Bitcoin slips to $65,500 as surging yields and regulation bite
Rising Treasury yields and fresh Democratic opposition to the Digital Asset Market Clarity Act are driving capital out of bitcoin and into fixed income.
Bitcoin dropped to roughly $65,500, extending a pullback from a Wednesday peak near $66,700. The 0.7% decline dragged down major tokens including ether, solana, and XRP. A confluence of surging sovereign yields, spiking oil prices, and fading prospects for a landmark crypto bill drove the selloff.
The primary headwind remains a sharp repricing in global bond markets. The U.S. two-year Treasury yield jumped to 4.31%, marking its highest level since February 2025. Simultaneously, the benchmark 10-year yield rose to 4.66%, a peak not seen since May.
Because bitcoin generates no yield, higher rates fundamentally alter the calculus for institutional allocators. Investors are rotating out of speculative holdings and into government debt that now offers vastly improved risk-free returns. This dynamic leaves digital assets highly sensitive to macroeconomic tightening.
The bond market moves were catalyzed by surging energy costs and escalating geopolitical instability. West Texas Intermediate futures climbed to $88.60 per barrel, the highest price since June 11. This trajectory extends a steep rebound from recent lows below $70 and signals a fresh inflationary impulse.
Such inflation threatens to complicate efforts by central banks to cut interest rates globally. Military developments deepened the risk-off mood, as the U.S. deployed a B-1 long-range bomber on Tuesday to strike targets tied to Iran’s Islamic Revolutionary Guard Corps. According to Axios, this represents a clear escalation in the scale of American operations.
Against this macroeconomic backdrop, regulatory headlines further dampened crypto sentiment. Key Senate Democrats warned that the newest draft of the Digital Asset Market Clarity Act "falls short" on ethics and other critical provisions. Prediction markets reacted instantly, with Polymarket slashing the implied probability of passage from 46% to just 38%.
The legislative setback undermines industry lobbying for a clear market structure framework. Senate Republicans released the updated draft on Wednesday, pointing to an ethics provision agreed upon by the White House and President Donald Trump. Senator Bernie Moreno called the compromise "the most powerful ethics language in U.S. history."
Without Democratic backing, the bill faces an uphill battle in the Senate. This leaves crypto valuations exposed to harsh macro pressures without the safety net of clear federal guidelines. Until either rates ease or legislation passes, digital assets will likely struggle to find a bullish catalyst.
