Bitcoin is entering a critical week defending key technical levels while traders brace for two potentially market-moving events: a Federal Reserve interest-rate decision Wednesday and a Senate procedural vote on crypto regulation Tuesday.

According to reporting by CoinTelegraph, BTC closed last week below its 50-week moving average near $77,400, testing support levels that matter for a sustainable rally. The sell-off came as markets priced in expectations for a Fed rate hike and weighed regulatory uncertainty ahead of the CLARITY Act vote.

The immediate backdrop is straightforward. The Fed, led by Chair Kevin Warsh, is widely expected to raise benchmark rates by 25 basis points to 3.75–4.00% despite pressure from President Donald Trump to hold or cut. The CME FedWatch Tool shows just 13.3% odds of a rate pause—down sharply from 40% a week ago—as inflation data and surging oil prices above $100 per barrel have sharpened hawkish expectations.

Oil’s rise reflects genuine supply risks. The Kobeissi Letter warned that geopolitical tensions could block 30 million barrels daily from transiting the Strait of Hormuz, Saudi Arabia’s East-West pipeline, and now the Bab el-Mandeb Strait. Against a global market of roughly 100 million barrels per day, that disruption would be severe. US consumer inflation expectations have risen to 4.6% over the coming year—a 1.1 percentage-point jump from the start of 2026—driven by gas prices and trade tariffs.

CLARITY Act Vote: The Crypto Test

A day before the Fed speaks, the Senate will vote on advancing the CLARITY Act, the bipartisan crypto regulation bill that market participants have watched closely.

On Monday, Senate Republicans released what they called their “final offer” on the 635-page text. Senator Cynthia Lummis, who authored the update, tied the bill to ethics reforms and framed it as essential to US competitiveness in digital assets.

The procedural vote Tuesday at 2:15 p.m. ET requires 60 votes to advance the bill to the floor. Tyler Williams, a former crypto adviser to Treasury Secretary Scott Bessent, told podcast host Kyle Chasse on Saturday that odds had never looked better. “We are on the precipice of this becoming law,” he said.

But betting markets tell a different story. Polymarket odds for CLARITY becoming law in 2026 stood at just 34%—well below the 50%+ levels seen in early August. That disconnect between insider optimism and market pricing suggests traders are hedging their bets.

Bitcoin’s Technical Picture Deteriorates

The price action tells its own story. Bitcoin closed the week around $76,800, failing to hold $78,300—a level analyst Rekt Capital flagged as critical. Losing that level opens the door to a repeat of May’s failed breakout attempt.

More concerning for bulls: BTC is now trading below its 50-week exponential moving average at $77,380, a threshold that typically supports sustained bull trends. Rekt Capital identified the 21-week EMA at $72,270 as the next line in the sand. If Bitcoin can’t hold these moving averages as support, it signals the uptrend may not be as entrenched as many believe.

The chart pattern shows lower highs across the timeframe, keeping the longer-term bear-market structure intact. There’s one silver lining: a bullish RSI divergence persists through 2026, with the relative strength index making higher lows despite price weakness. That suggests underlying demand may be accumulating even as headlines dominate.

Derivatives-Led Rally Under Strain

Market positioning data reveals traders are already de-risking ahead of Tuesday and Wednesday’s events.

Santiment, the on-chain analytics platform, found that open interest in Bitcoin fell 13.5% in the week through September 11, dropping from 321,497 BTC to 278,151 BTC. At the same time, spot price fell 5%, suggesting the derivatives-driven momentum may lack real conviction from spot-market buyers.

“Positioning sits about 20% below where it was before the mid-August rally,” Santiment noted. That pullback is consistent with traders trimming exposure before binary events.

However, funding rates—which reflect the balance of long and short interest—have continued building bullish sentiment as BTC trades near $80,000. CryptoQuant’s research shows that since May, aggregate funding rates have gradually increased following a bearish phase in early March. Historically, negative funding rates have marked the final stages of Bitcoin corrections, before rallies take hold.

The divergence is telling: technical weakness and reduced open interest, but funding rates still climbing. It suggests some traders remain constructively positioned even as the broader market pulls back.

The Week Ahead

Tuesday’s CLARITY vote and Wednesday’s Fed decision will likely trigger volatility across risk assets. A yes vote could provide a modest tailwind for sentiment, though the market’s low confidence in passage suggests downside surprise is priced in. A Fed hike, meanwhile, should reinforce near-term headwinds for speculative assets, though traders have largely baked that outcome into positions already.

Bitcoin’s ability to stabilize above $76,800 and work back toward $78,300 will signal whether bulls can defend the recent rally or whether support is genuinely giving way. Given the technical deterioration and positioning pullback, the burden of proof falls on the bulls.