Crypto’s Regulatory Win Meets Macro Headwinds: What’s Next for Bitcoin?

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Crypto’s regulatory tailwind runs into a potential rates reset

What to know:

  • The Senate Banking Committee’s approval of the Clarity Act marks a major step toward a U.S. regulatory framework that could spur institutional use of tokenization, stablecoins and smart-contract platforms like Ethereum and Solana.
  • Despite the regulatory progress, higher inflation, rising energy prices and potential interest-rate increases are pressuring risk assets such as bitcoin.
  • A bullish inverse head-and-shoulders pattern in the two-year Treasury yield, now above 4.05%, suggests further gains that could reinforce expectations of higher-for-longer Fed policy and weigh further on crypto markets.

This is an excerpt from CoinDesk newsletter ‘Daybook.’ Sign up here, if you haven’t already.

While the recent Senate committee approval of the Clarity Act provides more certainty for the future of cryptocurrency, current market conditions – specifically inflation, interest rates, and what the Federal Reserve might do – are what’s impacting crypto prices right now.

The bill advanced out of committee with a vote of 15 to 9, bringing it one step closer to a vote by the full Senate. This progress is particularly important for companies working with tokenization, stablecoins, and smart contracts, as they’ve been seeking clear regulations before growing their businesses.

According to Kavi Jain, a senior research associate at Bitwise, the recent passage of the CLARITY Act by the Senate Banking Committee is a major step forward for crypto regulation in the US. He told CoinDesk that it brings the market closer to having a clear set of rules for digital assets.

Jain explained that the new, more defined rules should especially help platforms like Ethereum and Solana that deal with tokenization and smart contracts. This could encourage more involvement from traditional financial institutions in areas like stablecoins, tokenized funds, and digital capital markets.

The economic environment is becoming less favorable. Inflation in April was higher than expected, largely due to rising energy prices influenced by tensions related to the conflict in Iran, which are impacting the global economy. As a result, markets now anticipate the Federal Reserve will likely raise interest rates by April 2027 – a shift from previous expectations of rate cuts before the conflict began.

In my research, I’ve been tracking the recent rise in Treasury yields, and it’s definitely a point of concern. We just saw the U.S. sell 30-year bonds at a 5% yield – something we haven’t seen since 2007. This increase in interest rates tends to make riskier investments, like Bitcoin and other cryptocurrencies, less appealing to investors.

This is important because inflation especially hurts investments that will pay off over a long time, and rising long-term interest rates indicate the market now sees the energy price increases as lasting, not just a short-term problem, according to Jain.

The financial landscape is mixed. While regulations are becoming clearer, which could help the development of financial services on blockchains, rising long-term interest rates are making investments like Bitcoin less appealing. This is happening at the same time that strong demand for AI-related investments continues. It’s important to be cautious and pay attention to these changing conditions.

Today’s signal

The yield on the two-year Treasury note—which often indicates what investors expect from short-term Federal Reserve interest rates—rose to over 4.05%, its highest level in a year.

The price recently surpassed a key technical level, forming what’s known as an inverse head and shoulders pattern – a signal that many traders watch for signs of a potential price increase. This pattern looks like an upside-down head and shoulders, with a low point in the middle and two similar, lower points on either side.

This pattern shows a slow change from negative to positive market movement. When the price rises above the ‘neckline’ – a line connecting temporary price increases between lows – it suggests the price is more likely to continue rising.

The rate of return could increase further in the coming days, and might even reach as high as 4.24%, which was the peak in January 2025.

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2026-05-15 14:39