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Why Is Bitcoin Down Today?
Key Points
Bitcoin was down 4% Tuesday morning as investors weighed a Senate vote on crypto legislation and a sharp rise in oil prices and bond yields.
The CLARITY Act needs 60 Senate votes to advance, but reports indicated it may not have the necessary support amid Democratic concerns.
For Bitcoin investors, the Federal Reserve's decision and Bitcoin's reaction matter more than one rough morning.
Bitcoin (CRYPTO: BTC) is down more than 4% since 4:30 p.m. ET yesterday, on Tuesday, Sept. 15, as investors worried about both crypto regulation and tighter financial conditions.
The Senate vote could decide whether crypto legislation advances
The CLARITY Act, which would create a regulatory framework for digital assets, faces a procedural Senate vote today. The bill needs 60 votes to advance, but reports indicated it may lack the necessary support amid concerns from Senate Democrats.
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Oil above $109 and a 5% Treasury yield added to selling pressure
Still, I wouldn't pin the entire decline on Washington. Bitcoin is sensitive to changes in the bond market, and as oil prices continue to climb, the 10-year Treasury yield topped 5%, reaching its highest level in nearly 20 years. Investors appear fairly convinced that a rate hike is incoming from the Federal Reserve.
Typically, when bond yields rise, volatile assets become a tougher sell, as investors opt for a healthy, safe return.
The bottom line
I wouldn't get too caught up in any single short-term moves, but the next week will be a telling one for Bitcoin. To my mind, the Clarity Act is less interesting than what the Fed decides and how Bitcoin reacts.
Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.