The cryptocurrency market sentiment has experienced a decline after reaching a multi-month high, influenced by divisions within the US crypto industry regarding a Senate version of a highly anticipated crypto market structure bill.
The Crypto Fear & Greed Index, a tool that tracks market sentiment, saw a drop of 12 points on Friday, settling at a "neutral" score of 49 out of 100. This marks a decrease from its score of 61, which indicated "greed," recorded on Thursday.
The index's score on Thursday represented the highest level observed since October 10, when it reached 64 out of 100. Notably, October 10 was also the day the crypto market experienced a significant crash, leading to $19 billion in liquidations.
The index's multi-month high on Thursday coincided with Bitcoin (BTC) experiencing a gain of approximately 5% over the day, reaching $97,870.
Policy Concerns Cast Shadow on Bitcoin's Surge
Santiment, a crypto sentiment platform, reported on Thursday that the market's upward movement "appeared more than justified based on continued smart money accumulation, and retail traders dumping."
However, crypto sentiment on social media began to show signs of wavering following expressions of concern from several executives regarding a Senate version of crypto market structure legislation scheduled for markup on Thursday.
This bill aims to delineate how US market watchdogs will regulate cryptocurrencies. Some crypto lobbyists have voiced dissatisfaction with certain provisions, particularly one that imposes further restrictions on stablecoin yields.
While many were prepared to continue supporting the bullish trend, Brian Armstrong, the CEO of major crypto lobbyist Coinbase, withdrew his support for the bill. He stated that it "would be materially worse than the current status quo" and expressed a preference for "no bill than a bad bill."
In response to the backlash, the Senate Banking Committee canceled its markup of the bill that was planned for Thursday. The committee cited the need for additional time to secure support for the bill and did not provide a timeline for when or if the markup would be rescheduled.
This development occurred in the same week that the Senate Agriculture Committee postponed its planned Thursday markup of the bill to late January, also citing the necessity to garner more support.
The bill is a significant topic of discussion within the crypto industry, and concerns surrounding it can lead market participants to anticipate price declines, which in turn often drives down overall sentiment.
Despite these concerns, some industry participants view the postponement as a positive development for the sector.
Crypto venture capitalist Kyle Chasse stated on Friday that the delays are "a BULLISH signal." He elaborated, emphasizing that "Everyone thought that the market was going to get REKT after the news broke," but "it didn’t," and the market is "actually holding up."
At the time of publication, Bitcoin is trading at $95,480, having experienced a 0.83% decrease over the past 24 hours.