $516.41, while Zcash dropped 1.87% to $1,141.
Cosmos and XDC Network each rose 1.4%, while Stellar barely changed on the day despite remaining 4.3% higher over 24 hours.
CoinMarketCap’s Altcoin Season Index stood at 36/100, remaining in neutral territory after last week’s rally pushed the gauge to 51/100.
