The cryptocurrency bill faced a serious obstacle: how a delay in Congress led to the collapse of Bitcoin

An unexpected obstacle in US legislation triggered a significant pullback in the cryptocurrency market. On Thursday, Bitcoin fell below the critical level of $96,000 after the Senate Banking Committee canceled scheduled hearings on the structure of the crypto market. The cancellation occurred amid Coinbase, the largest cryptocurrency exchange, unexpectedly withdrawing its support for the bill late Wednesday evening.

Why Bitcoin lost momentum in just one day

The cryptocurrency market experienced impressive growth throughout the week, with Bitcoin rising from $90,000 to a peak just below $98,000. However, rapid developments changed the situation. Market analysts note that the committee’s cancellation of key hearings acted as a signal of uncertainty for investors, prompting profit-taking and capital shifting into safe-haven assets.

Current data show the price has dropped to $87.83K, reflecting ongoing market pressure. This means that Bitcoin has lost over $10,000 from its weekly high in just a few days — a serious correction in absolute terms.

A major legislative obstacle weakened investors

The main catalyst for the decline was the delay of the crypto legislation on market structure. When Coinbase withdrew support for the bill, it created an obstacle to its further progress in Congress and signaled fundamental disagreements within the industry regarding the proposed regulations.

This political obstacle proved particularly sensitive, as many crypto investors expected that passing the law would pave the way for a more favorable regulatory environment in the US and attract new institutional investments into the sector.

The preliminary rally ended with deflation of expectations

The weekly rally of Bitcoin occurred amid global concerns about the situation in Iran and possible US intervention. During this period, Bitcoin exchange-traded funds attracted over $1.7 billion in new investments in the first three days of the week — a figure demonstrating one of the strongest capital inflows in recent months.

However, the market turned when it became clear that geopolitical risks were receding into the background, and regulatory uncertainty was taking center stage. Meanwhile, US stocks showed mixed behavior: the Nasdaq index rose nearly 1%, and the S&P 500 increased by 0.65%, indicating investor selectivity in asset choices.

Cryptocurrency derivatives reflected market pessimism

Crypto stocks and related assets immediately reacted to the news. Coinbase (COIN), Circle (CRCL), and MicroStrategy (MSTR) lost between 3% and 5% in a single downward move, demonstrating high correlation in risk perception.

Open interest in derivatives markets declined, indicating traders were closing positions. At the same time, volatility increased, and there was a rise in protective put options, along with an increase in short positions, reflecting overall market pessimism about short-term price dynamics.

CoinDesk 20 index follows the overall decline

In addition to Bitcoin, the broad CoinDesk 20 cryptocurrency index also showed a noticeable decline, confirming the systemic nature of the pullbacks and the absence of local support levels. Investors moved into risk-free assets, which is typical during periods of heightened uncertainty.

Ecosystem projects also felt the shift

Meanwhile, developments within the crypto ecosystem continued despite the overall downturn. The Optimism community approved a 12-month plan that allocates about half of the Superchain’s revenue to a token buyback program for OP, starting in February. However, even such positive news did not prevent the OP token price from continuing to decline along with the overall market trend.

The Pudgy Penguins project is strengthening its position as one of the most successful NFT-native brands of the current cycle, transitioning from speculative “digital luxury items” models to a multi-vertical consumer IP platform. The project’s strategy involves attracting users through mainstream channels — toys, retail partnerships, and viral content — followed by integration into Web3 via games, NFTs, and the PENGU token.

The Pudgy Penguins ecosystem already includes physical-digital products (over $13M in retail sales and more than 1M units sold), gaming projects (Pudgy Party exceeded 500k downloads in two weeks), and a widely distributed token (airdropped to over 6M wallets). Nevertheless, even ambitious initiatives within the crypto ecosystem are affected by macroeconomic uncertainty.

What’s next: obstacles and opportunities

The crypto legislation remains a significant obstacle to industry development. Its fate in Congress now appears less certain after the hearings were canceled and Coinbase withdrew support. Investors will closely monitor political developments, as the outcome of this legislative battle could significantly influence the long-term dynamics of the crypto market.