Probability of US Crypto Bill on Polymarket Drops to 17%: Why Did Bitcoin Retrace?
Bitcoin gave back its Monday gains as the probability of the CLARITY Act being enacted this year dropped from 34% to 17% on Polymarket.
Bitcoin declined on Tuesday amid increasing political uncertainty surrounding the CLARITY Act, aimed at regulating the crypto market in the US. According to CoinDesk data, the Bitcoin price fell from Monday’s high of $79,427 to $76,862. As a result, the cryptocurrency has dropped 1.7% since midnight and is down 6.6% from its September peak of $82,284.
The odds on Polymarket for the bill to be passed and signed this year moved in tandem with Bitcoin’s retracement. The odds, which rose to 34% on Monday, fell to 17% on Tuesday after Democrats prepared a counter-proposal following their rejection of the draft submitted by Republican negotiators. The main disagreement between the parties reportedly centers more on ethical provisions regarding the crypto holdings of public officials rather than market regulations.
Senate Vote Could Determine the Direction of the Crypto Market
The Senate is scheduled to vote at 14:15 ET on the procedure to bring the bill to a vote. The progress of the bill could pave the way for creating clearer rules regarding which US agency oversees which crypto activities. It is noted that if the vote fails, regulation regarding market structure could be delayed until after the midterm elections in November.
Selling pressure spread across the broader market. 92 of the 100 assets in the CoinDesk 100 index lost value, with the index retreating 1.6%. Ether fell 1.6% to $2,474.76, while Solana dropped 2% to $100.43.
Total open interest in crypto futures decreased by 1% in the last 24 hours to $135 billion, while trading volume rose 54% to $207 billion. This picture indicated that the rate of closing existing positions outpaced the opening of new ones.
Sell-side market orders were prominent in the decline of Bitcoin futures. Open interest in Bitcoin futures also remained below 680,000 BTC. A similar decline was seen in Ether, Solana, and XRP futures; open interest in Solana fell to its lowest level since May.
A different picture emerged in traditional markets. Nasdaq 100 futures rose 0.43%, S&P 500 futures climbed 0.35%, and the dollar index increased 0.17%. This situation showed that Tuesday’s sell-off coincided with developments specific to crypto assets rather than overall risk appetite.