The cryptocurrency market faced fresh selling pressure on Tuesday as the U.S. Senate delayed action on the long-awaited Digital Asset Market Clarity Act, sending Bitcoin and Ethereum lower by over 3% in 24 hours.
Bitcoin traded near $63,200 after briefly testing levels just above $63,000, while Ethereum declined about 4% to around $1,873. Broader altcoins followed suit, with XRP dropping more than 4.5%—according to CoinMarketCap data.
This brief but quick sell-off led to liquidations across the market exceeding $670 million in 24 hours, the majority coming from leveraged long positions, as the Crypto Fear and Greed Index slipped deeper into “fear” territory.
Senate Majority Leader John Thune set aside debate on the market-structure bill this week, leaving only a narrow window before the August recess begins around August 7–8. Leadership indicated a vote on the Clarity Act before the break is now unlikely, reinforcing caution across digital asset markets already sensitive to regulatory signals.
Market Reaction and Liquidation Wave
Traders reacted swiftly to the legislative setback. Bitcoin’s decline of nearly 3% erased recent gains and pushed the asset toward multi-day lows. Ethereum underperformed slightly, reflecting ongoing sensitivity around asset classification rules that the Clarity Act is designed to resolve.
Prediction markets amplified the negative signal, with odds of the Clarity Act becoming law this year on Polymarket fell to a record low near 37%, completing a steep decline from levels above 80 percent earlier in the year. Institutional flows also reflected caution. U.S.-listed crypto investment products had already recorded significant outflows in recent sessions, with Ethereum-related products leading withdrawals amid uncertainty over classification and market-structure rules.
The sell-off occurred against a backdrop of broader risk-off sentiment. Rising Treasury yields and elevated oil prices had already pressured non-yielding assets, while Asian equity markets contributed to an overnight rout that spilled into crypto trading hours. The combination of legislative delay and macro headwinds left little room for immediate recovery.
CLARITY Delayed As Senate Prioritizes Russia Sanctions Bill
The bipartisan Lindsey O. Graham Sanctioning Russia Act of 2026 has taken on the character of a legislative tribute to the late South Carolina senator, who secured the White House’s backing for the measure on July 10 in Kyiv, just a day prior to his demise on July 11.
President Trump has publicly endorsed the sanctions package, saying it has a “good chance” of passing and signaling his willingness to sign it, while also pressing for the addition of Iran-related provisions to broaden its scope.
The revised bill directs the president to impose a sliding tariff of up to 100% on the five largest purchasers of Russian oil and gas, scaled back from the original 500%, and targets Russia’s political leadership, financial institutions, energy sector and “shadow fleet.”
Trump had earlier tried to attach Graham’s memory to the crypto bill itself. In a July 13 Truth Social post, he urged the Senate to pass the CLARITY Act “in honor of Lindsey,” praising Graham as “a big supporter” and framing clear crypto rules as essential to keeping the United States ahead of China on digital assets and artificial intelligence. But it is the sanctions bill bearing Graham’s name, not the CLARITY Act, that the Senate has chosen to move first.
That choice has come at a direct cost to the crypto legislation. With the Senate’s pre-recess window closing in early August, Majority Leader John Thune has placed the Russia sanctions bill and a batch of Trump nominations ahead of CLARITY on the floor schedule. After processing the nominations en bloc, the Senate is expected to proceed to H.R. 5334 — the House vehicle now carrying the Graham sanctions text — leaving the market-structure bill waiting behind it.
A CLARITY vote is now viewed as unlikely before the following week, compressing an already narrow timeline. The delay compounds the bill’s existing obstacles, from unresolved ethics provisions around President Trump’s crypto holdings to bank lobbying over stablecoin yield, pushing a measure the industry had hoped to pass before August ever closer to the recess deadline.
Legislative Hurdles and Path Forward
The Clarity Act seeks to establish clear jurisdictional lines between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) for digital assets. The House passed an earlier version with strong bipartisan support in 2025.
The Senate Banking Committee advanced related text in May 2026, and a merged draft was released in mid-July. Despite progress, the bill has remained stalled on the Senate calendar since early June.
Central obstacles include ethics provisions intended to address public officials’ involvement in crypto ventures. Republicans incorporated language barring certain officials from issuing or sponsoring digital assets, and President Trump accepted related restrictions last week.
Democrats have argued the measures fall short of adequately addressing potential conflicts. Additional points of contention involve stablecoin rules, developer protections, and law-enforcement concerns.
With only days of productive session remaining, the calendar has become the decisive constraint. Should the pre-recess window close, the next opportunity shifts to September, when approaching midterm elections could further complicate bipartisan cooperation. Prolonged uncertainty tends to weigh most heavily on institutional participation rather than triggering outright collapses, yet ETF flows and innovation remain sensitive to any further delays.
As Congress focuses elsewhere this week, crypto markets will watch both the remaining legislative calendar and upcoming Federal Reserve decisions for the next directional catalyst.
Also read: Why is NEAR Token Price Down Today? $4.54M in Longs Liquidated
