KEY POINT
- Bitcoin slides to yearly lows amid a global risk off move and U.S. regulatory uncertainty.
- Federal Reserve policy signals and crypto legislation debates weighed on investor sentiment.
- Altcoins including Ethereum, XRP and Solana tracked Bitcoin lower in synchronized declines.
Bitcoin slid to its lowest level of the year on Thursday as global investors pulled back from risk assets, weighing a broader Wall Street selloff, shifting expectations around US monetary policy and renewed uncertainty over federal cryptocurrency legislation in Washington.
Bitcoin’s latest downturn underscores how closely the digital asset market remains tied to traditional financial conditions and regulatory signals.
As lawmakers and regulators in the United States debate the future oversight of cryptocurrencies, price action this week reflected investor caution rather than speculative enthusiasm.
Bitcoin was last trading near $84,400 on Thursday afternoon in New York, down more than 5 percent on the day and marking its weakest level so far in 2026.
The world’s largest cryptocurrency has spent much of January rangebound, gaining roughly 1 percent for the month before the latest selloff accelerated.
The decline came alongside a sharp pullback in US equities, particularly technology and software stocks, as well as a sudden reversal in gold prices after bullion briefly surged above $5,500 an ounce earlier in the session.
Investors also assessed the Federal Reserve’s decision Wednesday to leave interest rates unchanged while signaling caution on the pace of future policy easing.
Cryptocurrency markets have remained sensitive to macroeconomic tightening cycles since 2022, when rising interest rates reduced demand for speculative assets and increased competition from higher-yielding traditional instruments.
Regulatory uncertainty added another layer of pressure. A landmark proposal known as the Clarity Act, aimed at defining whether cryptocurrencies fall under securities or commodities law, recently stalled in the US Senate. That setback has left market participants unclear about how digital assets will be supervised in the near term.
Paul Atkins, chair of the Securities and Exchange Commission, and Michael Selig, chair of the Commodity Futures Trading Commission, are preparing a joint regulatory framework to clarify agency oversight, according to reporting by The Wall Street Journal.
The effort follows ongoing disagreements between lawmakers, regulators and industry leaders over jurisdiction and consumer protections.
“Markets dislike ambiguity, and right now the regulatory picture is still fragmented,” said Sheila Warren, chief executive officer of the Crypto Council for Innovation, a Washington based industry group. “Until Congress provides a clearer statutory foundation, price volatility is likely to persist.”
Meanwhile, the White House is expected to host senior executives from the banking and cryptocurrency sectors next week as part of an administration led crypto council, according to Reuters.
Discussions are set to include whether crypto firms should be allowed to offer interest or rewards on dollar pegged stablecoins.
| Asset | Price Thursday | Daily Change | January Performance |
|---|---|---|---|
| Bitcoin | $84,437 | -5.7% | +1% |
| Ethereum | $2,818 | -6.1% | -3% |
| XRP | $1.80 | -5.6% | -2% |
| Solana | — | -7% | -4% |
Michael Novogratz, founder and chief executive officer of Galaxy Digital, said the market reaction reflects broader financial conditions rather than a fundamental shift in blockchain adoption.
“This is a macro driven move,” Novogratz said in a televised interview. “When liquidity tightens and policymakers send mixed signals, crypto trades like other high-beta assets.”
Regulators argue that clearer rules could ultimately stabilize markets. Rostin Behnam, former CFTC chair and now a senior fellow at Georgetown University, said regulatory coordination is essential for long-term growth.
“A coherent framework would reduce uncertainty for investors and firms while strengthening consumer protections,” Behnam said. “But that process takes time and bipartisan agreement.”
In the near term, investors are expected to monitor developments in Congress, signals from US regulators and upcoming economic data that could influence Federal Reserve policy.
Any progress on legislation defining crypto oversight or stablecoin rules could affect market sentiment, though officials have cautioned that negotiations remain complex.
Bitcoin’s slide to yearly lows highlights the continued interplay between macroeconomic forces and regulatory policy in shaping digital asset markets.
While long term adoption trends remain intact, near term price movements are likely to remain volatile as investors await clearer guidance from US lawmakers and regulators on the future of cryptocurrency oversight.
FAQ 1:
Why is Bitcoin price falling today?
Bitcoin price is falling due to global market selloff, U.S. interest rate uncertainty, and concerns over new crypto regulations.
FAQ 2:
Is U.S. crypto regulation affecting Bitcoin?
Yes, uncertainty around U.S. crypto laws and regulatory oversight is increasing volatility in Bitcoin and the broader crypto market.
FAQ 3:
Will Bitcoin recover after this drop?
Bitcoin recovery depends on market sentiment, Federal Reserve policy signals, and clarity around upcoming U.S. crypto legislation.