Bitcoin News Today: Bitcoin Slumps Below $86K as Clarity Act Delay Deepens Crypto Uncertainty

The U.S. Senate has delayed the CLARITY Act, a pivotal piece of legislation aimed at regulating the crypto market, until early 2026. The bill, which seeks to provide federal oversight for trading and custody of digital assets, has already passed in the House of Representatives but remains stalled in the Senate. This delay adds to the regulatory uncertainty faced by crypto market participants and financial institutions according to reports.

Bitcoin's price has been under pressure, falling below $86,000 for the fifth consecutive day as of Tuesday. Institutional investors have shown mixed sentiment, with spot Bitcoin ETFs experiencing significant outflows, while some firms continue to accumulate Bitcoin. The mixed signals reflect broader uncertainty in the market according to market analysis.

Market fear has intensified, with the Fear and Greed Index dropping to 11, nearing the end of November lows. This extreme fear among traders highlights the growing anxiety over Bitcoin's near-term prospects. However, improving liquidity conditions in the U.S. may help limit further downside in the short term.

Regulatory Uncertainty Prolongs Market Hesitation

The Senate's decision to push the CLARITY Act into 2026 has created a regulatory vacuum for the crypto industry in the United States.

The bill aims to clarify whether digital assets are commodities or securities and to establish a framework for their trading and custody. Without this clarity, trading platforms and financial institutions remain cautious in expanding their crypto offerings.

The delay also reflects a broader political divide in Congress. While the House passed the bill in July 2025, the Senate remains gridlocked, with some lawmakers expressing concerns about the implications for decentralized finance (DeFi) and the potential for pushing activity to other jurisdictions. Industry groups have warned that a strict application of securities rules to DeFi could stifle innovation and drive activity overseas.

With no federal crypto market structure law expected to pass in 2025, participants must rely on a patchwork of state regulations and existing federal enforcement cases for guidance. This lack of uniformity has led to speculation that larger financial institutions will pause or slow new crypto product launches until the regulatory landscape becomes clearer according to market analysts.

Mixed Market Conditions for Bitcoin and Broader Crypto Assets

Bitcoin's price correction has been amplified by high leverage in the market. On Monday alone, over $584 million in bullish bets were liquidated, with Bitcoin leading the losses. The liquidations were primarily concentrated in long positions, indicating a shift in risk appetite among traders.

Ethereum also faced significant losses, with $233.5 million in liquidations, further signaling a broader market reset. Analysts have noted that these liquidations were triggered by Bitcoin breaching key support levels, which activated cascading stop-loss orders and forced selling.

The impact of leverage and open interest has been a key factor in Bitcoin's volatility. Rising open interest since early December has contributed to a more fragile market structure, where sudden price movements can trigger large-scale liquidations. This dynamic raises the risk of further volatility in the near term.

What This Means for Investors

The current market environment presents both risks and opportunities for investors. While Bitcoin's price correction has led to increased fear among traders, some analysts point to improving liquidity conditions in the U.S. as a potential support. The Treasury General Account (TGA) has dropped significantly, injecting liquidity into the financial system and potentially boosting risk-on sentiment.

However, the longer-term outlook for Bitcoin remains uncertain. Wall Street analysts have issued optimistic target prices for 2026, but historical patterns suggest another difficult year may be ahead. The cryptocurrency has historically declined in the 12 to 18 months following a halving event, with the next potential peak expected around mid-2028.

For investors, the regulatory uncertainty surrounding the CLARITY Act adds an additional layer of complexity. While the delay in the Senate has postponed a clear framework for digital asset regulation, it has also given market participants time to prepare for potential changes. As the year draws to a close, investors are advised to closely monitor both regulatory developments and on-chain indicators for signals of market stability according to market experts.