Bitcoin may struggle to establish a sustained move above $80,000 after the Federal Reserve raised interest rates and signalled that borrowing costs could remain higher for longer, according to James Butterfill, head of research at digital asset manager Coinshares.
In a market assessment published on 17 September, Butterfill identified the Federal Reserve’s outlook and the latest setback for the CLARITY Act as the main obstacles to a stronger near-term recovery in cryptocurrencies.
The analyst said the Fed’s revised interest-rate projections were more significant than the 25-basis-point increase itself. The Federal Open Market Committee lifted its target range to 3.75%-4% on 16 September, its first rate increase since July 2023.
The decision marked a return to rate rises after more than three years. The Fed also said inflation remained elevated while economic activity continued to expand at a solid pace.
Its September projections put the median federal funds rate at 4.1% for both 2026 and 2027. Those figures were higher than the June forecasts of 3.8% for 2026 and 3.6% for 2027, indicating a substantially tighter expected policy path.
Butterfill believes that outlook could keep conditions difficult for Bitcoin by supporting the US dollar and short-term government bond yields, while delaying a broader improvement in liquidity.
Iran is another factor in his assessment. Butterfill said conflict-related energy costs were adding to inflationary pressure and reducing the likelihood of an imminent change in monetary policy. On that basis, he considers another rate increase later this year increasingly possible.
Bitcoin is therefore facing a restrictive monetary environment despite what Coinshares regards as a longer-term supportive monetary case. A marked fall in inflation or a move towards easier policy could change that balance, while continuing price pressures could postpone the return of liquidity conditions that have traditionally benefited Bitcoin.
CLARITY Act remains stalled
The regulatory outlook was also clouded on 15 September, when the Senate failed to invoke cloture on a motion to proceed to H.R. 3633, the Digital Asset Market Clarity Act.
The procedural motion was rejected by 49-50, leaving the proposed federal framework for digital asset market structure stalled. Butterfill identified unresolved ethics provisions involving elected officials and crypto-linked ventures as a central difficulty.
However, he does not expect the legislation to disappear for years. Seven Democratic senators who opposed the motion later said they would continue negotiations, describing the vote as a setback rather than the end of the CLARITY Act effort.
Butterfill said a revised bill could return relatively quickly, potentially early next year. He also pointed to stablecoins as a reason the legislation remains relevant, particularly as issuers accumulate increasing amounts of US government debt.
The setback is unlikely to affect all cryptocurrencies equally. Butterfill’s analysis said: “The inability to distribute yield also reduces the commercial appeal for banks and other financial institutions, one of the reasons the issue has faced such strong resistance from incumbent finance.”
Michael Saylor, executive chairman of Strategy, expects regulators and banks to continue expanding Bitcoin infrastructure under existing law despite the bill remaining stalled.
Butterfill also identified the Treasury market as a possible catalyst if rising yields eventually force a stronger policy response. He described aggressive liquidity intervention as a tail risk rather than his central expectation, but said it could support both gold and Bitcoin.
“The longer-term regulatory and monetary backdrop remains constructive, but the timing has clearly moved further out,” he concluded.
