Bitcoin Is in Trouble

This has been a bad week for the crypto industry and I think it is going to get worse.

On Tuesday, the industry lost a key procedural vote in the Senate on the Clarity Act, legislation that would have established a regulatory framework for digital assets. Banks of every size from the largest money-center institutions to small regional lenders lobbied against the bill with JPMorgan CEO Jamie Dimon among the most vocal opponents. Their argument was that allowing crypto stablecoins to pay interest-like rewards could spark deposit flight from community banks and damage the local economies they serve. After the vote failure, odds of eventual passage this year on prediction markets fell sharply.

The next day, the Federal Reserve raised interest rates for the first time in several years. The vote was unanimous with no dissents as Fed Chair Kevin Warsh cited the lack of improvement in inflation data.

I believe these two developments will spark a pronounced selloff in Bitcoin. Here is why: