Crypto Volatility to Stay High as Fed, CLARITY Failure Weigh on Markets

Crypto volatility is likely to remain elevated as investors weigh the Federal Reserve's monetary policy decision and the CLARITY Act's failure to advance in a key Senate procedural vote, according to Simon-Peter Massabni, head of business development at XS.com.

Bitcoin (CRYPTO: $BTC) fell more than 2.5% to around $75,600 on Tuesday, while Ethereum (CRYPTO: $ETH), Solana (CRYPTO: $SOL), Cardano (CRYPTO: $ADA) and Dogecoin (CRYPTO: $DOGE) also traded lower.

The Senate's failure to advance the CLARITY Act was a major source of market uncertainty. Senators voted 49-50 on Tuesday, falling well short of the 60 votes required to move the legislation forward. The bill aims to establish a federal framework for digital assets and clarify the regulatory roles of the Securities and Exchange Commission and Commodity Futures Trading Commission.

The broad decline also came as investors reduced exposure to riskier assets amid higher U.S. Treasury yields. The 10-year Treasury yield briefly moved above 5%, significantly "increasing the opportunity cost of holding non-yielding assets, including much of the cryptocurrency market."

At the same time, oil prices above $100 a barrel, geopolitical tensions and the prospect of tighter monetary policy are adding to the pressure on risk assets. "Volatility could remain elevated," Massabni said, pointing to the combination of monetary policy, regulation and geopolitical risks facing the market.