Bitcoin Reverses Monday’s Gains as CLARITY Act Odds Slide on Polymarket

Bitcoin dropped 1.7% to $76,862 since midnight UTC, erasing much of Monday’s late rally as Polymarket’s probability of the CLARITY Act becoming law this year fell by half overnight.

Bitcoin climbed from $75,916.49 to $79,427 on Monday, but the move reversed the following day, pushing the largest cryptocurrency back to $76,862. The decline leaves BTC 6.6% below its September high of $82,284, reached on Sept. 4. Ether fell 1.6% to $2,474.76, while solana declined 2% to $100.43.

Polymarket traders also turned less optimistic about the U.S. CLARITY Act. The odds of the legislation being signed into law this year climbed to 34% on Monday before dropping to 17%. The reversal followed reports that Democrats had prepared a counterproposal after rejecting a revised Republican draft circulated Sunday.

The main disagreement centers on provisions concerning crypto holdings by government officials rather than the bill’s core market-structure rules.

The Senate is scheduled to vote at 2:15 p.m. ET on whether to invoke cloture and force a vote on the legislation. Approval would bring the crypto industry closer to its first comprehensive U.S. framework defining regulatory responsibilities. If the bill fails, market-structure legislation could be pushed back until after November’s midterm elections.

Selling extended across most of the crypto market Tuesday. Ninety-two of the CoinDesk 100 constituents traded lower, while the index declined 1.6%.

Traditional Markets Move Higher

U.S. equity futures moved in the opposite direction. Nasdaq 100 futures rose 0.43%, while S&P 500 futures gained 0.35% as part of Monday’s AI-related sell-off reversed.

The Dollar Index also increased 0.17%. The combination suggests Tuesday’s weakness was largely concentrated in crypto, reversing the previous day’s pattern when digital assets were the only major asset class posting gains.

Derivatives Market Shows Caution

Crypto futures positioning remained relatively balanced ahead of the Senate vote. The long-short taker-volume ratio showed neither side holding a decisive advantage.

Aggregate open interest fell 1% over the previous 24 hours to $135 billion, while trading volume jumped 54% to $207 billion. The combination indicates that existing traders are closing positions more rapidly than new positions are being established.

Bitcoin’s decline toward $77,000 was accompanied by aggressive selling from futures takers, according to Marex analysts. Takers execute trades at available prices and remove liquidity from exchange order books.

Bitcoin futures open interest remained below 680,000 BTC, pointing to limited appetite for leveraged exposure.

Open interest was also declining across ether, solana and XRP futures. Solana open interest stood at 58.81 million tokens, its lowest level since May, according to CoinGlass.

Open-interest-adjusted 24-hour cumulative volume delta readings were negative for the major tokens, indicating stronger bearish pressure. A negative CVD suggests that a greater portion of short positions is being opened through market orders rather than passive limit orders.

XLM Defies the Broader Trend

Stellar’s XLM was a notable exception, gaining about 4% over 24 hours while futures open interest climbed more than 10% to 1 billion XLM.

The combination of rising price and increasing open interest is generally interpreted as evidence of long accumulation and bullish positioning. Annualized funding rates were around 10%, suggesting healthy demand for leveraged upside exposure without clear signs of excessive speculation.

Funding rates remained moderately positive for most major tokens, including bitcoin. Ether and SOL showed mildly negative rates, indicating a modest tilt toward short positions.

That positioning could create conditions for a short squeeze if the CLARITY Act procedural vote succeeds. TRX remained an exception, with deeply negative open interest continuing for several days.

Volatility Rises Slightly Ahead of Vote

Bitcoin and ether’s 30-day implied-volatility gauges, BVIV and EVIV, moved higher but remained close to recent levels and well below their February and June peaks.

The modest increase points to somewhat stronger hedging demand as traders prepare for the Senate vote, which could influence crypto market direction over the short term.

Options markets remained relatively orderly. The implied-volatility curve for Deribit-listed options was normal and upward sloping, indicating that traders were not pricing in an extreme volatility spike over the next 24 hours.

Bitcoin and ether options volume also leaned bullish, with higher-strike calls occupying most of the top-five volume positions for both assets.

Filecoin Leads Token Pullbacks

Filecoin’s FIL token reversed part of Monday’s sharp advance. Its 27% Monday rally was accompanied by a 70% increase in futures open interest, but both moves have since unwound rapidly.

FIL was down 5.1% since midnight UTC at $0.89 and 13% over 24 hours, while open interest dropped 23% to $106 million.

AI and computing-related tokens came under pressure for a second straight session following Anthropic CEO Dario Amodei’s weekend call for slower AI development. Internet Computer (ICP) was the biggest decliner, falling 6% to $2.58. Theta Network dropped 4.5%, while NEAR Protocol declined 3.7%.

Uniswap bucked the broader DeFi weakness, rising 1% to $6.60 and gaining 4.8% over 24 hours. The token is among those with potentially greater exposure to the outcome of Tuesday’s vote.

Venice Token (VVV), which reached a record high last Wednesday following a token burn and short covering rather than sustained buying, has since surrendered roughly 20%. It fell another 4.5% Tuesday to $22.05.

Monero and Zcash moved in opposite directions for a fifth consecutive session. XMR gained 0.37% to $516.41, while ZEC declined 1.87% to $1,141.

Cosmos and XDC Network each gained 1.4%, while XLM was nearly unchanged on the day but remained 4.3% higher over the previous 24 hours.

CoinMarketCap’s Altcoin Season Index stood at 36 out of 100, placing it in neutral territory after falling from last week’s reading of 51.

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