Bitcoin Gives Back Gains as CLARITY Act Bets Retreat
Bitcoin fell 1.7% since midnight UTC to $76,862 on Tuesday, erasing most of its late-Monday recovery as Polymarket traders sharply reduced their expectations that the U.S. CLARITY Act will become law this year.
BTC rose from $75,806.11 to $79,427 on Monday but reversed course the following day. At $76,862, bitcoin remained 6.6% below its Sept. 4 monthly high of $82,284. Ether slipped 1.6% to $2,474.76, while Solana declined 2% to $100.43.
The move in prediction markets was equally notable. Polymarket’s probability of the CLARITY Act being signed into law this year climbed to 34% Monday before falling to 17%. The reversal followed reports that Democrats had prepared a counterproposal after rejecting a revised Republican draft circulated on Sunday.
The dispute reportedly centers on ethics rules concerning crypto holdings by public officials, rather than the legislation’s market-structure provisions.
The Senate is scheduled to vote at 2:15 p.m. ET on whether to invoke cloture and advance the bill toward a vote. If the measure moves forward, the crypto industry would come closer to gaining a defined U.S. framework for determining which regulators oversee different parts of the market. A failed vote could push market-structure legislation beyond the November midterm elections.
Crypto selling was broad-based, with 92 of the CoinDesk 100 constituents declining on Tuesday. The CoinDesk 100 itself fell 1.6%.
Traditional markets were stronger. Nasdaq 100 futures gained 0.43%, while S&P 500 futures rose 0.35% as investors recovered some of Monday’s AI-driven losses. The Dollar Index increased 0.17%, making the latest decline largely a crypto-specific move. That was the opposite of the previous session, when crypto was the only major asset class trading higher.
Derivatives Point to Cautious Positioning
Crypto futures remain evenly positioned: The long-short taker-volume ratio remained finely balanced ahead of the Senate vote. Aggregate open interest slipped 1% over 24 hours to $135 billion, while futures volume jumped 54% to $207 billion. The combination indicates that traders are reducing existing positions faster than new exposure is being added.
Bitcoin futures reflect selling: Marex analysts said taker selling accompanied bitcoin’s overnight decline toward $77,000. Takers execute against existing liquidity at available market prices. Bitcoin futures open interest remains below 680,000 BTC, highlighting subdued demand for leveraged exposure.
Major-token OI continues to decline: Open interest in ether, Solana and XRP futures is also trending lower. Solana’s futures open interest recently fell to 58.81 million tokens, its lowest level since May, according to CoinGlass.
Negative CVD favors sellers: Major tokens recorded negative 24-hour open-interest-adjusted cumulative volume delta readings. The data suggests bearish pressure is influencing the market, with more short-side activity being executed through market orders instead of passive limit orders.
XLM continues to outperform: Stellar’s XLM has diverged from the broader market. Its spot price is up 4% over 24 hours, while futures open interest has increased more than 10% to 1 billion XLM. Such a combination is generally interpreted as long accumulation or bullish positioning. Annualized funding rates remain around 10%, showing demand for upside exposure without clear signs of excessive leverage.
Funding remains broadly positive: Most major cryptocurrencies, including bitcoin, continue to have moderately positive funding rates. Ether and SOL are exceptions, with mildly negative readings that indicate a modest short bias. If the CLARITY Act procedural vote succeeds, those short positions could potentially add fuel to a short squeeze. TRX remains an outlier with deeply negative open interest, continuing a trend seen in recent days.
Implied volatility edges upward: Bitcoin and ether 30-day implied-volatility indexes, BVIV and EVIV, have moved higher but remain near recent levels and significantly below their February and June peaks. The increase points to somewhat greater demand for hedging ahead of the Senate vote.
Options favor calls: Deribit’s implied-volatility curve remains upward sloping and within a normal range, suggesting traders are expecting relatively controlled conditions over the next 24 hours rather than an extreme volatility event. Higher-strike calls dominate bitcoin’s five most-traded options, while ether options show a similar bias.
Token Market Weakens
Filecoin’s 27% Monday rally has quickly reversed. The move had been accompanied by a 70% increase in futures open interest, but FIL has since dropped 5.1% since midnight UTC to $0.89 and is down 13% over 24 hours. Futures open interest has also fallen 23% to $106 million.
AI and computing tokens suffered another weak session after Anthropic CEO Dario Amodei called for slower AI development over the weekend. Internet Computer led the losses, dropping 6% to $2.58. Theta Network declined 4.5%, while NEAR Protocol fell 3.7%.
Uniswap was one of the few DeFi tokens to hold its ground, rising 1% to $6.60 and gaining 4.8% over 24 hours. The token remains among the DeFi assets particularly exposed to the outcome of Tuesday’s vote.
Venice Token also extended its pullback. After reaching a record high last Wednesday following a token burn and short covering rather than sustained buying, VVV has now retraced about 20%. It fell another 4.5% Tuesday to $22.05.
Monero and Zcash continued their divergent performance for a fifth consecutive session. XMR gained 0.37% to $516.41, while ZEC declined 1.87% to $1,141.
Cosmos and XDC Network each added 1.4%, joining a relatively small group of gainers. Stellar was nearly flat on the day but remained 4.3% higher over the previous 24 hours.
The CoinMarketCap Altcoin Season Index stood at 36/100, firmly within neutral territory after last week’s reading reached 51/100 before momentum faded.
