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The cryptocurrency market sentiment has stabilized to a neutral position as prices showed signs of recovery on Thursday, following a brief drop into the “fear” territory when Bitcoin dipped to $112,000 the previous day.
Despite this, analysts have warned that further volatility may be imminent.
Bitcoin (BTC) registered a decline to $112,350 on Coinbase during the late hours of trading on Wednesday, reflecting a 10% correction from its August high of just over $124,000, which pushed the Bitcoin Fear & Greed Index down to 44, its lowest point in two months.
Since then, it has started to bounce back, reclaiming the $114,500 mark in early trading on Thursday, according to TradingView, which has led to an uptick in sentiment. The index has shifted back to neutral, now rating at 50.
“As expected, crypto markets have begun to recover,” noted blockchain analysts from Santiment, who also cautioned, “be vigilant for more FUD” and “markets often move contrary to the crowd’s expectations.”
Santiment further highlighted a number of crypto assets witnessing an increase in social interest, including Bitcoin, Tether (USDT), XRP (XRP), Cardano (ADA), and a lesser-known memecoin named SNEK.
Fluctuating sentiment
“One of the most amusing qualities of Bitcoin is its sentiment. It’s as unpredictable as a flickering flame. One moment it’s euphoria; the next, it’s panic. Many Bitcoin have changed hands amidst these feelings,” remarked Bitcoin entrepreneur and President Trump’s crypto adviser, David Bailey, who suggested taking a broader perspective and keeping focus.
Related: Retail sentiment shifted from bullish to ‘ultra bearish’ as Bitcoin dropped to $113K
“Crypto prices have leveled off over the past week, impacted by macroeconomic factors presenting short-term challenges,” stated Augustine Fan, head of insights at crypto trading software provider SignalPlus, in an interview with Cointelegraph.
She also mentioned that US Treasury Secretary Scott Bessent “let down observers by stating the government would not be purchasing additional BTC for its Strategic Bitcoin Reserve,” although Bessent appeared to retract those statements in a post on X shortly afterwards.
Total market capitalization has bounced back to $3.96 trillion after a 2% rise in the preceding 24 hours; nevertheless, more volatility could be expected this week.
All eyes on Powell’s remarks at Jackson Hole
Investors are keenly awaiting Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole conference on Friday, an event that has historically influenced markets significantly.
“Markets are preparing for Jackson Hole as Powell’s message could impact both equities and crypto,” asserted Bitcoin solutions provider BitGo on Wednesday.
Investors have been speculating on the prospect of Powell indicating no rate cuts in September; however, if he “takes a softer stance suggesting that rate cuts are imminent, we may see a significant uptick,” noted author Jason Williams on the same day.
“Jackson Hole will determine the future course of crypto,” predicted CNBC trader Ran Neuner, adding, “Trump is advocating for a rate cut for valid reasons… But will Powell heed his call?”
The prediction futures-based CME Fed Watch tool currently projects an 82% likelihood of a rate cut on Sept. 17, though this figure has been declining.
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