Bitcoin slips below $80K ahead of CLARITY Act hearing; can crypto regulation revive market sentiment?

The cryptocurrency market turned cautious on Thursday ahead of the scheduled committee vote on the U.S. CLARITY Act later today, with major digital assets witnessing broad-based selling during Asian trading hours amid regulatory uncertainty and macroeconomic pressure.

Bitcoin, the world's largest cryptocurrency, slipped below the crucial $80,000 mark and was trading near $79,334 at the time of writing, down 1.54% over the past 24 hours, according to CoinMarketCap data. The decline came after stronger-than-expected U.S. inflation data renewed concerns over prolonged monetary tightening by the Federal Reserve and triggered weakness across risk assets globally.

The broader crypto market also remained under pressure. Ethereum, the world's second largest cryptocurrency,  fell 2.2% to around $2,253, while other major digital assets such as XRP, Tether and BNB declined nearly 1% each.

Despite the current weakness, experts broadly believe that a transparent regulatory framework in the U.S. could act as a long-term positive trigger for the crypto market by reducing uncertainty, encouraging institutional capital inflows and improving the credibility of digital assets globally.

Market participants are now closely watching developments around the proposed CLARITY Act, which is expected to define the jurisdiction of U.S. financial regulators over digital assets.

CLARITY Act a pivotal moment for global crypto regulation, say experts

Analysts believe the legislation could emerge as a landmark framework for the global crypto ecosystem by reducing regulatory ambiguity and boosting institutional participation.

According to Sumit Gupta, co Founder at CoinDCX, the CLARITY Act represents a pivotal moment for global crypto regulation. He said a comprehensive U.S. market structure law could accelerate regulatory convergence across countries, including India, where policymakers have so far lacked a clear global benchmark for crypto oversight.

“The discussion on conflict-of-interest provisions is a healthy signal that US hopes to build its crypto regulation on institutional integrity. Markets ultimately run on trust. Any legislation that advances both regulatory clarity and ethical guardrails strengthens the long-term credibility of the entire asset class,” he said.

Nischal Shetty, founder of WazirX, said the legislation is important because it seeks to resolve the long-standing overlap between the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) regarding digital asset oversight.

“The CLARITY Act matters because it ends something specific: the situation where two US regulators, the SEC and the CFTC, both claimed authority over the same assets without a clear boundary between them,” he said.

According to him, assigning spot market regulation to the CFTC while limiting the SEC’s role to fundraising activities could significantly reduce compliance uncertainty for exchanges and institutional investors. He added that the move could also influence India’s evolving crypto regulatory framework, where oversight currently remains fragmented among multiple agencies.

Mohit Kumar, Head of Markets Research at Delta Exchange, said the CLARITY Act could become a major step toward integrating crypto assets into mainstream finance by clearly defining regulatory responsibilities for digital assets and stablecoins.

He added that while traditional banking institutions remain cautious about stablecoins potentially competing with bank deposits and payment systems, committee approval of the bill could still support a near-term rally in cryptocurrencies.

Full passage of the legislation, according to Kumar, may accelerate institutional adoption, ETF participation and improve overall market liquidity.

Echoing similar views, Raj Karkara, COO, ZebPay said the markup of the CLARITY Act signals the continued maturation of the global digital asset ecosystem. He noted that clear and balanced regulation is becoming increasingly critical for fostering institutional confidence, supporting responsible innovation and enabling broader mainstream adoption of blockchain-based financial systems.

Can Bitcoin reclaim key resistance levels?

From a market perspective, analysts believe the bill could become an important near-term catalyst for crypto price action.

Akshat Siddhant, Lead quant analyst, Mudrex said Bitcoin’s decline toward the $79,000 zone was driven by rising inflation concerns after U.S. producer price inflation climbed to its highest level since 2022. He added that markets are also tracking geopolitical and trade developments between the U.S. and China for broader directional cues.

According to Siddhant, the CLARITY Act currently carries around a 65% probability of approval, and a positive outcome could help Bitcoin reclaim the $83,000 level and potentially move toward $85,000. However, rejection of the bill may push the cryptocurrency below the $78,500 support zone, intensifying downside pressure.

Meanwhile, Avinash Shekhar, Co-Founder & CEO, Pi42 said Bitcoin’s failure to sustain momentum above key resistance zones has increased short-term bearish sentiment in the market. He noted that investors remain cautious as macroeconomic uncertainty and profit-booking continue to weigh on sentiment.

At the same time, he said traders are closely monitoring U.S. crypto legislation for signs of regulatory clarity that could improve long-term confidence in the asset class.