(Bloomberg) — Crypto’s hopes for a Washington rescue collided with a harsher market reality Tuesday. The likely failure of the long-shot Clarity Act to advance in the Senate removed one of the industry’s few potential catalysts just as renewed anxiety over interest rates bears down on speculative assets, sending Bitcoin sharply lower while hammering crypto-linked stocks.
Bitcoin, the largest cryptocurrency, added to earlier losses to drop as much as 5.2% to $75,010, after the bill was set to fail in the Senate. Ether also declined, falling more than 8% at one point, while some smaller tokens lost even more on a percentage basis.
The double blow adds fresh momentum to a selloff that has already pushed digital assets into one of their bleakest stretches in years. For months, the industry had looked to friendlier regulation as a possible turning point, with the Clarity Act promising rules that could draw crypto further into the financial mainstream. But the bill’s defeat has left that payoff elusive and exposed a more immediate problem: Washington can bring institutional legitimacy to the asset class, but it cannot force investors to embrace the volatile asset en masse.
From Bitcoin to Coinbase Global Inc. and other companies focused on the industry, assets that have rallied on the prospect of regulatory progress are again being driven lower at a time of growing anxiety over rising interest rates and tightening liquidity. Many crypto-market-watchers had this week already pointed to the prospect of higher interest rates weighing on risk assets as well.
The bill needed a number of Democrats to vote in favor of advancing it toward final passage thanks to the Senate’s 60-vote rule for most legislation. Among the most pertinent of sticking points were ethics provisions that Democrats demanded as they looked to prevent President Donald Trump from continuing to profit from the industry.
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