The US Senate moved closer to a key vote on the CLARITY Act, and crypto markets rallied as a result. Will the BTC and ETH rally continue for another week?
Improving crypto market fundamentals and positive media headlines contributed to another week of gains from Bitcoin (BTC) and Ether (ETH). On the market structure side, aggregate trading volumes for BTC topped $1.9 billion, while spot Bitcoin ETFs saw a 7-day inflow streak of $981 million.
On the regulatory front, progress toward a US Senate floor vote on the CLARITY Act accelerated. A strong advocacy push from pro-crypto legislators and Wall Street kept the upcoming deadlines front and center in major media throughout the week.
Polymarket odds of the CLARITY Act being signed into law in 2026 stand at 38%, while Kalshi projects a 62% chance of the legislation becoming law before Oct. 1, 2027.
Odds of the Clarity Act becoming law in 2026. Source: Polymarket
With Bitcoin price holding above $65,000 and ETH making a push toward $2,000, analysts’ confidence in a trend reversal grew. The Crypto Fear and Greed Index reflected this sentiment, rising to 37 (“Fear”) from a June low of 18 (“Extreme Fear”).
Does the budding trend change simply reflect the improving odds that the CLARITY Act will pass, or does the data support traders’ belief that the bottom is officially in?
CMC Fear & Greed Index. Source: CoinMarketCap
The Rundown
- Oil Surge Revives Inflation and Rate-Hike Fears
- Crypto Advocates Push CLARITY Act Closer to Senate Floor Vote
- What’s on the Radar?
Oil Surge Revives Inflation and Rate-Hike Fears
Renewed fighting in the US-Israeli war with Iran briefly sent Brent crude above $100 a barrel. Meanwhile, AI capital spending disclosed in July 23 earnings reports shocked markets, contributing to end-of-day losses in the Nasdaq, Dow and S&P 500.
Crypto flows followed, with the cumulative volume delta (daily candle) for BTC and Ether tilting toward sellers. Outflows totaled $728 million from Bitcoin and $847 million from ETH. The spot Bitcoin ETF inflow streak also snapped, with the funds shedding a combined $225 million on July 23.
Spot and futures aggregate Bitcoin cumulative volume delta. Source: Hyblock
Reflecting the energy price shock and its anticipated impact on US inflation, markets currently show a 38% likelihood that the US Federal Reserve will hike interest rates in July. Further out, markets have also begun to flag the possibility of two hikes in 2026 due to resurgent inflation.
Bitcoin price, funding rate, open interest. Source: Hyblock
The Fed will meet July 28-29, and crypto traders generally adjust their positioning ahead of the FOMC meeting. Bitcoin futures showed this de-risking as open interest declined 4.43% from a July 20 high of $22.13 billion to $21.15 billion.
Bitcoin’s price followed the OI decline as some traders exited profitable long positions near the $67,000 ceiling and others cut risk as oil prices topped $100 and rate hike odds soared from 12% to 38%.
Ultimately, rising oil prices have markets repricing toward a higher-for-longer view, with increasing chatter about a possible rate hike in July and a second in September or October. The Fed’s statement on inflation, or a hawkish tone at the press conference, could set the direction of markets this coming week. DXY’s response, along with aggregate open interest and funding in Bitcoin futures markets, will show how traders react.
Crypto Advocates Push CLARITY Closer to Senate Floor Vote
Crypto companies, Wall Street and pro-crypto legislators made a strong push, encouraging US Senators to find common ground on the CLARITY Act and move to a Senate floor vote before the August recess. The White House reportedly agreed to an initial ethics package, possibly addressing senators’ concerns related to President Trump’s involvement with the crypto industry.
Despite a strong push from Coinbase, the Crypto Council for Innovation and Blockchain Association, Charles Schwab, BlackRock and numerous others, the necessary support from Senate Democrats to secure the 60-vote procedural threshold is lacking. Even with updated bill text, Senate Democrats remain concerned over issues related to consumer protection, ethics and illegal financing.
Odds of the CLARITY Act becoming law in 2026 remain low but crypto markets reacted positively to the strong advocacy on Capitol Hill last week. Data from Velo shows DeFi-related tokens — one of the crypto subsectors that could benefit if the CLARITY Act becomes law — rallying over the last seven days.
DeFi tokens rally as CLARITY Act push gains steam. Source: Velo
Hyblock analysts also noted strength in Ondo’s (ONDO) price amid a 41% increase in open interest over three days.
DeFi, RWA tokens rally on CLARITY Act news. Source: X / Hyblock
The analysts said that while the RWA and DeFi-related token was “not getting enough attention relative to its growth in OI,” a “little CLARITY news may help.”
With less than nine days left before lawmakers start their August recess, crypto advocates have emphasized the importance of getting the legislation to President Trump’s desk before the mid-term elections.
What’s on the Radar?
- CME FedWatch still favors a hold on rates at this week’s FOMC meeting, but the market is reflecting a “higher-for-longer” plus energy shock scenario. The Fed’s decision and its Wednesday press conference could help determine which way markets move. DXY, oil and BTC open interest are the metrics to watch.
- AI capex concerns continue to set the tone for the Nasdaq, Dow and S&P 500, illustrating how investors are weighing euphoria over year-to-date AI and Big Tech stock returns against the cost of the buildout. Have crypto investors priced in the potential downside in equities if the AI trade begins to lose steam?
- President Trump rolled out a handful of new US tariffs on an assortment of countries, while the war in the Middle East is escalating and regional spillover risk remains high. These developments could raise inflation and slow growth. Will they undermine the current crypto market revival?
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