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What happened: Bitcoin (BTC-USD) dropped more than 2% on Tuesday to trade just above $63,000 per token, its lowest level in 10 days.
What's behind the move: A rout in AI-related stocks, ambiguity over the Fed's next policy decision, and possible delays to crypto legislation in Congress weighed on bitcoin sentiment.
In recent days, optimism around crypto's landmark legislative push has faded as the timeline to pass the industry's major bill runs up against a key deadline: Congress's August recess, which begins after next week.
Known as the Clarity Act, the bill would establish a federal legal framework for much of the crypto industry, including market oversight, guidelines for institutional participation, and protections for consumers and businesses.
Polymarket bettors lowered the odds that the bill would become law this year to 35%, down from 55% earlier this month.
Additionally, August and September are bitcoin's seasonally weakest months as liquidity typically thins, according to Compass Point analyst Ed Engel.
"If Clarity Act doesn't pass, we see very strong support near ~$55k and would be buyers if BTC sells off this far," said Engel in a note on Monday night.
What else you need to know: Strategists have also pointed to the Federal Reserve's policy decision due Wednesday as a key factor that could impact bitcoin prices.
"For crypto, I continue to view the Fed's messaging around financial conditions and inflation as more important than the policy decision itself," said Sean Farrell, head of digital assets at Fundstrat.
Farrell noted the market has increasingly priced in the prospects of a 25 bps hike over the past few trading days.
"My view is that we receive another 'hawkish hold,' but one must respect the non-negligible possibility of a rate hike," he said.
The world's largest cryptocurrency is down roughly 50% from its October all-time high of about $126,000.
