Why is Crypto Market Up Today as Bitcoin Briefly Crosses $77K?

The crypto market stabilized on Sept. 18 after absorbing two major headwinds from U.S. monetary policy and crypto regulation.

Bitcoin held around $76,000 after briefly trading above $77,000 during the previous session. Several large-cap cryptocurrencies also remained higher, while Zcash and Hyperliquid recorded stronger gains.

The recovery followed the Federal Reserve’s first rate increase since 2023 and the Senate’s failure to advance the CLARITY Act earlier this week.

Crypto Market Stabilizes After Two Major Setbacks

The broad market gains come as a surprise, given the recent setback experienced by the crypto market. On September 15, the much-anticipated vote on the Clarity Act in the Senate failed, dampening hopes that crypto will receive comprehensive federal legislation.

Santiment analysts noted that the Clarity Act setback dampened sentiments in the crypto markets. They noted that September 14 marked an extreme period of FOMO for the crypto community, with a bullish narrative surging ahead of the vote.

However, the vote failure impacted market sentiment, which was further weakened by the U.S. Federal Reserve raising interest rates by 25 basis points.

The decision is the first rate hike in three years and signals potential tightening. While Fed chair Kevin Warsh did not say anything about further hikes, the unanimous decision to raise rates and comments about inflation suggest there could be more this year.

Unsurprisingly, the Clariry Act failure and the rate increase that followed have now wiped out crypto markets’ FOMO, with fear replacing euphoria. This is evident in the Fear and Greed Index, which is now at 64/100, which is still greed but nearing neutral territory.

Analyst Says Bear Market Return Highly Unlikely Based on Bitcoin Metric

Meanwhile, experts believe that the chances of a return to the bear cycle are increasingly unlikely. CryptoQuant’s Crypto Dan noted a rapid decline in the percentage of UTXOs in loss, confirming that the recent rally is not just a short-term rebound.

He noted that there is enough momentum to end the bear market and transition to a bullish cycle. While he acknowledged recent setbacks, Dan does not think they will affect market sentiment in the long term.

He described that as short-term headwinds, noting that they are unlikely to “completely reverse the on-chain structural changes already taking place and push the market back into a full bear cycle.”

Nevertheless, there are still worrying signs. CryptoQuant data show that stablecoin inflows on exchanges have been declining, even as inflows to Binance remain robust.

The exchange recorded $1.23 billion in stablecoin inflows on Monday alone, far above the average over the past two months. High inflows of stablecoins were one of the features of Bitcoin‘s rally from $62,000 to $80,000.

This article is for informational purposes only and does not constitute financial or investment advice. Onchain indicators, sentiment data and analyst views do not guarantee future cryptocurrency performance.