Bitcoin climbed back above $78,000 on Monday as hopes grew that changes to the CLARITY Act could win over reluctant Democratic senators, although a bipartisan effort led by New York Attorney General Letitia James threatened to derail the legislation.
The cryptocurrency reached about $78,972 after falling to a Sunday low of $76,464. Despite the latest recovery, its price remained almost unchanged from the approximately $78,500 recorded at the opening of trading on 1 September.
Optimism surrounding the CLARITY Act increased after reports that Republican senators had revised the bill to address concerns from Democrats. Democratic senators met in a caucus to discuss the legislation, helping to fuel the initial move higher.
Bitcoin had earlier faced the prospect of a sharper decline, dropping from about $77,400 to its Sunday night low. It then recovered quickly, moving back above $77,000 and approaching $77,800 within three hours.
The price stayed largely above $77,500 before a second rally began at 5:25 a.m. EST. Bitcoin moved above $78,000 for the first time since Friday, but failed to break through $78,300. A subsequent sell-off pushed it below that level before another recovery appeared to establish support above $78,400.
At 1:30 p.m. EST, the price stood at about $78,882, giving Bitcoin a market capitalisation of approximately $1.58 trillion. With the first half of the month almost complete, the cryptocurrency was still virtually flat compared with its 1 September opening price.
Bitcoin’s rise also affected the derivatives market. More than $41 million in short positions were liquidated over a 24-hour period, compared with $16 million in long positions. Across the wider crypto economy, $223 million in leveraged positions were wiped out, including almost $126 million in liquidated long positions.
CLARITY Act faces opposition
Momentum behind the bill was disrupted by reports that Letitia James was leading a bipartisan group seeking to stop it before a vote. James has argued that wording in the draft could give scammers greater scope to operate.
The attempt to block the legislation also appears to align with the opposition’s broader strategy of challenging the legislative objectives of U.S. President Donald Trump.
Republican senators had updated the bill in an effort to ease concerns raised by its opponents, but the intervention by 18 attorneys general is expected to make it more difficult to secure the Democratic support needed for passage. Prediction-market bettors have consequently become more doubtful that the bill will be signed into law this year.
An announcement from the U.S. Treasury on 19 August initially helped lift Bitcoin, but market insiders continue to view the CLARITY Act as the key potential catalyst for a sustained rally. Without progress on the bill, ongoing political deadlock could leave Bitcoin trading within a sideways range.
A Sunday evening meeting at which Democrats were expected to discuss whether to oppose the bill could prove decisive for its future.
