The cryptocurrency market is showing signs of renewed strength, but investors are heading into a volatile week with political uncertainty in Washington, a fragile U.S. stock market and renewed pressure on the Japanese yen.
The biggest setback came in Washington, where the Senate rejected the Clarity Act after months of negotiations aimed at creating a broader regulatory framework for digital assets.
The collapse was a major blow to an industry that had gained significant political influence in recent years, particularly under President Donald Trump. Coinbase CEO Brian Armstrong had emerged as one of crypto’s most powerful voices in Washington, but his increasingly hard-line position during negotiations also became a source of tension within the industry.
Armstrong withdrew his support for an early version of the legislation in January, arguing that the industry would be better off without a bad bill. The dispute centred partly on stablecoin rewards offered by Coinbase, which banks argued could encourage customers to move deposits away from traditional financial institutions.
Negotiations continued for months, but the bill grew increasingly complicated. By late summer, it had expanded to more than 600 pages, while disagreements between Republicans, Democrats, the banking sector and crypto companies made a compromise increasingly difficult.
The legislation eventually failed to secure the 60 votes needed to advance.
Yet the political setback did not prevent crypto-related stocks from rebounding sharply.
Coinbase shares jumped 11.7% in the latest session to $194.25, moving back above their 200-day moving average. Robinhood gained 9.1% on Friday, returning to a technical buy zone, while the iShares Bitcoin Trust ETF also rallied.
The rebound followed moves by U.S. regulators that helped restore some momentum to the sector, showing that the crypto market’s fortunes are no longer determined solely by congressional action.
The broader stock market, however, remains unsettled.
The Nasdaq gained 0.7% over the week while the S&P 500 slipped 0.1%. The Dow Jones Industrial Average fell 1.7%, and the Russell 2000 dropped 1.5%, with both reaching three-month lows.
Technology and semiconductor stocks were mixed, while investors continued to rotate between growth sectors. AMD and Sandisk were among the stronger performers, while the 10-year Treasury yield approached 5%, adding to pressure on equities.
Geopolitical risks are also complicating the outlook. Tensions in the Middle East, oil prices and upcoming U.S.-China talks are among the issues investors will be watching as the new trading week begins.
Currency markets are facing their own source of uncertainty.
The Japanese yen fell as much as 1.3% against the dollar on Friday after the Bank of Japan raised borrowing costs but two board members opposed the decision. Reports that Japanese officials conducted a so-called rate check later in the day did little to reverse the decline.
The move has left the yen vulnerable to further sharp swings, particularly as Japan enters a three-day holiday period that is expected to reduce market liquidity.
Thin trading conditions can amplify price movements and could also increase the impact of any potential intervention by Japanese authorities to support the currency. A similar opportunity for intervention emerged around Japan’s Golden Week holiday earlier this year.
For investors, the common theme across markets is uncertainty.
Crypto has regained momentum despite the failure of a landmark regulatory bill. U.S. stocks are showing strength in some growth sectors while major indexes remain under pressure. And the yen is entering a holiday-shortened period after a sharp decline.
The result is a market where individual assets can move quickly in opposite directions — making the next few sessions particularly sensitive to political decisions, central-bank signals and geopolitical developments.
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