Bitcoin rallies to $85,000, the highest since January, defying Clarity Act shock ahead of historic Uptober

Bitcoin briefly surged above $85,000 on Monday, marking its highest print since January and capping a striking rebound that has largely shrugged off last week’s U.S. Senate failure to pass the Clarity Act.

The world’s largest cryptocurrency jumped as much as 3 per cent in a single hour during Asian trading, triggering more than $250 million in short liquidations across the network. The move extended a recovery that began late last week, when Bitcoin reclaimed $80,000 after dipping toward $75,000 in the immediate aftermath of the legislative setback.

On September 15, the Senate voted 49-50 against cloture on the motion to proceed with the Clarity Act, the industry’s flagship market-structure bill. Sixty votes were required. Every Democrat present opposed the measure, joined by Republicans Susan Collins, Josh Hawley and Jerry Moran. Supporters, led by Sen. Cynthia Lummis, called the outcome a political defeat that all but ended prospects for passage before the November midterms. Bitcoin sold off sharply that day and the next, breaking below $76,000 as traders priced in continued regulatory uncertainty.

The market’s subsequent resilience has been notable. Rather than treating the vote as a lasting blow, buyers returned on a combination of spot demand, forced covering and incremental regulatory progress outside Congress. 

Bitcoin’s great rebound 

U.S. spot Bitcoin ETFs absorbed $433 million on September 18 alone, led by Fidelity’s FBTC with $310.7 million and BlackRock’s IBIT with $108.4 million. Those inflows offset earlier midweek redemptions of roughly $746 million and left the week with a slender $6.2 million net positive. Cumulative inflows since the products launched in 2024 now stand near $55 billion, with total net assets above $102 billion.

A short squeeze amplified the rebound. Leveraged bets against Bitcoin were unwound as the price pushed through $80,000 and then $82,000. On Monday, the squeeze intensified again, with Coinglass data showing more than $250 million in short liquidations in a concentrated window. Analysts noted that the $83,000–$85,000 zone remains near-term resistance; a sustained close above it would open a path toward $87,000–$90,000. 

In all fairness, Washington did not go entirely quiet on blockchain after the Senate vote. On September 17, the Securities and Exchange Commission opened a limited innovation exemption allowing qualifying tokenised U.S. stocks to trade on-chain under volume caps. The Commodity Futures Trading Commission separately sent broader crypto-market rule proposals to the White House. Market participants described these agency steps as a partial substitute for legislation, reducing some of the legal fog that had hung over trading venues and issuers.

Macro conditions also helped. The Federal Reserve delivered a 25-basis-point rate hike last week, its first since 2023, yet risk assets recovered as oil prices eased from recent highs near $108 and long-term Treasury yields pulled back. The debasement trade narrative, Bitcoin and gold as hedges against fiscal expansion and dollar weakness, has remained a background theme since the Treasury expanded long-end buybacks in August. That earlier policy shift helped lift Bitcoin roughly 25% that month.

The result is a market that has absorbed two apparent negative incidents, the Clarity Act failure and a hawkish Fed, and still posted an impressive multi-day run. Bitcoin is now up more than 5 per cent on the week and has reclaimed major short-term moving averages. Total crypto market capitalisation has climbed back above $2.8 trillion, with some altcoins outperforming.

Attention now turns to the September close and the seasonal pattern known as Uptober. October has historically been one of Bitcoin’s strongest months, delivering positive returns in the large majority of years since 2013 and average gains near 20 per cent. Standout performances include 2017 (+47–48 per cent), 2021 (+40 per cent) and 2023 (+24–29 per cent). The nickname is not a guarantee; 2014 and 2018 were exceptions, but the pattern has become a fixture of trading calendars. A firm September finish above $85,000 would position the market for that traditional fourth-quarter window.

However, risks remain. Leverage is still elevated, Treasury yields have not fully reversed, and the midterm election calendar could keep policy in flux. 

A failure to hold $87,000 would likely invite another test of the mid-$70,000s. Yet, for now, the tape has sent a clear message: the Clarity Act’s defeat in the Senate did not halt institutional demand or the technical recovery already underway. Bitcoin’s brief spike to $85,000 on Monday was the latest evidence that the market has chosen to look through the political disappointment and toward the final quarter of the year.