Bitcoin faces a larger near-term threat from another Federal Reserve interest-rate increase than from the Senate’s failed procedural vote on the CLARITY Act, according to Tim Sun, senior researcher at HashKey Group. His assessment places U.S. financial conditions, investment flows and market leverage ahead of the stalled digital-asset legislation when evaluating Bitcoin’s immediate path.
The Federal Reserve raised its target range by 25 basis points to 3.75%–4.00% on September 16. Sun said that increase had largely been priced into markets before the decision, helping explain why Bitcoin and the broader crypto market advanced afterward. The more important question, in his view, is whether policymakers raise rates again at their October meeting.
A second consecutive increase could change how investors interpret September’s decision. Instead of treating it as a single preventive move, markets could begin viewing it as the start of repeated monetary tightening. Sun said that shift could end Bitcoin’s current upward momentum.
October becomes the next monetary-policy test for Bitcoin
All 12 voting Federal Reserve members supported the September rate increase. The central bank said inflation remained elevated and that the move would support its goal of returning inflation to 2%.
Sun’s analysis focuses on what another increase could mean across several parts of Bitcoin’s market simultaneously. Higher long-term interest rates and tighter dollar liquidity could pressure demand. At the same time, movements in spot Bitcoin exchange-traded fund flows and changes in leveraged derivatives positions could influence the magnitude of any market reaction.
For that reason, Sun considers another rate increase more consequential for Bitcoin than the delay surrounding the CLARITY Act. His argument does not establish that the Fed will raise rates in October. Instead, it identifies another increase as the event capable of changing how investors understand the September move and the broader direction of monetary policy.
The Fed’s September projections showed a median year-end policy rate of 4.1% for 2026, compared with 3.8% in June. Sixteen of 18 participants projected a year-end rate above the current range. Those individual projections, however, are not commitments to increase rates at a particular meeting.
Bitcoin initially absorbed the September increase
Bitcoin’s reaction to the September decision provides part of the context behind Sun’s assessment. After the Fed announcement, Bitcoin initially moved toward $75,000 before returning to approximately 
76,700 within hours.
Sun said the September increase had already been largely reflected in market pricing. That distinction matters because a positive reaction to one anticipated increase does not determine how Bitcoin would respond if investors started expecting consecutive increases.
Stronger U.S. business activity and comments from Fed officials regarding inflation have also contributed to traders reassessing the possibility of another increase. S&P Global’s preliminary U.S. composite purchasing managers’ index rose to 58.4 in September from 56.0 in August. Separately, the 10-year Treasury yield reached 5.20% during trading on September 24.
These developments reinforce Sun’s focus on financial conditions rather than treating the September market reaction as evidence that additional tightening would necessarily produce the same response.
Treasury yields, ETF flows and leverage become key indicators
Sun identified long-term Treasury yields, money entering U.S. spot Bitcoin ETFs and derivatives leverage as the main factors to monitor around the next Fed decision.
For U.S. investors holding Bitcoin directly or through spot funds, ETF flow reports therefore remain relevant alongside monetary policy. Sun said sustained inflows could provide support for Bitcoin. At the same time, an excessive buildup of leverage in derivatives markets could introduce additional risk if financial conditions shifted.
The interaction among these factors is central to his assessment. Higher yields can affect financial conditions, while tighter dollar liquidity can pressure demand. ETF flows show whether investors continue allocating capital through regulated spot products, and leverage can amplify price movements when positions are forced to adjust.
Sun’s argument therefore does not depend on a single indicator. It centers on how monetary policy, Treasury yields, fund flows and derivatives positioning could interact if the Federal Reserve raises rates for a second consecutive meeting.
CLARITY failed to advance in a procedural Senate vote
The legislative issue developed one day before the Fed’s September decision. On September 15, the Senate voted 49–50 against ending debate on a motion to proceed to the Digital Asset Market Clarity Act. The motion required 60 votes.
The vote was procedural rather than a vote on final passage. Senators therefore did not decide whether to enact the legislation itself. The bill seeks to define how the Securities and Exchange Commission and Commodity Futures Trading Commission oversee parts of the digital-asset market.
Sun said the bill’s outcome would not substantially change Bitcoin’s characteristics or its regulatory position. In his assessment, the legislation is primarily intended to resolve broader market-structure questions for digital assets, including where SEC authority ends and CFTC authority begins.
That makes the legislative delay different from the monetary-policy risk he identified. The CLARITY vote concerns the framework governing parts of the digital-asset industry, while another Fed increase could affect financial conditions and investment behavior more directly in the near term.
A prolonged CLARITY delay could still affect the industry
Sun did not dismiss the importance of the legislation for crypto companies. He said a long delay could influence whether investors commit capital to crypto businesses and infrastructure projects over a period of several years.
The concern, according to his comments, is less about an immediate decision determining which company can operate and more about the conditions surrounding long-term investment. Unresolved rules can remain relevant when investors evaluate commitments to companies and infrastructure over extended periods.
After the Senate vote, U.S. regulators continued operating under their existing authorities. The Commodity Futures Trading Commission had submitted a crypto-markets measure for preliminary White House review, while the Securities and Exchange Commission issued a limited exemption concerning tokenized stock trading.
Neither action supplied the statutory framework contemplated by CLARITY. The failed procedural vote therefore left the legislative question unresolved, even as regulators continued taking actions within their current powers.
Spot Bitcoin ETF demand remains part of the picture
Bitcoin advanced following the September Fed decision before retreating from the $87,000 area during the following week. U.S. spot Bitcoin ETFs recorded five consecutive sessions of net inflows through September 23, although flows had varied significantly earlier in the month.
Sun has cautioned that short-term ETF flows can follow Bitcoin’s price rather than reliably predict its next movement. That distinction is important when evaluating the October rate question. A sequence of inflows demonstrates that investors continued using the funds, but it does not establish how those investors would react to another increase in interest rates.
The same limitation applies to Bitcoin’s rally after the September Fed decision. Because Sun described that increase as largely expected, the market response cannot establish how Bitcoin would behave if investors interpreted another increase as evidence of consecutive tightening.
During the week ended September 18, U.S. spot Bitcoin ETFs recorded approximately $6.1 million in net inflows, despite receiving $433 million on the final trading day alone. The later sequence of positive sessions coincided with Bitcoin’s advance toward $87,000.
Fed projections shifted higher from their June levels
The Federal Reserve’s September projections provide another element in the monetary-policy backdrop. The median projected policy rate stood at 4.1% for both 2026 and 2027. In June, the corresponding median projections had been 3.8% for 2026 and 3.6% for 2027.
These figures represent individual officials’ estimates based on their views of appropriate monetary policy at the time of the meeting. They are not commitments to a specific path or guarantees of an increase at the October meeting.
For Sun’s assessment, the central issue remains how investors interpret the next policy decision. If September continues to be viewed as an isolated preventive increase, Bitcoin’s current market structure would face one set of conditions. If another increase causes investors to expect repeated tightening, the interpretation of the policy environment could change.
That is why his analysis emphasizes the possibility of an October increase rather than treating the September move alone as the decisive event.
Bitcoin’s next test combines policy, flows and positioning
The comparison between the Fed and CLARITY ultimately separates immediate market conditions from longer-term regulatory uncertainty. Sun sees the rate outlook as the larger near-term risk because monetary tightening can influence yields, dollar liquidity, ETF demand and leveraged positions at the same time.
The CLARITY delay remains relevant for companies and investors seeking a clearer U.S. digital-asset market structure. A prolonged absence of settled rules could affect capital commitments to crypto businesses and infrastructure projects over several years. According to Sun, however, it does not materially change Bitcoin’s own characteristics or regulatory position.
Bitcoin’s movement after September also leaves the October question open. The asset absorbed a rate increase that Sun said markets largely anticipated, later advanced toward $87,000 and then pulled back. Spot ETF inflows continued across several sessions, but Sun cautioned against treating short-term flows as reliable predictors.
Long-term Treasury yields, ETF allocations and derivatives leverage therefore remain the indicators he considers most important alongside Fed policy. If sustained ETF inflows continue, they could support demand. If leverage becomes excessive while financial conditions tighten, market moves could become more vulnerable to changes in positioning.
The next Fed decision consequently represents a test of whether September was interpreted correctly as a largely anticipated move or becomes the first step in a sequence of increases. Sun’s assessment favors neither outcome as certain. It identifies the consequences of another increase as more significant for Bitcoin’s near-term path than the Senate’s failure to advance CLARITY.
