The market is currently in an adjustment phase influenced by both macro policies and regulatory expectations. Fed Chairman Kevin Walsh has maintained a relatively hawkish stance, leading to ongoing adjustments in market expectations for the interest rate path. Concurrently, the legislative process for the "CLARITY Act" has slowed, dampening the market's previous optimistic regulatory outlook. Despite the continuous impact of these two bearish factors, Bitcoin has maintained a range between $62,000 and $66,000, demonstrating notable resilience.
Current performance shows that cryptocurrency market trading volume has declined by 80% from its peak, contracting by approximately 60% compared to the Q4 2025 high, with total market capitalization also down about 50%. The overall market still lacks new USD liquidity inflows. However, against a backdrop of persistently low trading volume and cooling regulatory expectations, Bitcoin has not experienced a more significant decline. Market focus is gradually shifting from short-term bearish factors to whether the current cycle is approaching its bottom.
Fed Maintains Hawkish Tone, Cooling Regulatory Expectations Dampen Market Sentiment
Since the first reports of Kevin Walsh's nomination emerged in late January 2026, the Fed's policy stance has been more hawkish than previously anticipated by the market, with the two-year Treasury yield rising by approximately 35 basis points over the same period. While Walsh has repeatedly emphasized that inflation remains above target, the market is more concerned about the uncertainty introduced by policy communication. Currently, the Committee's voting pattern shows 9 members in favor of holding rates and 3 supporting a rate hike, fueling discussions about further policy tightening.
Simultaneously, the progress of the "CLARITY Act" continues to slow. As of July 17th, prediction markets indicate only a 32% probability of it being signed into law by the end of 2026. With the Senate prioritizing other issues, the approaching summer recess, and unresolved disputes over stablecoin interest payments, anti-money laundering (AML), and ethics provisions, the window for the bill to complete Senate voting, House confirmation, and presidential signature is narrowing further.
Market Still Lacks New Liquidity, Bitcoin Shows Resilience
Stablecoin supply has yet to resume sustained growth. Since November 2025, the market capitalizations of USDT and USDC have not shown significant expansion, reflecting that the digital asset market has not yet welcomed new USD liquidity. Without renewed net inflows of funds, cryptocurrency prices will struggle to form a sustained upward momentum.
Nevertheless, Bitcoin has demonstrated stronger relative performance compared to most altcoins. Since the market peaked in October 2025, tactical models have consistently favored Bitcoin. Many projects from previous cycles continue to be affected by historical selling pressure and unlocking pressures, whereas Bitcoin, under the combined headwinds of the Fed's persistent hawkishness and weakening prospects for the "CLARITY Act," has corrected only about 3% over the past week. This resilience suggests that investors needing to adjust their positions may have largely completed their rebalancing, making it increasingly difficult for the market to decline significantly from current levels.
Overall, the market still faces multiple influences including hawkish monetary policy, slowing regulatory progress, and capital wait-and-see sentiment. However, Bitcoin's relative stability in an environment of low trading volume and a lack of new liquidity suggests the downward pressure of the current cycle is gradually easing. If Bitcoin subsequently reclaims the $70,000 level and drives multiple indicators to turn bullish, it would further indicate that the low point of this cycle has been established.
Some of the above views are from BIT on Target, contact us for the full BIT on Target report.
Disclaimer: Markets are risky, investments require caution. This article does not constitute investment advice. Trading digital assets can be extremely risky and volatile. Investment decisions should be made after careful consideration of personal circumstances and consultation with financial professionals. BIT is not responsible for any investment decisions based on the information provided herein.
