What Happened in Crypto Market Today: DeFi Crackdown Hits Hard

Bitcoin Dominance Rises as Crypto Market Faces DeFi Crackdown

The crypto market recorded a 1.01% decline over the past 24 hours, mirroring a 0.47% weekly drop while maintaining a 6.65% gain for the month. The brief setback follows strong recent advances, with traders engaging in profit-taking as risk appetite cooled. Analysts also imply that ETF outflows and a strong connection with crashing equity markets were factors that led to the recent downturn.

Crypto Market Extends Minor Pullback Amid Broader Risk-Off Shift

Bitcoin’s dominance increased to 58.57%, reflecting a rotation from altcoins to the leading digital asset as investors sought relative stability.

At the same time, Ethereum ETFs recorded net outflows of 8.7 million, which is an indication of bearish institutional investor positioning.

The crypto market has also been following the performance of the traditional stocks, keeping it at 0.83 with the S&P 500, where the two industries were reacting to a wider market slump.

Bitcoin was able to hold its support of up to $121k, and this is indicative of further consolidation following a tremendous upwards trend over the last several weeks. Ether, which fluctuated to close to $4,300, moved downwards after a slight market downturn.

Today in the Crypto Market: U.S. DeFi Crackdown Sparks Backlash, Roger Ver Settles Tax Case, Luxembourg Fund Buys Bitcoin ETFs

Democrats Face Backlash Over Proposed DeFi Restrictions

Today in the crypto market, a group of Democratic senators has been attacked after introducing new policies that aim to regulate decentralized finance (DeFi). Their proposal would permit the U.S. Treasury Department to put risky DeFi protocols on a limited list, and it may be criminalized to use them. The proposal also consists of the severe Know Your Customer (KYC) policies of crypto applications and non-custodial wallets, as well as decreasing the legal safeguards of developers.

The industry leaders believe that the proposal would choke DeFi innovation in the United States. Summer Mersinger, the CEO of Blockchain Association, said that it would not be possible to adhere to such restrictions and would make crypto innovators leave the country and go abroad.

Crypto attorney Jake Chervinsky commented that the proposal would kill the gains achieved in the direction of a bipartisan cryptocurrency framework, which he called a de facto cryptocurrency ban. The proposed actions will also jeopardize the gains made on the CLARITY Act that sailed through the House earlier this year on a solid, bipartisan vote.

According to critics, rather than making the regulatory environment better, the proposal would drive honest projects in the country away and kill investor confidence. It is viewed by many in the cryptomarket as a political gambit, and no longer as a viable policy tool.

Luxembourg’s Sovereign Fund Enters the Bitcoin Market

Meanwhile, the Luxembourg sovereign wealth fund is entering the Bitcoin exchange-traded funds (ETFs) market in Europe. In July 2025, Intergenerational Sovereign Wealth Fund ( FSIL ) invested $9 million in Bitcoin ETFs under a new investment policy approved by the fund.

Treasury Director Bob Kieffer termed the move as an appreciation of the growing maturity of Bitcoin as a financial instrument. The investment will focus on the balancing of innovation and responsible exposure to digital assets. The move by Luxembourg renders it among the initial European governments to reap indirect exposure to Bitcoin through regulated ETFs.

The events of this week highlight the fact that the global cryptomarket is increasingly divided, with regulatory pressure in the United States opposing the rise in institutionalization in Europe.