Bitcoin slipped about 2% as a steep selloff in South Korea’s stock market and delays to the U.S. Senate’s Clarity Act weighed on crypto sentiment ahead of the Federal Reserve’s policy announcement.

Bitcoin (BTC) was down 0.53% from the start of the UTC session after falling nearly 2% during the overnight U.S. trading hours.

Market sentiment was pressured by two major developments.

The first came from South Korea, where a sharp decline in semiconductor shares dragged the Kospi index down 11%. The heavy losses, driven largely by chipmakers, marked one of the market’s biggest daily drops in recent years and fueled broader risk-off moves across global markets.

The second source of uncertainty was the delay surrounding the U.S. Crypto Clarity Act. The Senate put the legislation on hold while prioritizing a Russia sanctions bill and federal nominations, leaving limited time for action before lawmakers begin their summer recess on Aug. 8. As a result, expectations for the bill’s passage this year have become increasingly uncertain.

Ethereum (ETH) declined 0.56% to $1,880 after failing to push above the key $2,000 threshold on Monday. Investors are now watching both Wednesday’s Federal Reserve rate decision and the Senate’s remaining legislative schedule as potential market-moving events.

Traditional markets also traded lower, with Nasdaq 100 futures falling 0.70%, gold declining 0.93%, and silver dropping 1.50%.

Derivatives market signals growing caution

Futures sentiment turns negative:
The futures taker long/short ratio shifted toward bearish positioning, with short trades accounting for 51.5% of taker volume. This represents a reversal from the bullish stance seen in recent days and suggests traders are becoming more defensive. Market takers are participants who execute trades immediately at current prices.

XRP futures activity increases:
XRP futures open interest climbed to 2.35 billion tokens, rising nearly 6% over the previous day. In contrast, open interest across Bitcoin, Ethereum, and Solana futures remained mostly unchanged, indicating limited new positioning despite the recent market recovery.

Altcoin futures see declining interest:
Open interest for futures linked to tokens such as SHIB, AVAX, LINK, and DOGE decreased, suggesting investors are reducing exposure to some speculative assets.

CVD indicator turns bearish:
The 24-hour open interest-adjusted cumulative volume delta (CVD) for the top 25 cryptocurrencies moved into negative territory for the first time in at least three weeks. The shift indicates that sellers are dominating price action through aggressive market selling.

Funding rates show increasing bearish bets:
Bitcoin funding rates remain close to zero, reflecting balanced positions between buyers and sellers. Meanwhile, funding rates for Ethereum, Solana, XRP, and TRX have turned negative, pointing to stronger demand for short positions.

Volatility remains contained:
Despite major events ahead, including the Federal Reserve meeting and the core U.S. PCE inflation report, options markets are not showing signs of heightened stress. Bitcoin and Ethereum 30-day implied volatility levels remain near recent lows, suggesting traders are not pricing in extreme market movements.

Options traders favor downside protection:
Put-call skews for Bitcoin and Ethereum options on Deribit have increased slightly following the recent decline in spot prices. Ethereum options show a smaller bearish tilt compared with Bitcoin, although downside protection remains the most actively traded strategy across both markets.

Token market update

Lighter (LIT) was one of the strongest performers in the market, gaining 3.97% to $2.21 as it continued recovering from last week’s profit-taking. The token successfully defended the $2.10 support level for the third time this month.

MORPHO and Ethena (ENA) were among the few other cryptocurrencies trading higher, rising 1.54% and 1.46%, respectively. Both projects maintained relative strength within the DeFi sector despite broader market weakness.

Fetch.ai (FET) recorded the biggest 24-hour decline, dropping 9.48%. NEAR, HYPE, and Worldcoin (WLD) also lost between 8% and 9%, with AI-focused tokens and layer-1 assets suffering the strongest selling pressure.

PUMP fell 3.07% after Monday’s rally, though it remained above weekend levels as traders began taking profits.

CoinMarketCap’s Altcoin Season Index stood at 53/100, slightly lower than Monday’s reading but still above levels recorded during most of July.