Bitcoin falls below $96,000: Market awaits breakthrough in US crypto regulation bill

The key cryptocurrency market regulation legislation process in the United States has encountered obstacles, as the Senate Banking Committee postponed the review of the “CLARITY Act.” The market responded swiftly, with Bitcoin prices falling back below $96,000, ending the rebound that started earlier this week around $90,000.

Market Volatility

This week, the crypto market has been like riding a roller coaster. Bitcoin prices once rebounded strongly from around $90,000, reaching above $97,000 on Wednesday, hitting a two-month high. The driving forces behind this rebound are multifaceted. The latest US Consumer Price Index (CPI) data shows signs of cooling inflation, with core CPI dropping from 2.7% to 2.6%, boosting market expectations of further Fed rate cuts in 2026.

US spot Bitcoin ETFs also demonstrated strong capital attraction, recording a total net inflow of $1.2 billion over the past five trading days, indicating continued institutional interest. However, this optimistic momentum was abruptly halted on Thursday. News of the “CLARITY Act” being shelved during Senate review caused market sentiment to turn quickly, with Bitcoin price turning downward and breaking below the key psychological level of $96,000.

Bill Controversy

What exactly is the “CLARITY Act” that triggered market turbulence? Why is its progress so closely watched? The bill aims to establish the first comprehensive legal framework for the US digital asset market, with one of its core goals being to clarify the regulatory jurisdiction between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). In simple terms, it seeks to define which tokens are securities and which should be considered commodities, ending the long-standing regulatory uncertainty that has troubled the industry.

The delay in bill review was not unexpected. There are clear disagreements within the industry regarding the draft content, which directly led to the suspension of the review process. Major points of contention include: provisions in the draft bill that are seen as effectively banning tokenized stocks; strict restrictions on rewards or yield mechanisms for stablecoins, potentially “suffocating” innovation in this area; requirements for DeFi (Decentralized Finance) platforms to obtain users’ financial records, raising concerns about privacy and decentralization. Additionally, there is heated debate over whether public officials (including President Donald Trump) can profit from crypto assets while in office. These disagreements led to the withdrawal of key supporters and ultimately caused the Senate to postpone the scheduled review.

Multiple Factors

Although the stagnation of the “CLARITY Act” is the direct trigger for this market adjustment, price fluctuations in the crypto market have always been the result of multiple factors working together.

Besides regulatory developments, the macroeconomic environment continues to exert significant influence. The Federal Reserve has cut interest rates three times since September 2025, with the current federal funds rate maintained between 3.50% and 3.75%. This accommodative monetary policy environment generally favors assets like Bitcoin, seen as hedges against inflation and currency devaluation. The global M2 broad money supply continues to rise, providing ample liquidity to the market.

Geopolitical tensions are also an important factor. Earlier this week, concerns about escalating tensions in the Middle East may have prompted some funds to view Bitcoin as a safe-haven asset, supporting the price rebound. As tensions eased, this safe-haven demand diminished, and combined with regulatory bearish news, it intensified the price correction.

Market Outlook

From a technical analysis perspective, Bitcoin currently has a strong buy support zone around $84,000, with a short-term key resistance near $98,000.

Market analysis firm Tiger Research, in its Q1 2026 Bitcoin valuation report, states that despite short-term adjustments, the medium-term outlook remains optimistic. The firm forecasts a target price of $185,500 for Bitcoin in Q1 2026, representing over 100% potential upside from current levels.

According to Gate market data, Bitcoin’s current price is $95,737.5, with a 24-hour trading volume of $1.13B and a market capitalization of $1.9T, accounting for 56.44% of the entire crypto market. Its all-time high was $126,080, and the lowest was $67.81.

On-chain indicators show that the market’s Fear & Greed Index is currently at 54, in the “Neutral” zone, a significant improvement from the “Extreme Fear” state in mid-December 2025. Key valuation metrics like MVRV-Z have exited the undervalued zone and entered a range that could generate profits.

Regulatory uncertainty remains a primary short-term drag on market sentiment, but the ongoing macro liquidity injection and potential institutional inflows provide structural support for the market’s medium to long-term development.

As of January 16, Bitcoin’s trading price on Gate was approximately $95,737.5, down slightly by 0.6% for the day. Market focus remains on Washington’s Capitol Hill. The Senate has postponed the review of the “CLARITY Act” to the last week of January, with the White House stating that this delay is “an opportunity for all parties to sit down and resolve differences.” When asked whether Bitcoin can return to the $100,000 level, a digital asset director at a Wall Street analysis firm calmly pointed out: “This is not just a numbers game; it’s a gauge of the integration process between traditional finance and the rules of the crypto world.”