Bitcoin remained trapped between roughly $62,000 and $66,000 as tighter U.S. rate expectations, stalled crypto legislation and weak stablecoin growth limited demand across digital assets. The range-bound trading has offered relative shelter compared with many alternative tokens, but it has emerged alongside a pronounced contraction in market activity rather than a clear return of risk appetite.
Bitcoin was down about 3% over the previous week, according to the market figures cited in the trading data, while total cryptocurrency trading volume had fallen 80% from its earlier high and roughly 60% from its peak in the fourth quarter of 2025. Total crypto market capitalization was also about 50% below prior levels.
That combination points to a market with fewer active participants and less liquidity available to absorb sharp moves. Bitcoin’s narrower decline does not necessarily indicate renewed demand; it may also reflect its position as the most established and liquid crypto asset during a period when traders are reducing exposure to smaller, more speculative tokens.
Fed expectations weigh on risk assets
Expectations for U.S. monetary policy have become more restrictive since late January, when reports first emerged of Kevin Warsh’s nomination. The two-year U.S. Treasury yield, a closely watched gauge of near-term rate expectations, rose about 35 basis points over the period, based on U.S. Treasury yield data.
Higher short-dated Treasury yields generally signal that markets expect interest rates to stay elevated for longer, or potentially rise further. That environment can put pressure on assets whose valuations depend heavily on abundant liquidity and lower borrowing costs, including cryptocurrencies and technology shares.
The Federal Open Market Committee’s divisions have sharpened the policy uncertainty. A reported 9–3 balance favoring a decision to hold rates, rather than raise them, leaves the market confronting a central bank that has not embraced near-term easing and where support for further tightening remains visible.
Bitcoin’s fall to around half of its October 2025 peak near $126,000 has taken place during that reassessment of rates and liquidity. The decline cannot be attributed to monetary policy alone, since digital-asset markets are also managing regulatory uncertainty, token supply overhangs and weakening activity. Yet rising Treasury yields have removed one of the more supportive conditions for speculative markets.
Clarity Act faces a slower path
Regulatory progress has provided little immediate support. A July 17 prediction-market estimate put the chance of the proposed CLARITY Act becoming law by the end of 2026 at 32%, reflecting a slower and more contested legislative process than some crypto advocates had anticipated.
The bill’s schedule is constrained by competing Senate business, the approaching summer recess and unresolved debates over stablecoin interest payments, anti-money-laundering requirements and ethics language. Those disagreements reach beyond minor drafting issues: each could determine how much latitude crypto firms have in designing yield products, handling compliance obligations and dealing with conflicts of interest.
The CLARITY Act is intended to establish clearer federal rules for digital-asset markets and divide responsibilities among U.S. regulators. A prolonged delay leaves firms and traders operating with many of the same jurisdictional questions that have shaped the sector for years, including how particular tokens and trading activities should be treated under securities and commodities laws.
The market reaction so far has been muted rather than disorderly. Bitcoin’s ability to remain inside a defined range suggests sellers have not forced a broad capitulation, even as legislative optimism has faded. A stable price range, though, can also reflect a lack of conviction from buyers waiting for clearer macroeconomic or regulatory signals.
Stablecoin supplies remain flat
Stablecoin data offers another indication of constrained fresh liquidity. The market capitalizations of USDT and USDC showed no sustained expansion from November 2025 through the period covered by the figures, limiting the growth in dollar-denominated liquidity that often accompanies stronger crypto trading conditions.
Stablecoins are not a complete measure of demand, since market participants can enter crypto through many channels. Their supply trends nevertheless provide a useful indication of funds moving into the on-chain economy. When USDT and USDC supplies expand, more dollar-linked capital is generally available for settlement, lending, decentralized finance activity and token purchases. Flat supply removes that tailwind.
The reported $205 million of net July inflows into U.S. spot Bitcoin funds adds to the picture of restrained institutional demand. The figure marked the weakest monthly result on record for those products in the supplied fund-flow data, though flows can reverse quickly and do not capture the entire Bitcoin market.
Bitcoin outperforms as older tokens face supply pressure
Bitcoin has held up better than many older-cycle alternative tokens, where legacy holder selling and token unlocks have added pressure. Unlocks release previously restricted tokens into circulation and can increase sellable supply, particularly when early backers, project teams or treasury holders seek liquidity in a weak market.
That dynamic can make Bitcoin relatively attractive within crypto portfolios even when the asset itself is falling. Its supply schedule is more predictable, and it does not face the recurring unlock calendar that affects many newer and older token projects. Relative strength in this setting is therefore more defensive than bullish.
Bitcoin network computing power also continued to rise despite the price weakness. The network’s hash rate reached approximately 897 million terahashes per second, or 897 exahashes per second, near month-end, according to the supplied network measure. Hash rate tracks the computing power miners devote to securing the blockchain; rising levels indicate continued mining investment and competition, though they do not predict near-term price direction.
Traders looking for evidence of a more durable recovery are watching whether Bitcoin can reclaim $70,000 alongside a sustained pickup in daily trading volumes and improvement in technical indicators. Until then, the market remains defined by a narrow Bitcoin range, thin participation and policy conditions that have yet to turn supportive.
For deeper insight into rate moves and Bitcoin’s trading floor, explore how Fed rate cuts influence BTC volatility now.
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