Bitcoin gained 6% over the past week even after the U.S. Senate failed to move forward with the CLARITY Act and the Federal Reserve raised interest rates by 25 basis points. On Sept. 18, after the U.S. Securities and Exchange Commission released a five-year "innovation exemption" order, Bitcoin climbed from around $76,000 to above $81,000. CoinGlass said about $470 million in short positions were liquidated over 24 hours.
The move came after three straight days of policy headlines. On Sept. 15, the CLARITY Act fell short in the Senate. A day later, the Fed delivered its first rate hike since July 2023. On the third day, the SEC opened the door for qualified platforms to trade tokenized U.S. stocks on public blockchains through liquidity pools. In price terms, the market responded far more strongly to the last of those events.
The CLARITY Act failed in the Senate, and Bitcoin briefly fell below $75,000
On Sept. 15, the CLARITY Act, a bill the crypto industry had lobbied for over more than a year, failed to pass the U.S. Senate. The vote was 49 in favor and 50 against, leaving it 11 votes short of the 60 needed to advance. The bill’s core purpose was to define which digital assets would fall under the jurisdiction of the SEC and which would be overseen by the Commodity Futures Trading Commission.
Before the vote, Republican Senator Cynthia Lummis, one of the bill’s sponsors, said lawmakers had already accepted more than 120 Democratic demands. If that still was not enough, she said, "then we are done."
The sticking point was not the crypto industry itself but an ethics provision. Democrats insisted that restrictions on digital asset holdings by public officials should also apply to the president and the first family. They argued the revised text did not do that, so none of them voted yes. Four Republicans also voted against the bill.
The result pushed federal-level legislative clarity back at least until the next Congress. Coinbase and Circle both fell about 10% that day, while Bitcoin dropped from near $80,000 to below $75,000 at one point.
Even so, the sell-off did not break a closely watched range. In a weekly report published a week earlier, Glassnode described the $76,000 to $82,000 area as a zone where recent buyers had accumulated. On the day of the Fed decision, Bitcoin traded mostly between $75,000 and $76,500 and closed at $76,200, leaving that range intact.
The Fed raised rates by 25 basis points, while spot Bitcoin ETFs saw $746 million in outflows over two days
On Sept. 16, the Federal Reserve voted 12-0 to raise the federal funds rate by 25 basis points to 3.75% to 4%. It was the first rate increase since July 2023.
Fed Chair Warsh said at the press conference that "inflation is too high, and it has been too high for too long." In the central bank’s economic projections, inflation does not return to 2% until 2029. The dot plot showed that 16 of 18 officials expected one more rate increase this year. The 2-year U.S. Treasury yield rose to 4.74%.
Flows reacted more clearly than price. U.S. spot Bitcoin ETFs recorded net outflows of $746 million across Sept. 15 and Sept. 16. The article argues that this was the first signal from the market: bearish news had landed, but price did not collapse with it.
What the SEC’s five-year exemption actually allows
The bigger shift in sentiment came from the SEC’s five-year "innovation exemption" order released on Sept. 17.
Over the past two years, most tokenized U.S. equities were issued offshore and sold only to non-U.S. investors. In practice, they were mostly synthetic products linked to stock prices, with holders receiving neither dividends nor voting rights. The new order takes a different route.
From Sept. 17, 2026 through Sept. 17, 2031, qualified platforms can use automated market maker liquidity pools on public, permissionless blockchains to match trades in tokenized U.S. equities without registering as exchanges. Institutions that provide capital to those pools also do not need to register as dealers.
The conditions are extensive:
- The token must carry the same rights as the underlying stock, including dividends and voting rights, and cannot be synthetic.
- The issuer must receive written notice 30 days before listing and can veto the launch.
- The product can be offered only to U.S. investors who pass identity checks.
- If the underlying stock is halted on an exchange, on-chain trading must halt as well.
Another piece of the framework was introduced in June. The SEC proposed scrapping Rule 611 of Regulation NMS, which requires stock trades to be executed at the best price available across the market. Automated market makers price assets by formula and cannot meet that standard. Without removing Rule 611, liquidity pools would still be out of bounds under existing market rules.
SEC Chair Paul Atkins put the point plainly in a statement: Congress failed to advance the CLARITY Act, so the SEC moved ahead on its own.
Kenneth Bentsen, president and chief executive of the Securities Industry and Financial Markets Association, said in a statement the same day that multiple tokenized versions of the same stock trading in parallel could fragment liquidity and confuse investors.
The market reaction was immediate. Uniswap’s UNI rose about 30% in 24 hours, hitting a 10-month high. Ondo, which focuses on compliant tokenized U.S. Treasuries, gained 7.39%. At present, tokenized real-world assets on public blockchains total just over $30 billion, and BlackRock’s BUIDL fund accounts for about $2.8 billion of that total. The fund is open only to institutions.
The article sums up the three-day stretch as two heavy blows and one piece of candy. The market absorbed the 25-basis-point rate hike in a day. It answered the opening for on-chain stock trading with a 6% rise.
Why the article compares this move with 2023
The piece also looks back to the summer of 2023 and says the first half of the script looked very similar.
On June 15, 2023, BlackRock filed for a spot Bitcoin ETF, helping lift Bitcoin from $25,000. On July 13, a court ruled that XRP secondary sales on exchanges did not constitute securities transactions, and Bitcoin climbed to $31,800, its highest level in 13 months.
That was also a rally driven by regulatory relief. Then, on July 26, 2023, the Fed raised rates by 25 basis points to 5.25% to 5.5%. Bitcoin closed that day at $29,400 with little immediate reaction. Over the next 13 days, it edged higher within a $29,000 to $30,000 range and touched $30,200 on Aug. 8, its post-hike high.
After that, the market rolled over. On Aug. 17, Bitcoin fell from $28,700 to as low as $25,400, an intraday drop of 11%. CoinGlass said 175,000 traders were liquidated over 24 hours for a total of $1.032 billion. CoinShares said open interest in perpetual futures fell by $2.75 billion in a single day, the biggest deleveraging event since the collapse of FTX.
At the time, traders pointed to reports that SpaceX had written down and sold its Bitcoin holdings, as well as Evergrande’s bankruptcy protection filing in New York. But the broader backdrop was that the 10-year U.S. Treasury yield had climbed to its highest level since 2007. By Sept. 11, Bitcoin had fallen below $25,000 again.
Measured from the Fed hike, Bitcoin rose for 13 days and then dropped 17% over the next five weeks. From the July 13 peak at $31,800, it fell 22% over two months. The article’s point is that regulatory optimism was eventually worn down by the rate environment.
What is different this time: ETFs and stablecoins are much larger
The similarity is clear: regulatory relief pushes prices up first, and macro pressure can still drag them back later. The difference is that the structure of demand has changed.
In 2023, there were no U.S. spot Bitcoin ETFs. Buying came mainly from exchange-based retail traders and Grayscale’s trust products. Today, U.S. spot Bitcoin ETFs hold about $103 billion in assets, and they recorded $3.52 billion in net inflows in August alone. The total stablecoin market capitalization is now above $300 billion.
Still, the article says Glassnode’s warning from last week cannot be ignored. New demand has gone quiet. On-chain capital inflows stopped growing after 27 straight days of increases. Public companies’ Bitcoin purchases fell from 89,000 BTC in July last year to 5,900 BTC over the most recent three months. Stablecoin supply is 4% below its April peak.
That leaves room for two readings at once: the composition of demand has changed, but demand itself is shrinking.
$86,000 remains the key wall, and none of the three conditions has been met
At around $81,000 on Sept. 19, Bitcoin had only returned to the lower edge of the resistance zone. Based on Glassnode’s early-September figures, about 1.07 million BTC held by long-term investors sit between $83,000 and $86,000. The aggregate break-even level for spot Bitcoin ETFs is also near $86,000, and by early September those products had been underwater for 228 straight trading days.
The article says three indicators matter if Bitcoin is to break through that wall:
- A weekly close above $86,000, showing the market has absorbed the 1.07 million BTC overhang.
- Three straight weeks of net inflows above $1.5 billion per week into U.S. spot Bitcoin ETFs, showing that fresh money is sustained rather than a one-day burst.
- A drop in the 30-year U.S. Treasury yield back below 5%, showing that the risk-free rate is no longer pressing down on risk assets.
For now, none of those conditions has been met. The situation has simply stopped getting worse. Spot Bitcoin ETFs saw $746 million in outflows in the first two days of the week and $593 million in inflows in the next two, leaving the weekly total roughly flat. The 30-year Treasury yield closed at 5.33% on Sept. 18, still above 5%.
The options market is sending a similar message. The max pain point is at $72,000, while call selling is concentrated at $85,000 and $90,000. Options sellers are effectively betting that Bitcoin stays trapped between $72,000 and $85,000 for now.
Arthur Hayes and Peter Boockvar see the rate hike in opposite ways
BitMEX co-founder Arthur Hayes wrote the day after the Fed hike that raising rates when government debt is already high can itself become a form of stimulus. In his view, interest paid on bank reserves and on Treasury holdings rises together, which eventually supports more consumption, especially consumption of financial assets. His conclusion was that "financial asset prices will continue to rise." He argued that the combined balance sheets of the Fed and the banking system are still growing, so the quantity of money is still increasing even as the price of money rises.
Peter Boockvar, chief investment officer at One Point BFG, took the opposite side. He said the latest hike merely reversed the rate cut delivered last December. He also argued that the Fed is mainly responding to an energy supply shock, something it cannot fix, and that the bond market should be left to determine the price of money.
The article frames the disagreement this way: Hayes is talking about the quantity of money, while Boockvar is talking about the price of money. In 2023, the price of money won. Whether this time is different may not be decided by the SEC order itself, but by the next two weeks of spot Bitcoin ETF flow data. The market has already taken the candy. The wall is still there.