Bitcoin extended its decline on Thursday as investors reacted to a combination of rising oil prices, higher Treasury yields, geopolitical uncertainty, and renewed concerns over crypto regulation. The market downturn came as expectations for the Clarity Act weakened and broader risk sentiment deteriorated.

Bitcoin was trading around $65,500, down roughly 0.7% since the beginning of the UTC session, following a pullback from Wednesday’s high near $66,700. The weakness spread across the cryptocurrency sector, with major assets such as Ethereum, Solana, and XRP also moving lower.

The rise in energy prices added to market concerns, with West Texas Intermediate crude futures on the NYMEX climbing to $88.60 per barrel, the highest level since June 11. Oil has rebounded sharply from recent lows below $70, raising concerns that renewed energy inflation could push consumer prices higher across major economies.

A potential increase in inflation could complicate central banks’ efforts to reduce interest rates, creating additional headwinds for financial markets and risk assets.

Treasury yields continued to climb as investors adjusted their expectations. The U.S. two-year Treasury yield rose to 4.31%, reaching its highest level since February 2025, while the 10-year yield advanced to 4.66%, its strongest level since May, according to TradingView data.

Higher yields tend to weigh on assets like Bitcoin and gold because they offer no direct income, while bonds become more attractive as their returns increase. As a result, investors often shift capital away from speculative assets during periods of rising rates.

Geopolitical developments further pressured markets after reports revealed that the U.S. military deployed a B-1 long-range bomber to strike targets associated with Iran’s Islamic Revolutionary Guard Corps. The deployment raised concerns that U.S. military activity could escalate beyond recent limited actions.

Meanwhile, uncertainty around crypto regulation increased after several leading Senate Democrats criticized the latest version of the Digital Asset Market Clarity Act. The lawmakers argued that the revised bill still does not include adequate ethics safeguards and other necessary protections.

The criticism quickly affected prediction markets, with traders on Polymarket reducing the implied chances of the Clarity Act becoming law from 46% to 38%.

Senate Republicans introduced the updated bill draft on Wednesday, including an ethics provision that had gained approval from the White House and President Donald Trump. Senator Bernie Moreno praised the addition, describing it as one of the strongest ethics provisions in U.S. legislative history.