Bitcoin has encountered significant challenges recently, following a sharp correction of over 30% in the fourth quarter of 2025. The leading cryptocurrency has since been locked in a phase of consolidation. In the past few weeks, Bitcoin made attempts to break out of its trading range; however, escalating international tensions have dampened investor enthusiasm, causing it to fall back below the $90,000 mark.
Currently, Bitcoin is more closely correlated with the S&P 500 index than with gold, reflecting a decline in risk appetite that is affecting demand for cryptocurrencies in general.
As market focus shifts to Davos, discussions surrounding cryptocurrency regulation, particularly the US CLARITY Act, have gained prominence among policymakers, banking officials, and crypto industry leaders.
Coinbase CEO Brian Armstrong took this opportunity to openly critique the current iteration of the CLARITY Act (also known as the Crypto Market Structure Act). He contended that the bill disproportionately favors traditional financial institutions, potentially stifling innovation within the crypto sector. In light of these concerns, Coinbase has retracted its support for the legislation, arguing that it expands the powers of the SEC, imposes restrictions on decentralized finance (DeFi), slows the tokenization process, and could effectively outlaw interest payments on stablecoins. Armstrong’s declaration that “no bill is better than a bad bill” caught many lawmakers and industry insiders off guard, resulting in delays in the Senate Banking Committee’s deliberations and sparking backlash from certain policymakers. Nevertheless, Armstrong stressed that discussions remain productive, with the White House participating actively, and that a revised version of the bill—providing clearer delineation of responsibilities between the SEC and the CFTC—seems probable.
In Davos, the growing institutional acceptance of cryptocurrencies was also evident, as major banks and exchanges openly discussed topics such as asset tokenization and 24/7 blockchain-based markets. This evolution underscores the urgent need for clear regulatory frameworks.
Looking ahead, estimated next steps for the CLARITY Act include:
1. The Senate Banking Committee reviewing the bill after a temporary legislative pause, focusing on the SEC’s authority, regulations concerning stablecoin yields, and the oversight of DeFi.
2. Ongoing bipartisan negotiations, with increasing pressure from the industry to arrive at a consensus before legislative momentum wanes.
3. A potential reintroduction of a revised version of the bill either later this month or early next month, aimed at establishing a clearer division of responsibilities between the SEC and the CFTC.
In the immediate market context, Bitcoin has shown signs of recovery today, rebounding by 1.20% to approximately $89,300, following a nearly 5.00% correction that saw it dip to around $88,000 the previous day.
