Bitcoin Rides Out Triple Threat of Rate Hikes and CLARITY Defeat to End

Bitcoin absorbed a punishing sequence of events this week—the collapse of the crypto industry’s most important legislative push, the Federal Reserve’s first rate increase in more than three years, and a matching move from the Bank of Japan—and still managed to close higher than where it started.

The cryptocurrency traded near $77,400 as of Thursday afternoon, according to CoinGecko data, roughly 0.8% above its level a week earlier. At one point during Friday’s session it touched $81,000, a two-week high, before settling back into the mid-to-upper $70,000s.

The week’s first blow came on Tuesday, when the CLARITY Act failed a procedural vote in the Senate. The bill, which would have settled the long-running jurisdictional dispute between the Securities and Exchange Commission and the Commodity Futures Trading Commission over which digital assets count as securities versus commodities, attracted only 49 votes—well short of the 60 needed to advance debate. A Republican ethics amendment aimed at limiting public officials’ digital asset conflicts of interest failed to secure the bipartisan support sponsors had hoped for.

The defeat sent shares of Coinbase and stablecoin issuer Circle down roughly 9% each, while bitcoin slid to about $75,000, its lowest level in three weeks. Yet the damage was contained. Analysts noted that traders had been repricing the legislative path for weeks, and the bill’s failure was widely viewed as a delay rather than a terminal setback. A motion to reconsider has already been filed, and several senators have publicly pledged to keep pushing for a version of the measure.

“The failure to advance the legislation delays a statutory framework, but it does not prevent the SEC and CFTC from continuing to provide guidance under existing authority, leaving an important regulatory pathway open,” said Joel Kruger, markets strategist at LMAX Group.

Less than 24 hours after the Senate vote, the Federal Reserve delivered its own test. Policymakers raised the benchmark rate by a quarter point to a target range of 3.75% to 4.00%, the first hike since July 2023. Futures markets had priced the move at roughly 90% or higher going into the meeting, which helps explain why bitcoin’s reaction was muted. The price dipped briefly toward $75,000, then recovered above $76,000 within minutes.

Fed Chair Kevin Warsh maintained a cautious tone on inflation, and a majority of FOMC participants signaled at least one more hike this year. Markets are currently pricing in three additional quarter-point increases by April 2027, which would take the federal funds rate to 4.50%–4.75%.

Then came Japan. On Thursday, the Bank of Japan lifted its policy rate by 25 basis points to 1.25%, the highest level in roughly 31 years, as officials responded to persistent inflation risks and progress toward the central bank’s 2% price target. The decision passed by a 7–2 vote.

The move revived concerns about the yen carry trade, in which investors borrow at low…