Bitcoin jumped above $80,000 despite a Fed rate hike and the CLARITY Act setback in the U.S. Senate, Ethereum and Base developers failed to reach agreement, and other highlights of the week.
Bitcoin shows signs of strength
The first cryptocurrency started the week around $77,000 as market participants awaited the Fed’s rate decision. The U.S. central bank did tighten monetary policy, but instead of the anticipated pullback, bitcoin rose about 1%.
A dip to $75,000 came after the Senate’s procedural vote on the CLARITY Act failed. Experts linked it to selling primarily by U.S. investors.
However, overnight from September 18 to 19, bitcoin quickly broke through the $81,000 level, gaining about 5% and pulling the broader market higher.
For the week, the first cryptocurrency held a gain of more than 4.8% and consolidated above $80,000. More notable moves came from Zcash (+32%), Hyperliquid (+17%) and Solana (+8%).
Spot bitcoin ETFs recorded a $6.21 million net inflow for the week. The figure turned positive thanks to Friday’s session, when investors added $433 million to the products in a single day.
Ethereum funds ended a four-week streak of continuous inflows and saw $140 million in outflows. Despite this, total assets in the investment products rose from $16.3 billion to $16.7 billion on the back of the cryptocurrency’s price increase.
The crypto Fear and Greed Index rose from 61 to 71. Despite the positive move, the metric remains in the “moderate greed” zone.
The digital asset market capitalization increased from $2.63 trillion to $2.75 trillion. Bitcoin’s dominance was almost unchanged at 58.9%, as was Ethereum’s share at 11.5%. The former added 0.1%, while the latter declined.
Fed raises key rate for the first time since 2023
On September 16, the U.S. Federal Reserve (the Fed) raised the target range for the federal funds rate by 25 basis points to 3.75%-4%.
The Federal Open Market Committee (FOMC) approved the decision unanimously, in line with market expectations. At the June meeting, only three members supported raising the range—with nine others voting to leave rates unchanged.
This is the first Fed tightening since July 2023, when the central bank under Jerome Powell raised the range by the same 25 bps to 5.25%-5.5%.
The current chair, Kevin Warsh, said in his opening remarks that the economy appears to be strengthening, but overall financial conditions are hard to call restrictive. In August, at the Fed’s Jackson Hole symposium, he stated the central bank’s commitment to achieving its 2% inflation target.
In its press release, the FOMC also noted stronger economic activity, rising labor productivity and low unemployment. Among the negatives were uncertainty stemming from geopolitical events and rising prices.
What to discuss with friends?
- BIS research found a sixfold gap in estimates of bitcoin transfers.
- Hackers demanded $3 million in Monero from Revolut for customer data.
- 404 Media: hundreds of OpenAI contractors read ChatGPT users’ conversations.
- Poland lost at least $230 million in USDT while buying Venezuelan oil.
CLARITY Act suffers first setback
On September 15, the CLARITY Act failed its first test — a procedural vote in the U.S. Senate that ended 49 in favor and 50 against. At least 60 votes were required to end debate and proceed to the bill.
Democrats opposed it over concerns related to crypto assets and President Donald Trump’s income.
Market participants called the outcome disappointing. The industry is now looking to new rules from the SEC and the CFTC.
Jessica Martinez, U.S. head of policy at Fireblocks, said the company will continue to work with both agencies. Ripple CEO Brad Garlinghouse called the result “painful” and urged a review of why it failed.
On the eve of the vote, U.S. Securities and Exchange Commission Chair Paul Atkins promised to develop clear rules for the crypto market. Businesses, however, doubt that agency guidance will give investors the same confidence as a full-fledged law.
NEAR chief legal officer Abhishek Vaidyanathan noted that companies are now fully dependent on regulators’ decisions and guidance.
“Firms planning 2027 budgets will face another delay. That puts them back to evaluating each case and endless legal work,” he added.
Ethereum and Base developers drop plan for a unified wallet standard
Teams working on Ethereum and Base will continue to develop two separate account abstraction mechanisms — EIP-8141 and EIP-8130. Ethlabs researcher Derek Chiang said work on a joint solution had ended.
Both initiatives would move some wallet functions directly into the protocol. The idea is that users could confirm transactions with a smartphone access key, bundle multiple actions into a single transaction, and designate another party to pay the fee.
The authors sought to create a common standard for Ethereum and Base. Talks ended last week due to differing requirements for the future mechanism.
According to Chiang, Ethereum developers focused on censorship resistance, privacy and security. Base’s priorities were scaling, configurability and regulatory compliance.
As a result, the teams decided to advance EIP-8130 and EIP-8141 independently.
If both proposals are implemented, wallet developers will have to support two native transaction formats — one for Ethereum and another for Base.
Also on ForkLog:
- Developers moved to final testing of Bitcoin Core 32.0.
- Chipmakers’ shares fell after Altman and Amodei called to slow AI development.
- The SEC allowed limited trading of tokenized shares.
- Circle deployed the Arc financial blockchain mainnet.
U.S. House committee approves bitcoin reserve bill
The U.S. House Financial Services Committee approved a bill to establish a strategic bitcoin reserve at the federal level. Twenty-eight lawmakers voted in favor and 21 against.
In May, Republican Nick Begich and Democrat Jared Golden introduced the American Reserve Modernization Act (H.R. 8957). Before the vote, the committee approved an updated version proposed by Republican Bryan Steil.
The bill can now be brought to a vote of the full House. It would then need to pass the Senate and be signed by the president.
The legislation would require the U.S. Treasury to create a strategic bitcoin reserve within 180 days and a separate holding for other digital assets.
Federal agencies would be required to inventory cryptocurrencies under their control. Bitcoins owned by the government and not designated by law for other purposes would be transferred to the reserve. This includes finally confiscated coins, if they do not need to be returned to victims or used for legally mandated payments.
Other digital assets would go to a separate stock. The Treasury could sell them under preapproved rules. Proceeds would first cover the costs of managing both funds, with the remainder used to reduce the national debt.
Bitcoins transferred to the reserve would be prohibited from being sold, exchanged, pledged, or otherwise used for 20 years after the law is enacted.
What else to read?
We looked into why businesses have stopped chasing cutting-edge AI models, and why parts of the industry are calling to “slow down.”
We explained in Cryptorium educational cards what Shor’s algorithm is and why it has become a threat to bitcoin as quantum computing advances.
We examined the architecture of the “green” AI project EcoGPT and how its proposed climate model works.
We compiled the week’s most notable cybersecurity events in our regular digest.
