Bitcoin Braces for Volatility as CLARITY Act Vote and Fed Rate Decision Loom

Bitcoin traders are bracing for a high-stakes week as two major catalysts converge: a Senate vote on the crypto CLARITY Act and the Federal Reserve's latest interest rate decision. BTC finished last week below its 50-week moving average near $77,400, though a bullish RSI divergence signals potential for a reversal. The dual events on Tuesday and Wednesday are expected to dictate risk-asset sentiment across the market.

The Federal Reserve is widely expected to raise benchmark rates by 25 basis points to a range of 3.75–4%, according to the CME Group's FedWatch Tool. Just a week ago, implied odds of a rate pause stood above 40%, but stubborn August CPI and PPI data, combined with surging oil prices above $100 per barrel, have shifted expectations firmly toward a hike. Fed Chair Kevin Warsh faces mounting political pressure from President Donald Trump, who has called not only for holding rates steady but for outright cuts. The Kobeissi Letter warned that escalating Middle East tensions could disrupt up to 30 million barrels per day of oil transit through the Strait of Hormuz, further fueling inflation expectations now at 4.6% among US consumers.

On the legislative front, the Senate will vote Tuesday on whether to advance the CLARITY Act, a landmark piece of crypto regulation that would establish a clearer framework for digital asset oversight in the United States. The outcome carries significant implications for market structure and investor confidence. With both events concentrated in a single 48-hour window, volatility across Bitcoin and the broader crypto market is virtually guaranteed.