CLARITY falls short as Fed hikes

Both events we flagged this week have now played out. The CLARITY Act vote failed Tuesday, and the Fed hiked Wednesday. Here is what happened and what it means for BTC, ETH, and XRP.

The Clarity Act vote failed

The Senate's Tuesday procedural vote on the CLARITY Act came up short, and with it, the market's best shot at US crypto legislation this year.

The Senate's cloture vote fell short on a 49–50 tally, below the 60 needed to open debate. The bill would have split SEC/CFTC oversight of digital assets and given Bitcoin and Ethereum clear commodity status. Democrats held out over ethics provisions. Bitcoin fell close to 4%, Ethereum lost more than 6%, and XRP dropped further still, given how much of its recent rally leaned on this outcome.

SEC/CFTC joint guidance stays in place but can be rewritten without Congress. With passage odds falling into the high teens, formal legislation before the end of the year now looks unlikely.

The Fed hiked, and signalled more to come

The FOMC delivered its first rate hike since 2023 and a hawkish press conference, a combination that weighed on risk assets more than the rate move itself.

The Fed raised its target range 25 basis points to 3.75%–4.00%, a unanimous decision and the first hike in three years. The move was heavily priced in beforehand, with markets assigning a greater than 90% probability, which limited the initial reaction. The bigger driver was the dot plot: 16 of 18 participants projected a year-end rate above the midpoint of the current target range, and Chair Warsh said inflation “is too high, and has been for too long.” Equities pared early gains into the close, led down by financials.

What it means for BTC, ETH and XRP

The three majors did not move together. Bitcoin held a narrow band near the mid-US$75,000s (A$105,750s), consistent with a priced-in outcome. Ethereum slipped further to around US$2,390-US$2,400 (A$3,370-A$3,384), mostly carrying over from Tuesday's CLARITY Act move rather than a fresh Fed reaction. XRP remained the clear underperformer, down 8-11% to around US$1.27 (A$1.79), reflecting two separate shocks landing in the same 48 hours rather than the Fed hitting it harder than BTC or ETH. Total market cap sat near US$2.67 trillion (A$3.76 trillion), down around 1.8%.

This is general market commentary, not personal financial or trading advice. If you want to chat further about market conditions, feel free to reach out to me at [email protected].

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