On May 14th, the CLARITY Act passed the Senate Banking Committee and advanced for full Senate Voting. Despite the positive outcome, $BTC’s price declined by nearly $6,000, suggesting possible sell-the-news behavior among traders. $BTC’s fall triggered a liquidation of over $670 million in leveraged crypto long positions.
Alongside Bitcoin, Ethereum fell by over 10%, and the $BTC ETFs experienced a net outflow of $700M over the past 3 days.
Advancement of the CLAIRITY Act
Reports reveal that over 8000 letters were sent to the Senate office by American Bankers Association (ABA) members ahead of the markup held on May 14th (Thursday). According to journalist Eleanor Terrett, there was no “separate phone call campaign” by the banking industry, “urging lawmakers to fix the stablecoin yield compromise.”
But the United States Senate Committee on Banking, Housing, and Urban Affairs voted 15-9 for the 309-page bill. It marks a critical step for the market participants of the crypto industry and is now pending the full Senate vote.
Earlier negotiations between Senators Thom Tillis and Angela Alsobrooks resulted in revised stablecoin yield language being added to the bill, restricting crypto exchanges and other intermediaries from offering passive yield on stablecoin holdings.
However, the Committee’s vote largely followed partisan lines, with 13 Republicans backing the bill while only two Democrats voted in support. It indicates challenges ahead as lawmakers race against time before the November 2026 midterm elections.
Traders Behaviour
Ever since the passage of the CLARITY Act in the Senate, the Bitcoin price has shown a decline on the daily chart. It fell from $82,000 to below $77k in the past days, implying that traders are exhibiting sell-the-news behavior.
It was clear that traders anticipated the bill’s positive momentum by buying Bitcoin earlier. And when the news about the CLARITY Act broke, traders might have started to sell, leading to a drop in $BTC’s price.
According to analyst Bill Theory, over the past 5 days, Bitcoin’s price fell by nearly $6,000 and is trading at the $76K level during press time. This has resulted in the massive liquidation of $670 million in crypto long positions, and $BTC’s market cap alone plunged by $126 billion.
Another analyst, Michaël van de Poppe, called this the largest liquidation in the past three months.
US Treasury Bond Yields
While the crypto market experienced liquidations, the U.S. 10-year Treasury yields hit their highest since February 2025. As inflation rates near 4% and the ongoing geopolitical tension, investors move toward safe assets. The macroeconomic pressure on Bitcoin could continue as there is no hope for the rate cuts in the near term.
Senator Cynthia Lummis Supports Digital Assets
The digital asset market has always been uncertain, and risks are continually rising. Yet, Senator Cynthia Lummis, one of the members of the Senate Banking Committee, strongly supports the digital asset market as it provides freedom to individuals. She stated on X,
“Digital assets provide individual freedom and individual savings. It is faster, it is cheaper, it is secure— and we’re inviting that consumer environment into our country under a very clear set of rules.”
She has long argued that unclear regulations would push crypto out of America as they would restrict blockchain innovations. Further, she also proposed the US strategic $BTC reserves and promoted Bitcoin as a long-term store of value.
The CLARITY Act has been under debate for a long time due to its stablecoin yield concerns. Banks fear that if this were allowed, the crypto firms could act like banks in the marketplace. However, it could protect consumers by defining guidelines and boundaries between the CFTC and SEC.
Is Bitcoin Turning Into a Wall Street Risk Asset?
The current scenario shows a different picture. Despite the progress in the CLARITY Act, the price of Bitcoin dropped. It implies the speculative nature of Bitcoin rather than being a decentralized alternative system to traditional banking.
As institutional investors heavily influence the trajectory of Bitcoin, it is repeatedly criticized for drifting away from its original anti-establishment ethos. The pioneer cryptocurrency reacts to Federal Reserve policy, Treasury yields, inflation data, geopolitical tensions, and ETF flows. This nature makes Bitcoin similar to tech stocks or other risk assets.
However, Bitcoin believers still find value in crypto for its core decentralized nature and view it as a financial asset that offers an alternative monetary system.
Related: Bitcoin Drops Below $77K as Traders Turn Defensive
