The Week in One Sentence
Bitcoin split into two chains over a fight about spam, the CLARITY Act died for the year without a vote, and a shock jobs report erased the Fed's rate hike.
1. Bitcoin Forked This Afternoon
At block 961,632 on Saturday afternoon, Bitcoin's blockchain divided in two.
The mining pool AntPool found the block first and published it without a particular flag set in its header. Nodes running software that enforces a proposal called BIP-110 rejected that block as invalid. Minutes later a small miner connected to the Ocean pool produced a competing version of the same block height with the flag set, and those nodes followed it instead. Two chains, same history up to 961,631, different histories after. Monitoring sites recorded the divergence shortly after four in the afternoon Eastern time.
BIP-110, formally the Reduced Data Temporary Softfork, is a one-year set of rules that would cap how much arbitrary data a Bitcoin transaction can carry. It caps OP_RETURN outputs at 83 bytes, restricts data pushes to 256 bytes, and limits most new outputs to 34 bytes. The target is Ordinals inscriptions, Runes, and similar uses that store images and files in the chain. Supporters call that spam and argue block space should be for moving money. Critics call it censorship of transactions that pay valid fees.
The mechanism is what produced a split from a proposal almost nobody supports. Most soft forks aim for 95% miner backing. BIP-110 set its threshold at 55%, and when voluntary signaling never got close, a mandatory phase began automatically at 961,632. From that block on, nodes enforcing the rules reject any block that does not signal, no matter how much computing power stands behind it. Miner signaling sits near 2.5%.
So there is now a Bitcoin chain being mined by roughly one fortieth of the network. It found its second block while the main chain moved seven blocks ahead. That gap is the story. A chain with 2.5% of the hashrate produces blocks about forty times slower, and Bitcoin's difficulty only adjusts every 2,016 blocks. Block 961,632 happens to sit exactly on a difficulty boundary, which means the minority chain must find 2,016 blocks before it gets any relief. At its current pace that is well over a year away. It is not a fork that fades. It is one that can barely move.
The reaction split along the same lines the debate always has. Luke Dashjr, credited with the original draft, wrote that AntPool "appears to be attacking Bitcoin." Bitcoin Mechanic told the pool it had mined an invalid block. The proposal's pseudonymous author congratulated the miner who produced the first compliant block and said it was time for game theory to do its work. On the other side, Blockstream's Adam Back said the proposal has neither technical nor ecosystem consensus. Even the BIP editor who assigned it a number described it as a misguided and unusually careless proposal, publishing it because it met the repository's criteria rather than because he endorsed it.
Two things holders should actually know. Coins that already exist are unaffected. Outputs created before any activation would be permanently exempt, and the main chain, the one with essentially all the hashrate, is running normally. And the larger risk is not this soft fork. Dashjr has said that if BIP-110 fails, changing Bitcoin's proof-of-work algorithm is the remaining option. That would be a hard fork, it would render existing mining hardware worthless on the new chain, and it would produce two genuinely incompatible ledgers rather than one stalled branch. There is reporting that some traders have been accumulating in anticipation of exactly that. Nothing about that is imminent, but it is the version of this fight that would actually matter.
Bitcoin has not changed its consensus rules since Taproot activated in November 2021, the longest quiet stretch in its history. Taproot had well over 90% miner support. What happened this afternoon is the system demonstrating, expensively and in public, that a change without broad agreement does not get adopted. It gets its own lonely chain.
2. CLARITY Dies for the Year
The Senate left for its August recess on Friday without voting on the CLARITY Act, which ends the bill's realistic chances this year.
The collapse was procedural rather than dramatic. Majority Leader John Thune said on August 3 that a vote would happen before the break. He then did not file a cloture motion on Wednesday, and without that filing the Senate cannot start the clock that leads to a floor vote. By Thursday the schedule held a funding measure, a group of nominations, and a college sports bill. The CLARITY Act was not on it. Thune's office later said flatly that Democrats were insistent on no vote, and promised to queue the bill up first thing when the Senate returns.
Prediction markets moved hard. Polymarket now prices 2026 passage near 17%, down from above 80% in February.
The arithmetic never changed. Cloture needs 60 votes, Republicans hold 53, and the seven Democrats leadership needed had gone on record two weeks earlier saying the revised text falls short, mainly on the ethics provisions restricting senior officials from holding crypto business interests. That group included both Democrats who voted the bill out of committee in May.
The Senate returns September 14 with roughly three weeks before midterm campaigning consumes the calendar. Several analysts now put realistic passage in 2027. Senator Cynthia Lummis has warned it could slip considerably further.
What this does not change is worth stating clearly, because the coverage will make it sound worse than it is. The joint SEC and CFTC guidance issued in March remains in force. Spot trading continues, the ETFs continue, and Bitcoin's status as a commodity was settled in practice long before this bill existed. Nothing broke on Friday. What was lost is durability. Guidance can be rewritten by a future administration in an afternoon; a statute cannot. That difference matters enormously to institutions sizing multi-year allocations, and not much at all to someone holding coins in their own custody.
3. The Jobs Report Erased the Rate Hike
Last week the market was pricing a September rate hike. On Friday that disappeared.
The July employment report showed the US economy shed 23,000 jobs. Economists had forecast a gain of around 80,000. Worse, the Bureau of Labor Statistics revised the previous two months down by a combined 103,000, cutting May's figure by 66,000 and June's by 37,000. Unemployment ticked down to 4.1%, though that reflects people leaving the labor force rather than finding work. Annual wage growth slowed to 3.2%.
Rate expectations flipped immediately. The CME FedWatch tool showed the probability of a September hike falling to 40% from 55% the day before, with the odds of no change at all jumping to 66%. On Polymarket, the chance of any increase before the end of 2026 dropped to 56% from a recent high of 77%.
Bitcoin took the relief. It climbed above $65,300 during the New York session, its best level of the month, and finished the week near $64,900, up roughly 2.8%. Equities rallied on the same logic.
Three cautions belong with that. This is the market cheering a deteriorating labor market, which is a strange thing to celebrate for long. Bitcoin remains roughly 48% below its October 2025 high and still trades under its major moving averages. And the relief is conditional on inflation cooperating, with the next reading due August 12 and energy prices still elevated because the Strait of Hormuz has not fully reopened. Analysts at QCP Capital and DWF Labs described the move as resilience rather than a confirmed breakout, which sounds about right. The Fed meets September 16, and Jackson Hole at the end of this month comes first.
The Numbers
| Metric | Value |
|---|---|
| BTC Price | ~$64,900 (Fri Aug 7) |
| On the Week | up ~2.8%; weekly high ~$65,300 |
| From All-Time High | ~48% |
| BIP-110 Miner Signaling | ~2.5% (55% threshold) |
| Chain Split | live at block 961,632; minority chain 7 blocks behind |
| July Payrolls | -23,000 (vs ~+80,000 expected); 103,000 revised away |
| Unemployment | 4.1% |
| Sept Fed Hike Odds | 40%, down from 55% (CME FedWatch) |
| CLARITY 2026 Odds | ~17% (Polymarket), from above 80% in February |
What to Watch Next Week
The minority chain. Watch whether the BIP-110 branch keeps finding blocks or stalls entirely, and whether any exchange or wallet assigns it value. Fork.observer and bip110.org track it live.
Any move toward a proof-of-work change. This is the development that would actually matter. Watch what Dashjr and Ocean say next, and whether any pool entertains it.
CPI on August 12. The jobs report gave the Fed room only if inflation cooperates. A hot print puts the hike back on the table.
The eCash hard fork. A separate and unrelated fork is targeted at block 964,000, around August 21. Expect more fork headlines regardless of what BIP-110 does.
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Bitcoin Weekly is published every week by 21VOX. Written by Karl. No financial advice. Just signal.