SKN | Bitcoin Leverage Falls as CLARITY Vote and Fed Decision Raise Market Risk

Key Points:

• Bitcoin open interest fell 13.5% in 10 days, from 321,497 BTC to 278,151 BTC, while the underlying price declined only about 5%, indicating a significant reduction in leveraged exposure.
• The CLARITY Act Senate vote and Federal Reserve decision are creating two major binary catalysts, encouraging traders to reduce derivatives risk ahead of potentially sharp market reactions.
• Spot demand remains the key test, with BlackRock’s IBIT recording a $19.23 million redemption on September 11 as Bitcoin approaches the $76,000–$77,000 support area.

Bitcoin Holds Near $77,000 as Derivatives Exposure Contracts

Bitcoin is trading below $77,000, down from its September 3 high of approximately $82,300, but relatively little changed on a day-to-day basis. The more significant development is occurring in derivatives markets, where Bitcoin open interest has fallen from 321,497 BTC to 278,151 BTC in 10 days, a 13.5% reduction despite only about a 5% decline in the underlying asset.

The divergence suggests that traders have been deliberately reducing leveraged exposure rather than simply responding to a large spot-market sell-off. With the CLARITY Act vote and Federal Reserve decision approaching within days of each other, the positioning indicates that market participants are attempting to limit the risk of being caught on the wrong side of a sharp policy-driven move.

Leverage Reset Shifts Attention to Spot Demand

The decline in open interest represents a reduction of approximately 43,346 BTC in outstanding derivatives exposure. Importantly, much of that adjustment occurred before the major catalysts, rather than after a sudden price collapse. That makes the move more consistent with proactive risk management than forced liquidation.

The next question is whether the reduction in leverage has created a cleaner environment for Bitcoin to test support around $76,000–$77,000. Lower leverage can reduce the probability of cascading liquidations, but it also means that future price moves increasingly depend on actual spot demand from investors, funds and other market participants.

ETF Flows Provide a Critical Spot-Market Signal

Recent U.S. spot Bitcoin ETF activity provides a mixed signal. BlackRock’s iShares Bitcoin Trust recorded $19.23 million in redemptions on September 11, the largest single-day outflow among U.S. spot Bitcoin ETFs that session. However, the amount represented only approximately 0.03% of IBIT’s reported $60.6 billion in assets, limiting its significance as an isolated event.

Nevertheless, ETF flows have become an increasingly important part of Bitcoin’s market structure because the funds provide a direct channel between traditional portfolios and spot Bitcoin. Sustained redemptions can therefore become more consequential when liquidity is thinner and leveraged positioning has already been reduced.

CLARITY Act Adds a Binary Regulatory Catalyst

The Senate is scheduled to hold a 2:15 p.m. ET cloture vote on the CLARITY Act, with 60 votes required to advance the legislation. Republicans hold 53 Senate seats, meaning at least seven Democratic votes would be required if all Republicans support the measure.

The revised draft incorporates more than 114 Democratic provisions, including a proposed registration category for non-decentralized DeFi protocols with identifiable operators overseeing consensus rules or functionality. Distributed ledger technology and raw software code are excluded from that category, reflecting an effort to distinguish software infrastructure from identifiable financial operators.

Fed Expectations Create a Second Market Test

Monetary policy adds another layer of uncertainty. As of September 10, futures markets priced approximately a 70% probability of a 25-basis-point Federal Reserve rate hike, up from 52.2% a month earlier. A higher policy rate can pressure crypto by increasing the relative appeal of traditional yield-bearing assets and tightening broader financial conditions.

The immediate test for Bitcoin is therefore whether reduced leverage can stabilize the market without stronger spot and ETF demand. Traders will be watching the $76,000–$77,000 area, the CLARITY Act vote and the Federal Reserve’s policy decision for evidence of whether the current positioning reset has reduced volatility or merely moved the risk from derivatives markets into the spot market.