Bitcoin fell on Thursday, continuing to trade below key levels amid growing concerns about rising US interest rates and the increasing inflationary impact of the war with Iran.
Cryptocurrency markets turned cautious ahead of the Senate Banking Committee's hearing on the highly anticipated Clarity Act later on Thursday. The committee released the final version of the bill early Wednesday.
The focus also remained on the ongoing US-China summit in Beijing, where US President Donald Trump and his Chinese counterpart Xi Jinping held high-level talks on Thursday.
Bitcoin fell 1.4% to $79,807.30 by 9:58 AM Riyadh time.
The hearing on the Clarity Act is scheduled for today, Thursday.
The Senate Banking Committee is scheduled to hold a crucial review hearing on the Transparency Act later on Thursday. Some senators have warned that any delay in passing the bill now could effectively freeze it until 2030.
The committee released the final version of the bill earlier this week, as lawmakers seek a compromise that satisfies both the digital currency sector and the banking sector.
The main point of contention is the ban on negative interest payments on stablecoins by cryptocurrency platforms, which the banking sector has consistently opposed due to its similarity to traditional savings accounts.
Bank advocates also called for stricter controls on money laundering and enhanced regulatory scrutiny of dividend payments linked to stablecoins.
The bill in its current form does not include a blanket ban on all forms of returns, but is limited to a ban on negative interest only.
Bitcoin loses support level at $80,000
Bitcoin's drop below $80,000 has broken one of the key support levels for the world's largest cryptocurrency.
This breakout may indicate the possibility of further losses in the cryptocurrency market, especially if negative sentiment persists in global markets.
The pressure on Bitcoin came primarily as a result of escalating concerns about rising US interest rates, following the release of April's consumer and production inflation data which came in above market expectations.
Continued high inflation could prompt the Federal Reserve to keep interest rates unchanged this year, a scenario widely anticipated by markets. Analysts have also observed some traders building positions in anticipation of a potential interest rate hike by the US central bank.
High or stable interest rates negatively affect high-risk assets, such as cryptocurrencies, as they increase the opportunity cost of investing in this sector.
Cryptocurrency prices today
Prices of alternative cryptocurrencies (altcoins) generally declined in tandem with Bitcoin's drop. Ether, the world's second-largest cryptocurrency, fell 1.6% to $2,265.84, while XRP dropped 2% to $1.43.
Solana and Cardano both fell by 4.2% and 3.0% respectively, while BNB declined by 1.3%.
As for the Memecoins category, Dogecoin rose by 1.8%, while TRUMP fell by 4.9%.
