Bitcoin Rally Fades as Polymarket Signals Lower CLARITY Act Passage Chances

Bitcoin Pulls Back as CLARITY Act Hopes Weaken

Bitcoin dropped 1.7% since midnight UTC to $76,862 on Tuesday, surrendering Monday’s late gains as Polymarket traders sharply lowered the odds of the U.S. CLARITY Act becoming law this year.

BTC climbed from $75,806.11 to $79,427 on Monday before reversing lower. At $76,862, bitcoin was 6.6% below its Sept. 4 monthly peak of $82,284. Ether declined 1.6% to $2,474.76, while Solana fell 2% to $100.43.

Polymarket’s probability of the CLARITY Act being signed into law in 2026 climbed to 34% on Monday but later dropped to 17%. The change followed reports that Democrats had prepared a counterproposal after turning down a revised Republican draft circulated Sunday.

The central disagreement involves ethics provisions related to crypto holdings by public officials, rather than the legislation’s market-structure measures.

The Senate is set to vote at 2:15 p.m. ET on whether to invoke cloture and advance the bill. A successful vote would bring the crypto industry closer to having a defined U.S. framework for regulatory oversight. If the measure fails, lawmakers could postpone market-structure legislation until after the November midterm elections.

The selling extended throughout the crypto market, with 92 of the CoinDesk 100 constituents declining and the index falling 1.6%.

Traditional markets posted modest gains instead. Nasdaq 100 futures advanced 0.43%, while S&P 500 futures added 0.35% as some of Monday’s AI-led declines were reversed. The Dollar Index rose 0.17%, reinforcing the view that Tuesday’s weakness was largely confined to crypto. This marked a reversal from the previous session, when digital assets were the only major asset class in positive territory.

Futures Market Signals Caution

Open interest slips as volume rises: The long-short taker-volume ratio across crypto futures remained almost evenly balanced before the Senate vote. Aggregate open interest fell 1% over 24 hours to $135 billion, while trading volume jumped 54% to $207 billion. This suggests market participants are closing existing positions more quickly than they are opening new ones.

Bitcoin futures face taker selling: Marex analysts said bitcoin’s overnight move toward $77,000 was accompanied by taker selling. Takers remove liquidity by executing orders at available market prices. Bitcoin futures open interest remains below 680,000 BTC, reflecting weak demand for leveraged exposure.

OI declines across major tokens: Ether, Solana and XRP futures have also seen open interest decline. Solana’s futures OI recently reached 58.81 million tokens, the lowest reading since May, according to CoinGlass.

Negative CVD reflects selling pressure: Major tokens recorded negative 24-hour open-interest-adjusted cumulative volume delta readings. The data points to bearish pressure, with a greater proportion of short-side trades being executed through market orders rather than passive limit orders.

XLM remains an outlier: Stellar’s XLM has continued to outperform. Its spot price is 4% higher over 24 hours, while futures open interest has risen more than 10% to 1 billion XLM. The combination is generally associated with long accumulation or bullish positioning. Annualized funding rates remain at 10%, showing demand for upside exposure without clear signs of excessive speculation.

Funding remains positive overall: Most major cryptocurrencies, including bitcoin, continue to record moderately positive funding rates. Ether and SOL have mildly negative readings, indicating a slight preference for short positions. If the CLARITY Act procedural vote succeeds, those shorts could potentially be squeezed. TRX remains an exception, with deeply negative open interest persisting in recent sessions.

Implied volatility edges up: Bitcoin and ether 30-day implied-volatility indexes, BVIV and EVIV, have increased but remain close to recent levels and well below the highs reached in February and June. The rise indicates slightly greater demand for protection ahead of the Senate vote.

Call options dominate activity: Deribit’s implied-volatility curve remains upward sloping and within a normal range, suggesting traders expect relatively stable conditions over the next 24 hours rather than a major volatility surge. Higher-strike calls feature prominently among bitcoin’s five most-traded options, with ether showing the same tendency.

Token Market Performance

Filecoin’s 27% Monday rally has quickly reversed. The move came alongside a 70% rise in futures open interest, but FIL has since fallen 5.1% since midnight UTC to $0.89 and is down 13% over 24 hours. Futures OI also dropped 23% to $106 million.

AI and computing tokens remained under pressure for a second session following Anthropic CEO Dario Amodei’s weekend call for slower AI development. Internet Computer fell 6% to $2.58, Theta Network declined 4.5%, and NEAR Protocol dropped 3.7%.

Uniswap was one of the few DeFi tokens to resist the broader sell-off. UNI gained 1% to $6.60 and was 4.8% higher over 24 hours, keeping it among the DeFi assets with significant exposure to Tuesday’s vote.

Venice Token extended its decline after reaching a record high last Wednesday following a token burn and short covering rather than sustained buying. VVV fell another 4.5% to $22.05 and has now retraced about 20%.

Monero and Zcash remained on opposite paths for a fifth consecutive session. XMR rose 0.37% to $516.41, while ZEC declined 1.87% to $1,141.

Cosmos and XDC Network each gained 1.4%, while Stellar was nearly unchanged on the day but remained 4.3% higher over the past 24 hours.

The CoinMarketCap Altcoin Season Index stood at 36/100, remaining in neutral territory after reaching 51/100 last week before losing momentum.