Crypto Selloff Deepens as US Senate Blocks Clarity Act, Fed Rate Hike Looms

Cryptocurrency prices tumbled Wednesday as the U.S. Senate’s failure to advance a comprehensive regulatory bill compounded selling pressure ahead of an expected Federal Reserve rate hike.

Bitcoin slipped almost 3% to near $76,000 during Asian trading, according to TechSpot, and later stabilized around $75,900 in London trading, as reported by Bloomberg via the Straits Times. The broader market suffered steeper losses: XRP dropped nearly 10% to $1.30, Ethereum fell nearly 5% to about $2,410, Solana shed 5% to just above $97, and Dogecoin lost nearly 5%, TechSpot reported. By Wednesday’s Asian afternoon, Bitcoin was trading 1.72% lower at $75,876.52, NDTV Profit reported, noting its 4% decline over seven days.

Bitcoin-related stocks also fell. Coinbase and Circle Internet Group were each down about 9%, according to Reuters via The Star. BitMine (BMNR) stock fell 4% alongside Bitcoin, Benzinga reported.

Legislative Blow

The selloff was triggered by the Senate’s failure to advance the Digital Asset Market Clarity Act, which would have established how different cryptocurrencies and blockchain projects are regulated, dividing responsibilities between the Securities and Exchange Commission and the Commodity Futures Trading Commission. The CFTC would have gained new authority over crypto spot markets.

The legislation failed to secure the 60 votes needed to clear a procedural hurdle, TechSpot reported, citing CoinDesk. More than 600 pages of compromise could not settle disagreements over ethics provisions restricting senior government officials’ crypto business interests. Democrats demanded stronger safeguards covering President Donald Trump and his family’s involvement, TechSpot reported. Trump reported more than $1.4 billion in income from his family’s crypto ventures in 2025, and companies managing his interests held at least $160 million in Bitcoin and Ether, plus up to $6 million in other tokens, according to a review of his disclosures cited by TechSpot.

Republicans released revised legislation on Sunday to address objections from Democrats and the banking industry, but that did not win over enough opponents, Reuters reported. With Congress preparing to leave Washington ahead of November’s midterm elections, the bill’s prospects this year are increasingly bleak, TechSpot reported.

The failure adds “additional headwinds in the short term for a move up in Bitcoin,” said Pratik Kala, a portfolio manager at digital-asset hedge fund Apollo Crypto, as quoted by Bloomberg. “Until investors gain more certainty on the path of rates globally, risk assets would remain under pressure.”

Fed Rate Hike Fear

The immediate focus has shifted to the Federal Reserve. Chairman Kevin Warsh is widely expected to raise interest rates on Sept. 16 amid inflation fears and soaring U.S. bond yields, Bloomberg reported. Markets are pricing a better than 90% chance of a 25-basis-point increase.

A Fed rate hike could further dent demand for risky assets like Bitcoin, NDTV Profit reported. “Market turmoil is to be expected across all asset classes if Warsh fails to hike rates,” said Caroline Mauron, co-founder of Orbit Markets, as quoted by Bloomberg. She added that inflation concerns could revive the debasement trade, which is positive for Bitcoin, but “bond yields mayhem and general market volatility will probably take it down first before it goes up.”

Market Data and Outlook

More than $540 million in bullish bets on cryptocurrencies were unwound in the last 24 hours, according to Coinglass data cited by Bloomberg. Institutional demand weakened, with U.S.-listed spot Bitcoin exchange-traded funds seeing more than $450 million in net outflows on Sept. 15, the largest single day of withdrawals since June. However, positioning showed some resilience: about $1.7 billion in calls were held at the $80,000 level across all maturities on Deribit, indicating more bets on Bitcoin to rise than to fall.

Industry executives expressed frustration. Ripple Labs CEO Brad Garlinghouse called for a post-mortem of why the bill failed, while Coinbase CEO Brian Armstrong said the industry could no longer wait on Congress, Bloomberg reported. Both pointed to the SEC and CFTC as able to offer a clear regulatory framework in the absence of legislation, but agency rules remain vulnerable to court challenges and changes in political leadership.

“This points to the larger challenge ahead,” said Samson Leo, chief legal officer at the Singapore-based stablecoin issuer StraitsX, as quoted by Bloomberg. “The longer major markets operate without clear and compatible frameworks, the harder it becomes to address fragmentation.”

Analysts see the setback as significant but not fatal. Ray Salmond called it a setback, not a derailment, as regulators may sustain adoption, Benzinga reported. Veteran investor Ross Gerber said the failure means another setback for Bitcoin, according to Benzinga.

The $74,000–$76,000 range for Bitcoin will be important to watch in the near term, said Avinash Shekhar, co-founder and CEO, Pi42, as quoted by NDTV Profit. “Holding this zone could allow the market to consolidate and attempt a recovery towards $78,000–$80,000, while a decisive break below it could invite further selling pressure.”

With both monetary policy and regulatory developments driving the market, Shekhar expects volatility to remain elevated near term and advises traders to watch whether Bitcoin can stabilize before expecting a broader recovery across altcoins.