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The cryptocurrency market has experienced a significant shift in its internal sentiment, with the widely tracked Crypto Fear & Greed Index retreating from its recent multi-month high. On Friday, the index recorded a sharp 12-point decline, settling at a “neutral” score of 49 out of 100. This move marks a notable departure from the “greed” sentiment observed just one day prior, when the index reached a score of 61 on Thursday. This recent peak was the highest level of market optimism recorded since October 10, a date previously marked by extreme volatility in the digital asset space. On that specific day in October, the sentiment index had reached 64 out of 100, but the market subsequently suffered a major crash that resulted in approximately $19 billion in liquidations.
The current cooling of sentiment is reflected in recent price movements for major assets. Bitcoin is currently trading at approximately $95,480, representing a decline of 0.83% over the past 24 hours. This downward pressure follows a period of strength on Thursday, during which Bitcoin gained roughly 5% over the course of the day to reach a price of $97,870. The transition from greed to neutrality highlights the sensitivity of the market to external factors, particularly as the industry navigates a complex regulatory environment in the United States. The sudden 12-point slide underscores the speed at which market participants have adjusted their expectations in response to recent legislative developments and feedback from industry leaders.
Context
The recent volatility in market sentiment is closely tied to the evolving situation surrounding a major crypto market structure bill currently under consideration in the United States. This legislation, which has been highly awaited by industry participants, seeks to define the regulatory boundaries and determine how various market watchdogs will oversee the sector. However, the crypto industry has become increasingly divided over the Senate version of the bill. While the legislation was intended to provide a clearer framework, certain provisions—specifically those that place further restrictions on stablecoin yields—have caused significant friction among prominent crypto lobbyists and executives. This division has directly impacted the legislative calendar, leading to the postponement of critical committee actions.
Two key Senate committees have recently adjusted their plans for marking up the bill, citing a need for broader support. The Senate Banking Committee cancelled its scheduled markup, which was originally planned for Thursday. Committee representatives indicated that additional time is required to build a consensus before the bill can move forward. Simultaneously, the Senate Agriculture Committee announced that it has pushed its own Thursday markup session into late January. These administrative delays highlight the ongoing struggle to finalize a regulatory framework that satisfies both policymakers and the diverse interests within the crypto sector. As these committees wait for more support, the lack of a clear path forward continues to weigh on the broader market sentiment and the expectations of participants.
Impact
The decision by prominent industry leaders to withdraw their support has had a profound impact on the bill’s momentum and the overall market outlook. Brian Armstrong, the CEO of major crypto lobbyist Coinbase, publicly pulled his support for the Senate version of the legislation. Armstrong expressed that the proposed rules would be materially worse than the current regulatory environment, stating a preference for having no bill at all rather than a poorly constructed one. His stance reflects a broader concern that the current legislative draft could hinder the industry rather than help it. Following this backlash, the Senate Banking Committee was forced to cancel its Thursday markup session, as it became clear that the bill lacked the necessary backing to proceed in its current form.
This legislative standstill has triggered a rapid adjustment in market psychology. The Crypto Fear & Greed Index’s fall from a score of 61 to 49 demonstrates how quickly “greed” can dissipate when regulatory headwinds emerge. While Bitcoin had shown resilience by gaining 5% to reach $97,870 on Thursday, the subsequent 0.83% drop to $95,480 aligns with the cooling sentiment. The market’s reaction suggests that participants are pricing in the uncertainty caused by the Senate Agriculture Committee pushing its markup to late January. The absence of a clear regulatory win, combined with the loss of support from major entities like Coinbase, has effectively stalled the momentum that had previously pushed sentiment to its highest level since the market liquidations seen on October 10.
Outlook
Looking forward, the cryptocurrency market faces a period of evaluation as the legislative timeline extends into the new year. With the Senate Agriculture Committee delaying its markup until late January, there is a significant window of time where regulatory uncertainty may persist. Market participants will likely be watching to see if the Senate Banking Committee eventually reschedules its cancelled session or if the bill’s current provisions are amended to regain the support of industry leaders. The current “neutral” sentiment score of 49 suggests that investors have moved into a “wait and see” mode, neither overly optimistic nor excessively fearful as they digest the latest setbacks from the legislative branch.
Despite the drop in sentiment, some observers see reasons for optimism. Crypto venture capitalist Kyle Chasse has described the recent postponements as a “BULLISH signal.” Chasse argued on Friday that while many anticipated a severe market downturn following the news of the bill’s struggle, the market has instead shown relative stability. He emphasized that the market is “actually holding up” and did not experience the massive crash that some had feared. This perspective suggests that the underlying market structure may be stronger than the sentiment index currently reflects. As the industry moves toward late January, the focus will remain on whether Bitcoin can maintain its current levels around $95,480 and if the eventual return of the bill to the Senate floor will bring the clarity the market has been seeking since the high-liquidation events of October 10.
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