Bitcoin and Ethereum prices fell sharply on Wednesday, September 16, 2026, as the crypto market reacted to the failure of the US CLARITY Act in the Senate and waited for the Federal Reserve’s interest-rate decision later in the day.
Because it did not receive the required 60 votes, the bill failed a procedural Senate vote on Tuesday. Because of concerns over government ethics provisions and potential conflicts of interest involving the president, senate Democrats blocked the bill’s advancement. Because president Donald Trump and his family have been involved in crypto investments and other digital-asset businesses, the concerns are particularly significant. Because investors are waiting for the Federal Reserve’s interest-rate decision on Wednesday, the crypto market is also under pressure.
He said the crypto industry had spent about 18 months working with Democrats and Republicans on the legislation before the effort broke down at the final stage. It was down 3.6% from one week ago. Despite the weekly decline, Bitcoin was still up 19.9% compared with one month ago.
If the central bank does raise rates, it would be the first US rate hike in three years, according to Yahoo Finance. A major reason behind Wednesday’s crypto sell-off was the failure of the Digital Asset Market CLARITY Act to advance in the US Senate. The setback raised fresh uncertainty around efforts to create a clearer regulatory framework for the US crypto industry. Galaxy Digital CEO Mike Novogratz criticised the Senate’s failure to advance the bill. Markets were expecting the Fed to raise interest rates later Wednesday. Investors are watching both the central bank’s decision and what Fed officials say about the future path of interest rates. The combination of the CLARITY Act setback and uncertainty ahead of the Fed decision has added pressure to crypto prices. Bitcoin and Ethereum were already moving lower before Wednesday’s market session fully developed. Bitcoin’s Wednesday opening price was also lower compared with its recent levels. This shows that the latest fall comes after a strong monthly rise.
That makes the Fed decision another important factor for crypto prices today.
Bitcoin opened at $75,586.51 on Wednesday, down 3.3% from Tuesday’s opening price. By 7:12 a.m. ET, Bitcoin had recovered slightly to $75,885.53, according to Yahoo Finance. Ethereum also opened lower at $2,397.64, falling 4.6% from Tuesday’s opening price. Ethereum later moved up slightly to $2,404.43. Bitcoin was down 34.5% compared with one year ago. Bitcoin’s all-time high was $126,198.07, reached on October 6, 2025. Bitcoin’s all-time low was $0.04865, recorded on July 14, 2010, according to Yahoo Finance. Ethereum opened Wednesday 3.5% lower than one week earlier. However, Ethereum was still up 27.5% compared with one month ago, despite Wednesday’s sharp decline. Ethereum was down 47% compared with one year ago, Yahoo Finance reported. Ethereum reached an all-time high of $4,953.73 on August 24, 2025. Its all-time low was $0.4209 on October 21, 2015.
Novogratz said most of the major disagreements had been resolved through compromise, but ethics remained a major sticking point. He argued that Republicans were concerned about placing limits on a president’s ability to profit from digital assets, while Democrats wanted to address what they viewed as corruption risks, according to Yahoo Finance. His comments were reported by Yahoo Finance, which cited his post on X.
The decline came as investors reacted to a setback for US crypto regulation and prepared for a potentially important Fed decision. Novogratz described the situation as a major setback for the crypto industry and the US. The two biggest cryptocurrencies were still significantly lower than at the same time on Tuesday.
The holding period can therefore affect the final tax bill, making the timing of a crypto sale important for investors. Bitcoin’s move to $75,885.53 and Ethereum’s move to $2,404.43 by 7:12 a.m. So, crypto profits from transactions made during 2025 would generally be reported on the 2025 tax return filed in 2026. Earlier reporting noted: Markets are currently pricing in a 92% chance of a Fed rate hike, according to the CME FedWatch Tool.
This has added pressure on Bitcoin as traders prepare for the central bank’s decision, according to Yahoo Finance. Noelle Acheson, author of the Crypto Is Macro Now newsletter, said recent Bitcoin price action suggests that the crypto winter may be close to ending, according to Yahoo Finance. Crypto taxes are generally reported on the tax return for the year in which the transaction happened.
The CLARITY Act had been viewed as an important piece of legislation for the digital-asset industry. Its failure means the industry will have to wait longer for lawmakers to reach an agreement on rules governing digital assets. Interest-rate decisions can have a major effect on assets such as Bitcoin and Ethereum. Higher rates can make safer interest-bearing investments more attractive and can reduce investors’ willingness to take risks. Investors will also continue watching developments around the CLARITY Act. Its failure in the Senate means uncertainty around the future of US crypto regulation remains. For now, Bitcoin and Ethereum are being hit by two separate sources of uncertainty: the US crypto legislation setback and the Fed’s upcoming interest-rate decision. ET showed some recovery from their opening prices, but both remained under pressure compared with the previous day. The fall in crypto prices does not change the tax rules that apply when investors sell digital assets. In the US, investors generally owe taxes when they sell cryptocurrency for more than they paid for it. Exchanging one cryptocurrency for another can also create a taxable event. For example, exchanging Bitcoin for Ethereum is generally treated as a taxable transaction by the IRS when there is a gain or loss. The amount of tax an investor pays depends mainly on how long the crypto was held, as well as the person’s taxable income and filing status. Crypto held for one year or less is generally subject to short-term capital-gains tax rates, while crypto held for more than one year generally receives long-term capital-gains treatment. Even if the central bank delivers the rate hike investors already expect, Bitcoin could still recover if the Fed’s outlook is less hawkish than markets fear.
Earlier reporting noted: Despite the latest decline, some analysts believe Bitcoin could be close to the end of its recent crypto winter. Earlier reporting noted: The key question now is what the Fed says and does on Wednesday.
The immediate focus for crypto investors is the Federal Reserve’s decision later Wednesday. The decision and the Fed’s comments could influence expectations for future interest rates and broader market risk appetite.
