Bitcoin Tops $85,000 as a Short Squeeze Meets a Stalled CLARITY Act in Washington

Bitcoin Breaks Out to Its Highest Level Since January

Bitcoin briefly moved above $85,000 on Monday, marking its strongest price since January. The largest cryptocurrency gained more than 5% in 24 hours and is now down less than 3% year to date. It still trades roughly 32.5% below its October all-time high near $126,000, so the recovery is significant but far from complete. Only a week ago, on September 15, bitcoin was changing hands near $75,000.

A Short Squeeze Drives the Move

Derivatives data points to forced buying rather than fresh conviction. According to CoinGlass figures, roughly $750 million in crypto positions were liquidated over 24 hours, and about $648 million of that came from short positions. When a price rises quickly, traders betting on a decline are automatically closed out, and those closures require buying the asset, which pushes the price even higher. Open interest still rose to about $156 billion, which suggests that traders are opening new positions rather than stepping aside.

Macro Backdrop: The Fed and Falling Oil

The rally follows the Federal Reserve's 25-basis-point rate hike last Wednesday, its first increase since 2023. Markets took comfort from the central bank's projections, which showed a median policy rate of about 4.1% at the end of 2027 and implied limited room for further tightening. On Monday, falling oil prices added to risk appetite across global markets. Even so, traders price roughly a 56% chance of another hike in October, and a run of Federal Reserve speakers this week could quickly change the mood.

The CLARITY Act Stalls in the Senate

The bigger story for US crypto policy is the setback in Congress. On September 15, the Senate voted 49–50 against advancing the CLARITY Act, falling well short of the 60 votes needed to overcome a filibuster. The bill, which passed the House in July 2025, would divide oversight of digital assets between the SEC and the CFTC and create a defined category for digital commodities. Bitcoin fell below $75,000 after the vote, and spot bitcoin ETFs saw about $450 million in outflows the same day. Disputes over stablecoin rewards, ethics provisions and regulatory authority all contributed to the defeat.

A Public Dispute Over Who Is to Blame

The aftermath quickly turned into a blame game. On Saturday, Coinbase CEO Brian Armstrong said The Wall Street Journal was preparing a story that would hold him and Coinbase responsible for the bill's failure. He argued that his January objections, which covered decentralized finance, tokenization, CFTC authority and stablecoin rewards, were addressed in a revised draft, which he then strongly supported. As of Saturday, the story he described had not been published, so its actual claims remain unknown. Investor Anthony Scaramucci publicly defended Armstrong and called the blame game nonsense.

Regulators Step Into the Gap

With Congress stalled, attention is shifting to agencies. SEC Chair Paul Atkins has pledged to act decisively within the agency's existing authority, and CFTC Chairman Mike Selig has said his agency is ready to move forward with its rules. At the same time, seven Democratic senators said on September 16 that they would keep pushing the legislation, so the door to a legislative solution is not fully closed.

What to Watch This Week

Two forces will shape the next moves. The first is the macro calendar, including remarks from Fed officials such as Austan Goolsbee and John Williams and any shift in October rate expectations. The second is regulatory: whether the SEC and CFTC move quickly, and whether Senate supporters can revive the bill. Traders will also watch the $82,000–$83,000 zone as a key resistance area, while a fall back below $80,000 would show that the squeeze has run out of steam.