Bitcoin Plunges Below $70,000

Bitcoin rose toward $82,000 in late September, approaching its highest level since January amid renewed institutional demand. US spot Bitcoin ETFs recorded $433 million in net inflows on September 18, led by Fidelity and BlackRock, reversing heavy outflows earlier in the week. Still, the funds ended the week with only $6.2 million in net inflows. The gain came despite the Federal Reserve raising rates by 25 bps last week and signaling further tightening, while US Treasury yields remained elevated. The divergence from the broader macro backdrop has raised interest in Bitcoin as a potential hedge against market and economic risks. Meanwhile, the Senate failed to advance the Clarity Act on September 15, while the SEC and CFTC moved ahead with crypto rulemaking under existing authority. The CFTC also submitted a crypto-market proposal to the White House for review.

Bitcoin fell to about $75,000 in mid-September, near a more than three-week low as investors reacted to the Senate’s failure to advance a major US cryptocurrency regulation bill. The Clarity Act failed to advance after a 49-50 procedural vote, falling short of the 60 votes required, and would have placed primary oversight of digital assets with the Commodity Futures Trading Commission. The setback leaves uncertainty around the regulatory framework for the crypto industry, with potential implications for business investment, the location of crypto firms and institutional participation in the US, analysts said. Bitcoin has also faced pressure from a less supportive macro backdrop, as higher interest rates and tighter liquidity tend to weigh on demand for speculative assets. The Federal Reserve’s policy decision is due later today, with markets widely expecting the central bank to deliver its first rate hike in around three years.

Bitcoin surged above $80,000 on Tuesday, reaching its highest level since May and bringing its gains since mid-August to about 28%. The move was fueled renewed interest in the “debasement trade” after the US Treasury announced plans to increase purchases of longer-dated government bonds, weighing on long-term yields and the dollar. US spot Bitcoin ETFs also recorded their strongest weekly inflows in 10 months, attracting $1.92 billion, while expectations of continued support for cryptocurrency from the Trump administration added to demand. The advance triggered a major short squeeze, with about $7.2 billion in leveraged bearish crypto positions liquidated last week. Despite the rebound, Bitcoin remains well below its record high of around $126,000 reached last October, while analysts caution that the move may be driven largely by short covering rather than sustained demand.