Bitcoin pushed above $84,000 in Monday morning trading, rising roughly 5% after the Senate rejected the CLARITY Act and the Federal Reserve delivered its first rate hike since July 2023. Arthur Hayes argues that the timing challenges the idea that regulatory progress was responsible for the latest crypto rebound.
Hayes, CEO of Flop Labs, criticized the stalled legislation as “nonsense” in an X post last week. He said the crypto industry did not need the CLARITY Act and instead pointed to monetary liquidity as a more important market driver. According to Hayes, higher rates can increase income for wealthy investors, allowing some of that capital to be redirected toward financial assets such as Bitcoin.
Bitcoin has risen more than 8% over the past week. The break above $84,000 has fueled discussion that the market may have established a bottom and could be heading into a broader recovery during the final quarter of 2026.
Two Major Events, One Bitcoin Rally
The Senate vote and the Federal Reserve’s policy decision occurred less than 24 hours apart, making the source of Bitcoin’s rally difficult to isolate. The Senate voted 49-50 against invoking cloture on the CLARITY Act last Tuesday, leaving the bill short of the 60 votes needed to advance.
The following day, the Federal Open Market Committee voted unanimously, 12-0, to raise the federal funds target range by 25 basis points to 3.75%-4%. It was the Fed’s first rate increase in more than three years.
Hayes’ Liquidity Case Meets a Different Fed Interpretation
Hayes argues that higher rates can initially encourage investors to keep money in cash, but he believes the increased returns can also boost the financial resources of wealthy asset holders. Some of that capital could subsequently move into Bitcoin and other risk assets.
Zach Pandl of Grayscale takes a different view of the policy shift. He compared the latest rate increase with the Fed’s single hike in March 1997, which did not prevent the Nasdaq from continuing its bull-market advance.
Pandl expects the rate increases anticipated through 2026 to have only a limited influence on capital allocation. He also suggested that higher cash yields could strengthen stablecoin issuers’ earnings and potentially support greater flows into tokenized assets.
Bitcoin’s rebound came within two days of the failed Senate vote and the Fed’s rate hike. The sequence fits Hayes’ liquidity argument, although it does not prove that either event was solely responsible for the move.
Coinbase CEO Brian Armstrong expressed disappointment with the Senate’s decision, pointing to the political effort invested in the legislation. Retail traders, however, remained cautious, with Stocktwits sentiment still bearish despite Bitcoin’s price recovery.
The $85,000 level now r
