Bitcoin Loses Ground as Energy Shock Hits Markets, Clarity Act Faces New Doubts

Bitcoin came under renewed pressure on Thursday as investors weighed escalating geopolitical risks, higher interest rates, and uncertainty surrounding the future of crypto legislation. The downturn followed a rise in oil prices and a sharp decline in market expectations for the Clarity Act.

The cryptocurrency was trading near $65,500, slipping around 0.7% since the start of the UTC trading session and extending its retreat from Wednesday’s peak of approximately $66,700. The broader digital asset market also weakened, with Ethereum, Solana, XRP, and other major tokens moving lower.

Crude oil prices added to inflation concerns, with West Texas Intermediate futures on the NYMEX climbing to $88.60 per barrel, their highest level since June 11. The latest increase extends oil’s strong recovery from recent lows below $70 and raises the possibility of renewed inflationary pressure in the U.S. and global markets.

A sustained rise in energy prices could make it more difficult for central banks to cut interest rates, potentially keeping monetary policy tighter for longer and weighing on risk assets.

Bond markets reflected these shifting expectations, with the U.S. two-year Treasury yield rising to 4.31%, its highest level since February 2025. The benchmark 10-year Treasury yield also climbed to 4.66%, reaching its highest point since May, according to TradingView data.

Higher bond yields often reduce demand for assets such as Bitcoin and gold, as investors may prefer fixed-income investments that provide stronger returns. The increase in yields can encourage capital rotation away from speculative assets and into traditional financial instruments.

Geopolitical concerns also intensified after reports that the U.S. military deployed a B-1 long-range bomber on Tuesday to target locations linked to Iran’s Islamic Revolutionary Guard Corps. The move represented a significant escalation and fueled speculation that U.S. involvement could expand further.

Adding to market uncertainty, several key Senate Democrats criticized the latest draft of the Digital Asset Market Clarity Act, arguing that the legislation still lacks sufficient ethics provisions and other important safeguards.

The concerns quickly impacted prediction markets, with Polymarket traders lowering the implied probability of the Clarity Act passing from 46% to 38%.

Senate Republicans released the revised version of the bill on Wednesday, including an ethics provision supported by the White House and President Donald Trump. Senator Bernie Moreno described the measure as among the strongest ethics provisions ever proposed in U.S. legislation.