Bitcoin and other major cryptocurrencies are struggling under a combination of regulatory uncertainty, declining ETF demand and higher bond yields.

Bitcoin has come under renewed pressure, while XRP is hovering close to the $1 mark as several unfavorable developments weigh on market sentiment.

Regulatory uncertainty remains one of the biggest concerns. The Clarity Act has stalled in the U.S. Senate, while the Securities and Exchange Commission is reportedly preparing to delay its proposed “innovation exemption.” The initiative aims to establish a clearer framework for trading tokenized securities on blockchain networks under existing securities laws.

The proposal has faced questions from the White House and Wall Street over its legal foundation and possible effects on financial markets.

The SEC’s separate “Reg Crypto” initiative has also been pushed back. The regulator canceled a Friday meeting that was expected to address proposed fundraising rules for crypto projects and has not yet announced a new date.

MSCI has introduced another potential source of pressure. The index provider is considering rules that could exclude “non-operating companies” from its equity indexes. Bitcoin treasury companies Strategy and Metaplanet are among those that could be affected by the proposed changes.

Bitcoin ETF Outflows Return

Investor flows into spot Bitcoin ETFs have weakened again. U.S.-listed funds have recorded approximately $333 million in net outflows this week, reversing the $853 million of inflows seen the previous week.

The earlier inflows had indicated that institutional demand might be returning, but the latest withdrawals have raised doubts about the strength of that recovery. Overall, more than $4 billion has been withdrawn from U.S. spot Bitcoin ETFs so far this year.

Rising Treasury yields are adding to the pressure. Thursday’s $25 billion auction of 30-year U.S. Treasury notes pushed yields as high as 5.22%, according to the Treasury Department. Some dealers said the level was the highest since 2001.

Higher long-term yields increase financing costs and make yield-producing assets more attractive than non-yielding assets such as Bitcoin. That shift can reduce appetite for riskier investments and further weaken the crypto market backdrop.

With legislative progress stalled, ETF flows turning negative and bond yields climbing, cryptocurrencies have few immediate catalysts for a sustained rally. XRP is particularly vulnerable as it attempts to defend the $1 level.

XRP Struggles to Protect $1

XRP has so far managed to stay above the key psychological threshold. However, a break below $1 could increase selling pressure and encourage more holders to exit their positions.

Investors who accumulated XRP below $1 in late 2024 could view the level as an important cost basis, potentially making a breakdown more significant for market sentiment.

As a result, XRP’s ability to hold $1 and Bitcoin’s ability to remain within its established trading range are becoming increasingly important ahead of the next session.

Year-End Optimism Remains

Despite the current weakness, some analysts continue to expect a stronger crypto market later in 2026.

Matt Mena, senior crypto research strategist at 21Shares, noted that the total crypto market outperformed both the S&P 500 and Nasdaq-100 in July, by 7.5 percentage points and 14.2 percentage points, respectively.

Mena believes that relative strength could support a strong third quarter and potentially set the stage for a powerful fourth quarter. His outlook includes potential targets of $100,000 for Bitcoin, $3,000 for Ether, $70 for HYPE and $110 for SOL.