Bitcoin fell further on Thursday, trading beneath a psychological support level as investors reassessed the outlook for U.S. interest rates and awaited a key congressional hearing on crypto legislation.
At 02:58 ET (06:58 GMT), Bitcoin was down 1.4% at $79,807.3, having slipped below the $80,000 mark that market participants had viewed as an important support level for the largest cryptocurrency.
Sentiment in crypto markets was guarded ahead of a high-profile U.S. Senate Banking Committee session scheduled for later in the day - a so-called "markup" on the Clarity Act. The committee released the latest version of the bill early on Wednesday, and some senators have warned that further delay could leave the legislation dormant until 2030.
The draft aims to strike compromises for both crypto firms and banks. One disputed provision would ban passive interest payments on stablecoins by crypto platforms - a point of steady opposition from banks, which argue such payments resemble traditional savings accounts. Lobbyists for the banking industry have also pressed for more stringent money-laundering and regulatory oversight of stablecoin yield payments. The bill, in its current form, does not call for an outright ban on all returns from stablecoins, but it does seek to prohibit passive interest specifically.
Focus elsewhere included a U.S.-China summit underway in Beijing, where high-level talks took place on Thursday between President Donald Trump and Chinese counterpart Xi Jinping. Markets were parsing developments from those meetings as part of broader geopolitical considerations.
Macro data also weighed on risk appetite. Both consumer and producer inflation readings for April arrived stronger than expected, amplifying concerns that inflation pressures may be more persistent. A sustained uptick in inflation could influence the Federal Reserve to keep interest rates on hold for a longer period this year - a scenario the market broadly anticipates - and some traders have positioned themselves for the possibility of additional rate increases.
Higher or steady elevated rates tend to increase the opportunity cost of investing in speculative assets, which can be unfavorable for risk-sensitive markets such as cryptocurrencies.
Altcoins mostly mirrored Bitcoin's decline. Ether slipped 1.6% to $2,265.84, while XRP fell 2% to $1.4327. Solana and Cardano registered larger declines, down 4.2% and 3.0% respectively, and BNB eased 1.3%.
Among memecoins, Dogecoin moved higher by 1.8%, while the token $TRUMP fell 4.9%, representing divergent performance inside the small-cap segment of the crypto market.
Context for investors - The interplay between potential regulatory changes and shifting rate expectations has created a cautious tone across digital asset markets. The outcome of the Senate markup on the Clarity Act, in particular, will be watched closely by market participants and firms active in stablecoin markets, while inflation data will remain a key driver for rate expectations and speculative asset allocation.