Bitcoin, Ether Slide as CLARITY Act Update Stalls and AI-Led Equity Rout Hits Risk Assets

CoinDesk reported that the crypto market softened on Thursday, with Bitcoin, Ethereum and XRP all moving lower as sentiment was weighed down by two forces: slower-than-expected momentum around the U.S. CLARITY Act and a global equity selloff sparked by the release of new Chinese AI models. Bitcoin briefly fell to $63,367, down 1.78% over 24 hours. Ether slid to $1,830 and XRP retreated to $1.08. Total crypto market capitalization declined to $2.18 trillion, while the Fear & Greed Index held at 31. On the policy front, no updated CLARITY Act text has been released. The U.S. House Committee on Financial Services held a hearing in New York the same day, focusing on how the bill could support digital asset innovation. No vote was taken, though the session is viewed as one of the formal steps before the legislation heads to a Senate vote. Representative Timmons said the bill is in its final stages and framed it as important to U.S. economic competitiveness. Optimism faded later as reports from Capitol Hill suggested that after discussions between Trump and Senate Republicans over ethics provisions, the revised bill text still had not been made public. Traders are now watching for a potential delay until next week, which would compress the timeline for advancing the bill ahead of the August recess. On Polymarket, the implied probability of passage fell to 31%. The report added that Trump has met with multiple senators in an effort to move the bill forward before the recess. Risk sentiment was also hit by turmoil in global stocks. China's AI lab Moonshot AI released an open-source model, Kimi K3, with 2.8 trillion parameters, topping DeepSeek's prior 1.6 trillion-parameter mark. Independent benchmark tests cited in the report said performance is comparable to Anthropic's Claude Fable 5 and OpenAI's GPT5.6, but with materially lower service pricing. The launch prompted investors to reassess assumptions behind AI infrastructure spending. A key pillar of the AI trade has been that competition would keep driving higher outlays for chips and data centers. Lower-cost, higher-performing models challenged that view and pressured valuations across related assets. Asian markets led the drop. Japan's Nikkei fell 4%, Taiwan's Weighted Index sank 6.5%, and TSMC slid 7.3%. The global semiconductor index declined 3%, more than 24% below its June high, pushing it into a technical bear market. The report also said global chip stocks have lost more than $2 trillion in market value since June 22. Looking ahead, the crypto market is expected to track two main variables: whether the CLARITY Act text is released before the August recess, and whether the AI-triggered equity selloff stabilizes. At this stage, the report said the correlation between crypto and major stock indices has risen above 80%. Continued pressure on U.S. equities and global tech shares could keep crypto assets under near-term downside pressure.