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Clarity Act Progress Fails to Ignite Bitcoin Breakout

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BTC remains capped below highs with bearish signals emerging

The Digital Asset Market Clarity Act was voted through by the Senate Banking Committee on Thursday, but it still faces several significant obstacles. The bill needs 60 votes to pass the full Senate, and the Republicans only hold 53 seats. This means that 7 votes must come from Democrats, who still have concerns related to stronger anti-money laundering rules and ethics-related issues. Also, there is still opposition coming from bankers, who are still not satisfied with the stablecoin yield language and may push for more changes.

The general consensus is that the bill must pass Congress before the midterm elections in August. If this deadline is missed, then the chances of the Clarity Act being signed into law by the end of the year will drop drastically.

Although the spot Bitcoin ETFs had a strong start to the month, the current week has been dominated by outflows. More than $230 million exited on Tuesday, followed on Wednesday by $630 million, according to data from Coinglass.

This followed hotter-than-expected US inflation data, which pushed the odds of a near-future rate cut even farther down the road. The yearly CPI jumped to 3.8%, close to the 3.7% forecast but sharply higher than the previous 3.3%.

Chart Analysis – BTC/USD

Bitcoin is still stuck in a tight trading range despite the Clarity Act developments, and the bulls seem afraid to engage with more conviction. The Relative Strength Index (RSI) has been trading near the overbought level, but it has not managed to breach it decisively.

Although ‘overbought’ suggests that a pullback is coming, oftentimes if the RSI pierces above its 70 level, it shows increased buying interest, possibly the beginning of an uptrend. This isn’t the case now, as we already saw the RSI rejected at the 70 level.

A break of the recent high would send the RSI into overbought territory, making $88K the first target. That zone is also the top of the parallel channel, and if BTC bulls can breach it, we could see a stronger climb, possibly into $95K resistance.

Bitcoin has been trading in a mini uptrend since the beginning of April, but since then, multiple bearish divergence signals have appeared. This means that pullbacks can be expected, with $77K as the first potential support. A break of this zone would also mean a break of the lower barrier of the parallel channel and would suggest that lower prices will follow.