BTC Gives Up Gains as Polymarket Signals Weaker CLARITY Act Prospects

Bitcoin fell 1.7% to $76,862 since midnight UTC, reversing Monday’s rally as traders sharply reduced their expectations that the CLARITY Act will become law this year.

Bitcoin rose from $75,916.49 to $79,427 on Monday before retreating Tuesday. The pullback left BTC 6.6% below its September high of $82,284, reached on Sept. 4. Ether declined 1.6% to $2,474.76, while solana lost 2% to trade at $100.43.

The move lower came as Polymarket traders became less confident about the U.S. CLARITY Act. The probability of the bill being signed into law this year had climbed to 34% Monday but subsequently dropped to 17%.

The sharp reversal followed reports that Democrats had drafted a counterproposal after rejecting a revised Republican version circulated Sunday. Negotiations are reportedly centered on ethics provisions concerning cryptocurrency holdings by government officials, rather than the legislation’s market-structure rules.

The Senate is scheduled to vote at 2:15 p.m. ET on whether to invoke cloture and move the bill forward. The procedural vote requires 60 votes. Passage would represent a major step toward establishing a U.S. framework for determining regulatory authority over digital assets.

If the legislation fails to advance, lawmakers may not return to market-structure legislation until after the November midterm elections.

Selling pressure spread across the market, with 92 of the CoinDesk 100 constituents declining Tuesday. The index fell 1.6%.

U.S. Stocks Move in the Opposite Direction

Crypto’s weakness contrasted with gains in U.S. equity futures. Nasdaq 100 futures rose 0.43%, while S&P 500 futures gained 0.35% as some of Monday’s losses tied to AI stocks were recovered.

The Dollar Index increased 0.17% as well. The moves marked a reversal from the prior 24-hour period, when cryptocurrencies were the only major asset class posting gains.

Derivatives Show Reduced Risk Appetite

The crypto futures market remained relatively evenly positioned ahead of the Senate vote, with long and short taker volume showing little difference.

Aggregate open interest declined 1% over the past 24 hours to $135 billion, while trading volume jumped 54% to $207 billion. This suggests existing traders are unwinding positions faster than fresh capital is entering through new positions.

Marex analysts said bitcoin’s overnight decline toward $77,000 was accompanied by taker selling. These traders execute orders at available prices, taking liquidity from exchange order books.

Bitcoin futures open interest remained below 680,000 BTC, pointing to weak demand for leveraged exposure.

Open interest was also trending lower across ether, solana and XRP futures. Solana’s open interest stood at 58.81 million tokens, its lowest level since May, according to CoinGlass.

The 24-hour open-interest-adjusted cumulative volume delta remained negative across major tokens, signaling persistent bearish pressure. A negative reading means a larger portion of short activity is being executed through market orders instead of passive limit orders.

XLM Emerges as an Outlier

Stellar’s XLM moved against the broader market trend, with its spot price gaining 4% over 24 hours and futures open interest climbing more than 10% to 1 billion XLM.

The simultaneous increase in price and open interest is generally considered a sign of long accumulation. Annualized funding rates around 10% also showed demand for bullish exposure without clear evidence of excessive leverage.

Funding rates remained moderately positive for most major cryptocurrencies, including bitcoin. Ether and SOL recorded mildly negative rates, indicating a slight tilt toward short positioning.

That short exposure could create the conditions for a squeeze if the CLARITY Act vote passes. TRX remained an exception, with deeply negative open interest continuing in recent sessions.

Options Traders Prepare for the Vote

Bitcoin’s and ether’s 30-day implied-volatility indexes, BVIV and EVIV, moved higher but stayed close to recent levels and well below their February and June peaks.

The increase points to a modest rise in hedging demand as traders prepare for the Senate vote and its potential impact on near-term crypto prices.

Deribit’s implied-volatility curve remained normal and upward sloping, indicating that options traders were not pricing in an extreme volatility event over the next 24 hours.

Higher-strike calls accounted for most of the top-five bitcoin options by 24-hour volume, with ether showing a similar pattern.

Filecoin Leads the Decliners

Filecoin (FIL) was among the tokens giving back recent gains. The cryptocurrency surged 27% Monday as futures open interest jumped 70%, but both moves quickly reversed.

FIL declined 5.1% since midnight UTC to $0.89 and was down 13% over 24 hours. Open interest dropped 23% to $106 million.

AI and computing tokens also remained weak for a second consecutive session after Anthropic CEO Dario Amodei called over the weekend for slower AI development.

Internet Computer (ICP) fell 6% to $2.58, Theta Network dropped 4.5%, and NEAR Protocol declined 3.7%.

Uniswap (UNI) was a notable exception within DeFi, rising 1% to $6.60 and gaining 4.8% over 24 hours. Its performance remained closely watched because of the potential impact of the Senate vote on the broader crypto sector.

Venice Token (VVV) declined another 4.5% to $22.05 after retracing roughly 20% from last Wednesday’s record high. The earlier rally was attributed largely to a token burn and short covering rather than sustained buying.

Monero (XMR) gained 0.37% to $516.41, while Zcash (ZEC) fell 1.87% to $1,141, marking their fifth consecutive session of opposite moves.

Cosmos (ATOM) and XDC Network (XDC) each rose 1.4%. XLM was nearly flat Tuesday but remained 4.3% higher over 24 hours.

CoinMarketCap’s Altcoin Season Index stood at 36 out of 100, remaining in neutral territory after declining from 51 last week.