Bitcoin stalled and CLARITY Act on the ropes

Bitcoin remains in consolidation after the August surge

The excitement of August around bitcoin has given way to a sense of caution. Scott Bessent has not followed up on his bond market interventions with any further moves, leaving cryptocurrencies becalmed as the focus shifts to what the Fed might or might not do in August. Notably however bitcoin has avoided the heavy losses that hit gold so hard in the last week of August due to the strengthening dollar, suggesting that revived inflows into cryptocurrencies are providing support for the time being.

CLARITY ACT runs out of road

It seems highly likely that the CLARITY Act now faces legislative limbo. Only four days of voting are left before US representatives leave on 17 September, with a fast-diminishing chance of the two chambers agreeing anything in the time left. Faced with this, the act is now on hold until the next session provides the chance of a fresh start, but with the Democrats fancying their chances of success in the mid-terms, they will surely relish the chance to disrupt one of the most widely-heralded planks of the Republican agenda.

What we’re watching – US inflation key for Fed move

All eyes are on this week’s price growth out of the US, which are the curtain-raiser for the FOMC decision in the following week. While the prospect of a rate increase has unsettled markets, it is rapidly becoming priced in. What matters for bitcoin traders and investors will be the question of whether this is the first move in a cycle or a one-off. Given the next meeting falls immediately before the mid-terms, there is sense that the window for a rate increase is relatively narrow. It has not been surprising to see bitcoin pause for breath after its huge August gains, and bullish investors will take heart from the fact that it has been able to hold on to almost all the August bounce.