Bitcoin (BTC) fell 3.2% after a procedural vote on the Clarity Act failed to reach the required threshold in the U.S. Senate. The bill received 49 votes in favor, leaving it 11 votes short of the required level to advance to the main floor. 

It has therefore been shelved for the remainder of the year, removing a potentially important regulatory catalyst for the crypto market.

In this article, Mynattaro’s brokers provide a clear and detailed overview of the subject.

The reaction was broad, with most major cryptocurrencies declining sharply before beginning to recover. However, the market had already assigned a relatively low probability to the bill passing. Prediction-market odds had fallen substantially over recent months before recovering toward 30% ahead of the vote. 

This suggests part of the regulatory disappointment may already be priced into BTC.

Bitcoin ETF Outflows Signal Weakening Demand

The bigger short-term concern is deteriorating capital flows. Bitcoin ETFs recorded approximately $450 million in net outflows, marking the largest single-day withdrawal since late June.

ETF flows are particularly important because spot Bitcoin ETFs provide traditional investors with direct exposure to BTC. Strong inflows can reinforce demand, while large redemptions can increase selling pressure. The $450 million outflow therefore represents a meaningful deterioration in the short-term supply-demand balance.

Meanwhile, nearly $600 million in leveraged long positions were liquidated across the crypto market. Ethereum (ETH) accounted for much of that total after falling approximately 5%. Bitcoin’s smaller 3.2% decline nevertheless demonstrates how leverage can amplify relatively modest spot-market moves.

The combination of ETF outflows, long liquidations, and weaker risk appetite can create a feedback loop in which falling prices trigger liquidations, which generate additional selling. The key question is whether this deleveraging phase is nearing exhaustion.

Federal Reserve Policy Could Amplify BTC Volatility

The next major catalyst is the Federal Reserve interest-rate decision. Current expectations point toward a 25-basis-point rate hike, while inflation is running at approximately 3.4%, nearly twice the central bank’s 2% target.

For Bitcoin, the accompanying forward guidance could matter more than the rate decision itself. A hawkish stance suggesting further tightening could keep pressure on risk assets, while guidance indicating that another increase could be delayed until 2027 could improve liquidity expectations.

The probability of another rate increase in December is currently above 70%. Any significant deviation from those expectations could therefore trigger a sharp repricing across financial markets.

Bitcoin may also experience elevated intraday volatility around the decision and press conference. A brief move below support followed by an immediate recovery would have a very different technical implication from a sustained daily close beneath it.

BTC’s 200-Day EMA Is the Critical Technical Level

Bitcoin has invalidated its bullish flag pattern, increasing the probability of a retest of the 200-day exponential moving average (EMA) near $73,000.

The $73,000 level is now the critical technical battleground. If buyers defend the 200-day EMA, the decline could become a liquidity sweep rather than a full trend reversal. A sharp recovery from this zone could also trap newly established short positions, creating additional buying pressure through short covering.

If BTC successfully holds and reclaims the EMA, the next major upside target would be approximately $85,000. From $73,000, that would represent a potential gain of roughly 16.4%.

Breakdown Below $73,000 Could Expose $66,000

The bearish scenario becomes stronger if Bitcoin decisively breaks below $73,000 and fails to reclaim the 200-day EMA.

A confirmed breakdown would weaken the medium-term technical structure and could trigger additional selling from technical traders and leveraged participants. The next major downside target would then be approximately $66,000.

A decline from $73,000 to $66,000 represents approximately 9.6%, while a move from $85,000 to $66,000 would amount to a correction of roughly 22.4%.

The distinction between a false breakdown and a confirmed breakdown will therefore be critical. An intraday breach followed by a rapid recovery could trap bears and produce a bullish reversal. 

Sustained trading below the 200-day EMA, particularly alongside high volume, continued ETF outflows, and rising liquidations, would provide stronger evidence of a bearish structural shift.

Conclusion

Bitcoin is facing a convergence of regulatory, macroeconomic, and technical pressures. The failed Clarity Act vote removes a potential catalyst, while $450 million in ETF outflows and nearly $600 million in long liquidations highlight weakening short-term demand. 

At the same time, 3.4% inflation, a potential 25-basis-point rate hike, and above-70% expectations for another increase could keep volatility elevated. Technically, the $73,000 200-day EMA is the decisive level. Holding it could reopen the path toward $85,000, while a confirmed breakdown could expose BTC to $66,000.