Sentiment in the crypto market has once again deteriorated due to political uncertainty in the United States. The Crypto Fear & Greed Index fell by 12 points on Friday to a ‘neutral’ position of 49. A day earlier, the index was still at 61, which indicated ‘greed’ among investors.
Sentiment changed quickly
The setback follows divisions within the US crypto industry over a long-awaited law that would set the market structure for cryptocurrencies. This law is intended to determine how regulators supervise the sector, but is currently raising concerns among major players.
The spike in sentiment on Thursday coincided with a strong rise in Bitcoin, which gained about 5 percent that day to reach almost $98,000. It was the highest sentiment level since October 10, the day when the crypto market was shocked by a crash with approximately $19 billion in liquidations.
Blockchain analysis platform Santiment called the price increase ‘justified’, partly because large investors continued to accumulate while smaller investors sold. Yet sentiment quickly turned when attention shifted from the market to politics.
Unrest about bill
The reason for the souring of sentiment is a proposal in the US Senate that should determine how the crypto markets are regulated. In particular, the division of powers between regulators and stricter rules regarding returns on stablecoins are causing division.
Criticism increased when Coinbase CEO Brian Armstrong withdrew his support for the proposal. According to him, the law would be “worse than the current situation”. He indicated that he would rather see no law than a bad law.
After the criticism, the Senate Banking Committee decided to postpone a planned consideration of the bill. The Senate Agriculture Committee also postponed its discussion to later this month to drum up more support.
The uncertainty surrounding the bill weighs on sentiment, because regulations in the US have a major influence on the global crypto market. Investors fear that unfavorable regulations could slow down growth or put pressure on existing revenue models.
However, despite the decline in sentiment, the Bitcoin price remains relatively stable. The price fluctuated around $95,500 on Friday, a slight decline from the day before. This suggests that investors are waiting to see how the political discussion develops further.
Source: https://newsbit.nl/crypto-sentiment-zakt-terug-door-onzekerheid-over-amerikaanse-cryptowet/
