Bitcoin jumped above $84,000 in Monday morning trading, gaining around 5% as the market reacted just days after the Senate blocked the CLARITY Act and the Federal Reserve raised interest rates for the first time since July 2023. Arthur Hayes argues that the timing suggests crypto regulation was not the force behind Bitcoin’s latest advance.
Hayes, CEO of Flop Labs, called the stalled legislation “nonsense” in an X post last week. He argued that the crypto sector did not require the bill and instead pointed to monetary policy as a more important factor. In his view, a rate increase can put additional income into the hands of wealthy investors, who may then direct part of that liquidity into financial markets, including crypto.
Bitcoin is now more than 8% higher over the past seven days. Its move beyond $84,000 has added to speculation that the market may have found a floor and could be entering another bullish phase in the fourth quarter of 2026.
CLARITY Act Rejection and Fed Hike Arrive Together
The Senate’s rejection of the CLARITY Act and the Fed’s rate decision came within a day of each other, making it difficult to isolate which development influenced Bitcoin’s move. Senators voted 49-50 against advancing the legislation last Tuesday, well below the 60 votes required for cloture.
A day later, the Federal Open Market Committee unanimously voted 12-0 to increase the federal funds target range by 25 basis points to 3.75%-4%. The move marked the central bank’s first rate hike in more than three years.
Hayes’ Liquidity Thesis vs. Grayscale’s View
Hayes argues that higher interest rates can encourage cash accumulation, but he believes the additional income generated by those rates can also increase the funds available to wealthy holders of financial assets. Some of that capital could eventually flow into Bitcoin, according to his argument.
Grayscale’s Zach Pandl has offered a different interpretation of the policy move. He compared the latest increase with the Fed’s isolated rate hike in March 1997, which did not interrupt the Nasdaq’s broader bull-market advance.
Pandl expects the rate increases anticipated through 2026 to have a relatively limited effect on capital allocation. He also pointed out that higher cash yields could benefit stablecoin issuers and potentially increase investment in tokenized assets.
Bitcoin’s recovery occurred within 48 hours of the Senate vote and the Fed decision. While the timing provides some support for Hayes’ liquidity argument, it does not establish that monetary policy alone caused the rally.
Coinbase CEO Brian Armstrong criticized the Senate outcome, highlighting the political effort surrounding the CLARITY Act. Meanwhile, retail sentiment on Stocktwits remained bearish even as Bitcoin prices recovered, underscoring the difference between price action and investor sentiment.
Bitcoin’s next key test is around $85,000. A move above that level could bring the $87,000-$88,000 range into focus, where a large concentration of short liquidations could contribute to a potential squeeze. If Bitcoin falls below $83,500, attention could shift toward $80,000, which remains a major support and long-liquidation zone.
Trading activity has also accelerated during the rebound. CoinGecko data showed daily Bitcoin transaction volume reaching $85.6 billion, compared with $72.4 billion a day earlier.
