Bitcoin's price retreated from a high of $97,770 to around $95,650 as the crypto market reacted to a regulatory setback in the U.S. Senate. The Senate Banking Committee paused the planned markup of the CLARITY Act (officially the Market Structure Bill) after Coinbase, the largest U.S. crypto company, withdrew its support. Coinbase's primary objection is a provision that would limit the ability of companies to offer rewards or yield on stablecoins to users.
The withdrawal of support followed lobbying pressure from banks and credit unions, which argue that such stablecoin rewards could lead to capital flight from traditional banking institutions, potentially reducing the cash available for lending. Despite this pause, the analysis suggests the bill is still likely to pass eventually, as it retains broad support from other industry players.
Beyond regulation, several macroeconomic and market-specific catalysts support a potential Bitcoin rebound. Geopolitical tensions eased after former President Donald Trump opted not to escalate military action against Iran, leading to a drop in crude oil prices (Brent to $63, WTI to $60). Falling energy prices help contain inflation, with December's headline Consumer Price Index (CPI) holding at 2.7% and core CPI easing to 2.6%. This data reinforces market expectations that the Federal Reserve could deliver at least three interest rate cuts in 2024, exceeding prior projections.
Spot Bitcoin ETF inflows provide another strong pillar of demand. Data from SoSoValue shows daily inflows increased by $100 million, contributing to a weekly total of $1.8 billion. January has seen net inflows of over $1.6 billion, bringing the cumulative total net inflows for U.S. spot Bitcoin ETFs to $58.2 billion. This institutional accumulation is complemented by ongoing purchases from Michael Saylor's MicroStrategy.
Technically, Bitcoin remains in a robust uptrend on the weekly chart, trading above a key ascending trendline from January 2024 and the 100-week Exponential Moving Average (EMA). Analysts posit that as long as Bitcoin holds above this trendline, the path remains open for a rally toward the all-time high of $126,300, representing a potential 32% gain from current levels.
