Market sentiment in the crypto sector has stabilized at neutral, with indicators of recovery emerging on Thursday after a slip into “fear” territory, as Bitcoin had dropped to $112,000 just a day prior.
Nonetheless, analysts caution that further volatility may be imminent.
Bitcoin (BTC) reached a low of $112,350 on Coinbase during late trading on Wednesday, representing a 10% decline from its August highs of just over $124,000, which dragged the Bitcoin Fear & Greed Index down to 44, its lowest in two months.
Since then, however, it has begun to bounce back, regaining the $114,500 mark in early Thursday trading, according to TradingView, prompting a shift in sentiment. The index is now back at a neutral position, rated at 50.
“As expected, the crypto markets have started to rebound,” remarked blockchain analysts from Santiment, who also urged caution with comments like “watch for more FUD” and “markets often move contrary to public sentiment.”
Santiment also identified several cryptocurrencies gaining traction in social interest, including Bitcoin, Tether (USDT), XRP (XRP), Cardano (ADA), and a lesser-known memecoin named SNEK.
Sentiment flickers like a flame
“One comical aspect of Bitcoin is its sentiment. It flickers like a flame: one moment it’s euphoric, the next it’s panic. Many Bitcoin have changed owners amid such emotional swings,” noted Bitcoin entrepreneur and Trump’s crypto adviser, David Bailey, advising to maintain perspective and focus.
Related: Retail sentiment shifted from bullish to ‘ultra bearish’ as Bitcoin dipped to $113K
“Crypto prices have been stable this past week due to macroeconomic factors posing short-term challenges,” Augustine Fan, head of insights at SignalPlus, explained to Cointelegraph.
She mentioned that US Treasury Secretary Scott Bessent “let down some expectations by indicating that the government won’t be acquiring additional BTC for its Strategic Bitcoin Reserve,” although Bessent seemed to retract his statement in an X post shortly thereafter.
The total market cap has rebounded to $3.96 trillion, following a 2% increase over the last 24 hours; still, further fluctuations could occur this week.
All eyes on Fed chair’s speech at Jackson Hole
Investors are keenly anticipating Federal Reserve Chair Jerome Powell’s address at the Jackson Hole conference on Friday, known for its market impact.
“Markets are gearing up for Jackson Hole, as Powell’s remarks could influence both equities and crypto,” said Bitcoin solutions provider BitGo on Wednesday.
Market participants have been speculating on Powell potentially signaling no rate cuts for September, yet if he “offers a softer perspective suggesting rate cuts are imminent, we might see a sharp upswing,” commented author Jason Williams.
“Jackson Hole is poised to determine the future trajectory of crypto,” added CNBC trader Ran Neuner, further stating, “Trump is advocating for a rate cut for valid reasons… But will Powell heed this call?”
The prediction futures-based CME Fed Watch tool currently anticipates an 82% likelihood of a rate cut on Sept. 17, though this number has been declining.
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