Bitcoin Whipsawed: Senate Regulatory Breakthrough Clashes with Hot Inflation Data

Bitcoin dips below $80K as PPI inflation spikes, but Senate advances crypto clarity bill. ETF outflows hit $635M, miners sell, yet regulatory hope emerges.

Bitcoin finds itself caught between Washington's push for clearer digital asset rules and a fresh burst of US inflation that has sent exchange-traded fund investors running for the exits. The top cryptocurrency briefly tumbled below $80,000 on Thursday before recovering to $81,293, as two opposing forces battled for control of the narrative.

The trigger for the sell-off was the April Producer Price Index, which surged to an annual rate of 6 percent. That jolted rate-cut expectations off the table. The CME FedWatch Tool now assigns a 97 percent probability to a June rate hike, with Kevin Warsh's confirmation as the new Federal Reserve chair adding another layer of uncertainty for risk assets.

Institutional investors responded swiftly. US spot Bitcoin ETFs recorded net outflows of $635 million on Wednesday, the steepest daily withdrawal since late January. The BlackRock iShares Bitcoin Trust alone shed nearly $300 million. The reversal is stark given that the same funds had absorbed roughly $2.44 billion in inflows during April, underscoring how quickly sentiment can shift when macro data delivers a surprise.

Capitol Hill Offers a Counter-Narrative

Yet even as inflation fears pummeled the market, a different story was unfolding in Washington. The Senate Banking Committee voted 15-9 to advance the Digital Asset Market Clarity Act, a bill that would formally divide oversight between the Commodity Futures Trading Commission and the Securities and Exchange Commission. The CFTC would take charge of most crypto assets, while the SEC retains authority over digital securities — a separation the industry has long argued would resolve the jurisdictional battles that have plagued the market.

The vote drew rare bipartisan backing. Democratic Senators Ruben Gallego and Angela Alsobrooks crossed party lines to support the measure. Crypto-exposed equities jumped in sympathy: Coinbase rallied more than 8 percent, Galaxy Digital added 6.3 percent, and Strategy, the largest publicly traded Bitcoin holder, climbed 7 percent.

The legislation builds on a joint SEC-CFTC classification earlier this year that treated Bitcoin as a digital commodity. If passed, the Clarity Act would embed that administrative view into federal law, potentially opening the door to broader institutional participation.

Miner Pain and State Selling Add Pressure

Corporate distress intensified the selling pressure on Thursday. MARA Holdings disclosed a first-quarter loss in the billions and said it had sold more than 20,000 Bitcoin to reduce debt. The mining giant now plans to pivot most of its capacity toward artificial intelligence infrastructure. Rival Bitdeer posted a net loss of nearly $160 million despite strong revenue growth.

State actors are also lightening their holdings. The Kingdom of Bhutan transferred an additional $8 million worth of Bitcoin on Thursday, bringing the total it has liquidated this year to roughly a quarter of a billion dollars.

On exchanges, the price slide triggered a cascade of liquidations. Binance processed more than $850 million in sales within a single hour, and open interest in leveraged positions contracted sharply.

Technical Levels and a Stubbornly Optimistic Undercurrent

Chart watchers now eye the 50-day moving average near $74,600 as the next meaningful support. The 200-day moving average, currently just above the market price, has so far blocked any attempt to regain upside momentum.

Nevertheless, the structural undercurrent is not entirely bearish. Strategy held 818,334 Bitcoin at the end of the first quarter, acquired for roughly $61.81 billion at an average price of about $75,500 per coin. The post-halving supply schedule now mints just 450 new Bitcoin per day, a constraint that historically has provided a floor during periods of selling.

The Clarity Act still faces a steep climb. With 53 Republican seats in the Senate, the bill will need at least 60 votes to overcome procedural hurdles — meaning it cannot afford to lose any GOP support and must pick up several Democrats beyond the two who backed it in committee. Cody Carbone of the Digital Chamber pointed to an ethics clause as a potential compromise mechanism. Galaxy Digital rates the odds of enactment by 2026 at 55 percent.

For now, Bitcoin is suspended between two realities: a legislative tailwind that promises structural uplift and a macro headwind that reminds investors that no asset class escapes the gravitational pull of rising rates. The next real test — the full Senate vote — will determine whether Washington can deliver a law that outlasts the current inflation scare.