Crypto markets slipped on Thursday as two forces weighed on sentiment simultaneously: a Senate hearing on the CLARITY Act revealed the legislation may slip further than expected, while a Chinese AI model triggered a global equity selloff wiping $1.8 trillion from stock markets worldwide.
Bitcoin fell to $63,367, down 1.78% over 24 hours, Ethereum dropped to $1,830 and XRP slid to $1.08. The total crypto market cap declined to $2.18 trillion as the Fear and Greed Index held at 31.
CLARITY Act: One Yard Line, No Touchdown Yet
The House Financial Services Committee opened a field hearing in New York examining how the CLARITY Act could unlock innovation across digital assets. The session was informational only with no vote impact, but it marked one of the final formal steps before the bill can reach a Senate floor vote.
Representative Timmons struck a positive tone. “We’re on the one yard line, we just gotta score the touchdown,” he said, describing the legislation as “incredibly important in maintaining the U.S. economy as the centre of the global economy.”
The excitement was tempered by developments on Capitol Hill. Updated legislative text has still not been released following a Trump-Senate Republicans meeting focused on ethics provisions. Industry leaders are privately bracing for the rollout to slip into next week, according to reporter Eleanor Terrett.
Polymarket odds of the CLARITY Act passing crashed to a record low of 31%, even as Trump met with senators in what was described as a last-ditch push to advance the bill before the August recess.
The AI Model That Moved Global Markets
The broader selloff arrived from an unexpected direction. Chinese laboratory Moonshot AI released Kimi K3, a 2.8 trillion parameter open-source model, the largest ever built, surpassing DeepSeek’s previous record of 1.6 trillion parameters. On independent benchmarks it performed close to Anthropic’s Claude Fable 5 and OpenAI’s GPT-5.6, while pricing its services at a fraction of the cost.
The implication was immediate. The AI trade has been priced on the assumption that staying competitive requires massive, growing spending on chips and data centres. When a Chinese laboratory builds something nearly as capable for far less, that assumption gets challenged and capital committed to AI infrastructure gets repriced simultaneously.
Asian markets absorbed the initial blow. Japan’s Nikkei fell 4%. Taiwan’s Taiex crashed 6.5% with TSMC down 7.3%. The global semiconductor index fell 3%, entering bear market territory after losing more than 24% from its June peak. Global chip stocks have shed over $2 trillion since June 22.
What to Watch
Two catalysts will determine crypto’s next move. The first is whether CLARITY Act text emerges before the August recess. A confirmed delay removes one of the few remaining positive catalysts in the near-term outlook. The second is whether the AI-driven equity selloff stabilises, given crypto’s current 80%-plus correlation with major equity indices.
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