Bitcoin has faced a larger threat from a possible second Federal Reserve rate hike than from the Senate’s failed CLARITY Act vote, according to HashKey Group senior researcher Tim Sun — a reading that flips the priorities many crypto traders have assumed during a week dominated by regulatory hand-wringing.
Sun told crypto.news that Bitcoin’s path now depends more on U.S. financial conditions and investment flows than on the stalled market structure bill. In particular, he said another rate increase in October could lead investors to treat September’s hike as the start of repeated tightening, rather than a single preventive move — a shift he considers capable of ending Bitcoin’s current upward momentum.
The October rate test
The Federal Reserve raised its target range by a quarter percentage point to 3.75%–4.00% on Sept. 16, with all 12 voting members supporting the decision. The central bank said inflation remained elevated and the increase would support its 2% inflation goal.
Sun said the September increase had largely been priced in before the announcement, which helps explain why Bitcoin and the broader crypto market rallied afterward — the asset initially moved toward 75,000 USD before settling back into a range. The question for investors, in his view, is whether the Fed will raise rates again at its October meeting.
An October increase would hit several parts of Bitcoin’s market at once. Higher long-term interest rates and tighter dollar liquidity could pressure demand, while changes in ETF flows and leveraged positions could determine the size of any price move. Sun pointed to long-term Treasury yields, money entering U.S. spot Bitcoin exchange-traded funds, and derivatives leverage as the three factors to watch.
The data explains the nervousness. The Fed’s September projections showed a median year-end policy rate of 4.1% for 2026, up from 3.8% in June, with 16 of 18 participants placing their projected year-end rate above the current range. S&P Global’s preliminary U.S. composite purchasing managers’ index rose to 58.4 in September from 56.0 in August, and the 10-year Treasury yield reached 5.20% during trading on Sep. 24 — levels that compress the appeal of long-duration assets across the board.
Why CLARITY ranks second
On Sep. 15, the Senate voted 49–50 against ending debate on a motion to take up the Digital Asset Market Clarity Act, short of the 60 votes needed. Senators never reached a final vote on the bill, which seeks to define how the Securities and Exchange Commission and the Commodity Futures Trading Commission oversee parts of the digital asset market.
Sun’s argument is that the bill’s outcome would not substantially change Bitcoin’s own characteristics or regulatory position. Its main purpose is to settle market rules for digital assets — where SEC authority ends and CFTC authority begins — questions that matter more for tokens and trading venues than for the largest, most institutionally embedded crypto asset.
A long delay could still matter for the industry. Sun said unresolved rules may affect whether investors commit capital to crypto companies and infrastructure projects over several years. The concern is less about an immediate decision on which firm can operate than about the conditions for long-term investment.
Since the vote, U.S. regulators have continued working under existing powers. The CFTC submitted a crypto markets measure for preliminary White House review, and the SEC issued a limited exemption concerning tokenized stock trading — but neither action supplies the statutory market structure framework contemplated by CLARITY.
ETF flows are the tell
Bitcoin rose after the September Fed decision, then pulled back from the 87,000 USD area during the following week — a stretch in which it traded as high as the mid-80s, near the 83,040 USD level seen in the late Sept. 29 snapshot, with Ethereum around 2,671.91 USD and Solana near 117.52 USD.
U.S. spot Bitcoin ETFs recorded five consecutive sessions of net inflows through Sep. 23, though flows varied sharply earlier in the month. During the week ended Sep. 18, the funds took in only about 6.1 million USD net — despite receiving 433 million USD on the final trading day alone — before the positive streak coincided with Bitcoin’s advance toward 87,000 USD.
Sun has cautioned that short-term ETF flows can follow Bitcoin’s price rather than reliably signal its next move. That distinction matters for his October assessment: a run of inflows shows buyers continue to use the funds, but it does not establish how they would respond to another rate increase. The September rally followed a hike traders already expected; it says nothing about what happens if investors begin pricing in consecutive increases.
The asymmetry is the point. A CLARITY delay bleeds slowly — capital allocation decisions pushed quarters or years down the road. A second Fed hike repriced risk instantly, through yields, the dollar, and the leverage stack in derivatives markets. Bitcoin spent September proving it could rally through one hike. October may test whether it can rally through two.
sun is right imo. everyone was doomposting about CLARITY failing while the real risk was another hike making sept look like a cycle, not a one-off
@macro the rally after sept 16 only happened because it was priced in tho. a second hike in october breaks that logic completely
The detail about all 12 voting members backing the September hike is what worries me more than the CLARITY vote. Unanimous hikes rarely stay single.
3.75 to 4 percent and they still call inflation elevated. bitcoin holding up as well as it has is honestly impressive
absorbed a unanimous hike and a 5.2 ten year in the same month and still holds. the etf bid is doing the heavy lifting but credit where due
16 of 18 dots above the current range and a 4.1% median for year end. Tim Sun is right, one October hike flipping september from preventive to a cycle matters way more than the CLARITY vote stalling
also the 3.9 pace projection for next year is barely lower. even the rosiest dot path stays restrictive, that is the part sun flagged and everyone skipped
counterpoint: CLARITY dying in the senate kills the institutional bid story for a whole cohort of alts. a hike is one 25bp event, no market structure bill is years of delay
One 25bp event? The September dots moved the entire curve in a day. Cycle repricing hits duration assets far harder than a market structure bill most institutions already gave up on.
The 5.20% ten year is the tell. BTC can shrug off hawkish dots but not both that yield and negative ETF flows at the same time