The progress of key cryptocurrency market regulation in the United States has hit a snag, as the Senate Banking Committee postponed its review of the CLARITY Act. The market reacted swiftly: the Bitcoin price dropped below $96,000, ending the rally that started earlier this week near $90,000.
Market Volatility
This week, the crypto market has felt like a roller coaster. Bitcoin staged a strong rebound from around $90,000, surging past $97,000 on Wednesday to hit a two-month high. Multiple factors fueled this rally. The latest US Consumer Price Index (CPI) data showed signs of cooling inflation, with core CPI dropping from 2.7% to 2.6%. This boosted expectations that the Federal Reserve might cut rates further in 2026.
US spot Bitcoin ETFs also demonstrated strong inflows, recording a net total of $1.2 billion over the past five trading days. This indicates sustained institutional interest in accumulating Bitcoin. However, this wave of optimism came to an abrupt halt on Thursday. News of the CLARITY Act’s stalled review in the Senate quickly shifted market sentiment, sending Bitcoin below the crucial $96,000 psychological level.
The Bill’s Controversy
What exactly is the CLARITY Act that triggered such market turbulence, and why is its progress so closely watched? The act aims to establish the first comprehensive legal framework for the US digital asset market. One of its core objectives is to clarify regulatory jurisdiction between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). In short, it seeks to determine which tokens should be classified as securities and which as commodities, ending the regulatory uncertainty that has long plagued the industry.
The postponement of the bill’s review wasn’t entirely unexpected. Significant divisions within the industry over the draft’s contents directly led to the interruption of the legislative process. The main points of contention focus on several key areas: the draft’s provisions are said to effectively ban tokenized stocks; it imposes strict limits on rewards and yield mechanisms for stablecoins, potentially "stifling" innovation in this sector. It also requires DeFi (decentralized finance) platforms to obtain users’ financial records, raising concerns about privacy and the essence of decentralization. Meanwhile, there is heated debate over whether public officials—including President Donald Trump—can profit from crypto assets while in office. These disagreements prompted key supporters to withdraw, ultimately forcing the Senate to delay the scheduled review.
Multiple Factors at Play
While the CLARITY Act’s delay is the immediate catalyst for this market adjustment, crypto price swings are always the result of multiple factors.
Beyond regulatory developments, the broader macroeconomic environment continues to play a major role. Since September 2025, the Federal Reserve has cut interest rates three times, with the federal funds rate now in the 3.50% to 3.75% range. This accommodative monetary policy typically benefits assets like Bitcoin, which are seen as hedges against inflation and currency depreciation. The M2 money supply in major global economies continues to rise, providing ample liquidity for the market.
Geopolitical tensions are another factor that cannot be ignored. Earlier this week, concerns over escalating tensions in the Middle East may have prompted some investors to treat Bitcoin as a safe-haven asset, fueling the price rally. As those tensions eased, demand for safe havens diminished, and when combined with negative regulatory news, this accelerated the price correction.
Outlook
From a technical analysis perspective, Bitcoin has established a strong support zone near $84,000, with short-term resistance around $98,000.
Market research firm Tiger Research noted in its Q1 2026 Bitcoin valuation report that while there may be short-term corrections, the medium-term outlook remains bullish. The firm forecasts a Q1 2026 target price for Bitcoin of $185,500, suggesting more than 100% upside from current levels.
According to Gate market data, Bitcoin is currently priced at $95,737.5, with a 24-hour trading volume of $1.13B and a market capitalization of $1.9T, accounting for 56.44% of the entire cryptocurrency market. The all-time high stands at $126,080, with a low of $67.81.
On-chain indicators show the Fear & Greed Index at 54, in the "neutral" zone—a significant improvement from the "extreme fear" seen in mid-December 2025. Key valuation metrics like MVRV-Z have exited the undervalued range and entered territory where profits are possible.
Regulatory uncertainty remains the main factor suppressing market sentiment in the short term. However, ongoing macro liquidity injections and potential institutional inflows are providing structural support for the market’s medium- to long-term development.
As of January 16, Bitcoin was trading on Gate at approximately $95,737.5, down 0.6% for the day. The market’s attention remains fixed on Capitol Hill in Washington. The Senate has postponed the CLARITY Act’s review to the last week of January. The White House commented that this delay "is an opportunity for all parties to sit down and resolve their differences." When asked whether Bitcoin could reclaim the $100,000 mark, the head of digital assets at a Wall Street analytics firm responded calmly: "This isn’t just a numbers game—it’s a barometer of how traditional finance and crypto rules are converging."
