Crypto Chill: Sentiment Drops As US Lawmakers Stir Market Fears

[Ben Graham]

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