The market mood in crypto cooled sharply after a quick spike in optimism. According to the Crypto Fear & Greed Index, the reading fell by 12 points on Friday, dropping from 61 to 49.

That swing moved the gauge from “greed” into a “neutral” zone in a single session. Bitcoin had jumped about 4.5% earlier in the week to roughly $97,700, which helped push sentiment higher, but the focus shifted toward politics and lawmaking in Washington.

Regulatory Concerns Shake Markets

Based on reports, the main trigger was debate over a Senate version of a long-awaited crypto market structure bill. The measure would set out how US regulators oversee digital assets and includes language that would tighten rules around stablecoin yields.

Several lobbyists and executives raised alarms about those provisions. Brian Armstrong, the CEO of Coinbase, withdrew his backing, saying the proposal would be worse than the current setup and that a bad law would be harmful.

After the backlash, the Senate Banking Committee cancelled its planned markup and the Senate Agriculture Committee moved its session to late January while lawmakers seek more support.

Social Media Sentiment Shifts As Traders React

According to crypto analytics firm Santiment, the market activity had two different trends at once: larger holders were building positions while smaller, retail traders were selling.

Social chatter began to reflect worry after the regulatory news, even as on-chain data showed accumulation by more experienced wallets.

The index’s peak earlier in the week was the highest since it reached 64 on October 10, the same day a market crash triggered over $19 billion in liquidations. Those past losses still hang in investors’ memories.

Smart Money Buys While Retail Sells

Reports have disclosed that smart money accumulation can support prices, but headlines shape short-term moods. Bitcoin was trading at about $95,642 at the time of publication, down around 0.02% over the past 24 hours, according to CoinGecko.

That small move shows market resilience, yet the sentiment measure’s drop demonstrates how fragile confidence can be when policy doubts emerge. Many traders watch Washington closely, sometimes even more closely than charts.

Delay Seen As Chance By Some Industry Players

A segment of the industry read the postponements as constructive.

David Sacks, who advises on crypto matters at the White House, said the pause could help close gaps between stakeholders and bring the bill closer to something workable.

Brad Garlinghouse, CEO of Ripple, kept engaging with lawmakers and described the delay as an opening to improve the text.

Those views contrast with more alarmed voices and help explain the mixed market reaction.

Featured image from The Drive, chart from TradingView

According to the Crypto Fear & Greed Index, investor mood has swung back toward optimism, registering a score of 61 on Thursday. That is the first time the gauge has moved into the “greed” zone since the large market fallout on Oct. 11, when roughly $19 billion in liquidations drove many traders from altcoins. The index had climbed to 48 just a day earlier, moving out of “neutral” and signaling a quick change in sentiment.

Crypto Fear And Greed Shifts

The index combines several signals — price moves, trading activity, momentum, Google search interest and social media chatter — to produce a single reading. Based on reports, the measure fell into low double digits several times during November and December after the October sell-off. A score of 61 does not imply euphoria, but it does show growing confidence among traders after weeks of anxiety and patience being tested.

Bitcoin Price Rebounds

Bitcoin’s price has been moving in step with the improving mood. In the past seven days, Bitcoin rose from $89,750 to a two-month high of $97,720 on Wednesday, according to data from CoinMarketCap. That level was last seen on Nov. 14, when the market was still struggling and sentiment readings were weak even as prices briefly touched similar highs. Market watchers say the recent rally has helped lift trader confidence and is one of the main reasons the index improved so fast.

Retail Exit And Exchange Supply

According to market intelligence firm Santiment, there was a net drop of 47,244 Bitcoin holders over a three-day stretch. Reports have disclosed that many small investors left their positions, a reaction blamed on FUD and impatience. At the same time, the amount of Bitcoin held on exchanges fell to a seven-month low of 1.18 million BTC. Less supply sitting on exchange platforms tends to lower the immediate risk of a large, sudden sell-off.

What This Means For Traders

Traders use sentiment tools as one input among many when deciding whether to buy, sell or wait. A return to “greed” suggests more people are willing to buy, which can push prices higher if buying pressure continues. On the other hand, sentiment can flip quickly; a sharp move back down would likely make some traders nervous again. Analysts point out that a shrinking pool of retail participants can leave the market in the hands of more committed holders, which often supports steadier price action.

From Anxiety To Optimism

Based on reports and current readings, the market has shifted from anxiety toward a more upbeat mood, backed by Bitcoin’s recent gains and lower exchange balances. That combination is seen by many former skeptics as a healthier setup than the panic-filled trading seen after the October liquidations. The picture is cautiously positive: optimism is rising, but the swings that define crypto markets have not disappeared.

Featured image from Unsplash, chart from TradingView