Bitcoin was trading at $86,423 on Tuesday, well above the level below $76,000 recorded a week earlier. iTrustCapital CEO Kevin Maloney and Fundstrat Capital Chief Investment Officer Tom Lee both said the market may have moved past its most difficult phase after higher interest rates and a setback for U.S. crypto legislation. However, Federal Reserve officials still expect another rate increase this year, while outflows from bitcoin ETFs show that investors have yet to reach a clear consensus on the rebound.
Kevin Maloney: The Crypto Winter May Be Over
iTrustCapital provides cryptocurrency and stock investment services through retirement accounts. In an interview with Paul Barron, CEO Kevin Maloney said the prolonged “crypto winter” had ended and that clients were once again allocating cash that had previously remained on the sidelines.
Maloney said iTrustCapital was holding about $350 million in idle client cash at the time, with “a large portion” subsequently returning to the market. He also argued that bitcoin does not need the CLARITY Act to continue developing, suggesting that capital allocation in the U.S. crypto market is not entirely dependent on the bill becoming law.
Maloney identified a weekly close above $85,000 as an important threshold. If bitcoin can finish the week above that level, he said, market conditions would look relatively favorable. Bitcoin had moved back above the threshold by Tuesday, although its ability to hold there remains untested.
Tom Lee Sees Fed Tightening Near a Peak
Tom Lee views the latest rate increase as an important point in the current tightening cycle rather than the start of a new, sustained push toward tighter policy. In a weekly update, he noted that the United States will change the way it calculates inflation data on September 30. Economists expect the revision could bring the Federal Reserve’s preferred personal consumption expenditures (PCE) inflation rate down from 3.4% to near 3%.
Lee said the Fed’s policy stance has limited room to become more hawkish. He also said that even another 25-basis-point increase this year would not necessarily damage the U.S. economy or equity market directly. For crypto assets, whether interest rates are approaching a near-term peak remains important for dollar liquidity and the valuation of risk assets.
Bitcoin Rebounds After CLARITY Act Setback
The market has recently faced two adverse developments. On September 15, the CLARITY Act failed a procedural vote in the U.S. Senate by 50 votes to 49, falling short of the 60 votes required. The bill was intended to clarify which U.S. regulator would oversee the digital-asset market.
One day later, the Federal Reserve raised its benchmark interest rate by 25 basis points, taking the target range to 3.75% to 4%. It was the first Fed rate increase since 2023. Bitcoin briefly fell below $76,000 after the votes, but gradually recovered and moved back toward $85,000.
The price action indicates that the bill’s failure and the rate increase did not immediately trigger sustained selling. The recovery does not mean regulatory uncertainty has disappeared, however. Whether the CLARITY Act returns to the legislative agenda and how responsibility for U.S. digital-asset oversight is divided remain variables for institutional investors to assess.
Fed Forecasts and ETF Flows Keep Investors Cautious
The Fed’s internal projections do not fully support the view that tightening is over. In the latest forecasts, 16 of 18 officials expected another rate increase this year. If that outlook is realized, liquidity and valuations for highly volatile assets could remain under pressure.
Fund flows also point to caution. On September 15, bitcoin exchange-traded funds recorded combined outflows of about $450 million, indicating that some investors pulled money from the market as prices fell and policy uncertainty increased.
Bitcoin was up about 0.6% on the day at the time of publication. The next key indicators will be the revised inflation data due on September 30 and whether bitcoin can maintain a weekly close above $85,000. Maloney’s and Lee’s assessments that the market may have bottomed still require confirmation from price action, ETF flows and further signals from the Federal Reserve.
