The crypto market sentiment weakened on Friday as the long-awaited US crypto market structure bill brought uncertainty again, trading more cautiously.
The Crypto Fear & Greed Index saw a drop of 12 points to 49, thus changing the sentiment from "greed" to "neutral" after reaching a multi-month high the previous day. This pullback indicates how digital asset markets remain affected by regulatory issues.
The sentiment shift emerged from the differences within the US cryptocurrency industry over a Senate version of the Digital Asset Market Clarity Act, proposing legislation aimed at defining the federal regulation of digital assets.
The bill would clear up the jurisdictional confusion between the Securities and Exchange Commission and the Commodity Futures Trading Commission, thus impacting the compliance of exchanges, stablecoin operators, and DeFi platforms significantly.
Momentum behind the bill stalled after Coinbase withdrew its support, citing concerns over restrictive provisions related to DeFi activity, tokenized equities, and limits on stablecoin-related rewards.
Coinbase CEO Brian Armstrong stated that the draft legislation could be “worse than the current status quo,” arguing that certain clauses may hinder innovation and liquidity.
Following the backlash, the US Senate Banking Committee postponed its scheduled markup of the bill, noting the need for additional time to build consensus. The Senate Agriculture Committee also delayed its review, pushing discussions into late January.
These postponements have extended uncertainty around the timeline and final structure of what would be the first comprehensive federal crypto market framework in the US.
The regulatory hiatus lined up with a slight drop in the prices; Bitcoin dropped under the $96,000 mark and was trading at $95,480, with a decline of 0.90% in the last 24 hours.
Ethereum also dipped slightly and was around $3,310, while traders' expectations of regulatory uncertainty were reflected in the price.
Analysts, however, expressed that the market pullback remains contained, indicating that the market was in a consolidation phase.
Some analysts say that the price increase of Bitcoin was due to the consistent buying of long-term holders and institutional players, rather than excessive speculative leverage.
Also Read: CLARITY Act Faces Pushback From Coinbase as Senate Delays Markup Vote
Some view the postponement as a setback, while others regard it as a chance to form a better regulatory framework. Among the proposed benefits of the delay, lawmakers are refining critical issues and forming a more durable regulatory framework.
On the other hand, some analysts have lowered their expectations for the short-term amid the continuous disputes concerning stablecoin yield policies and regulatory power.
The fate of the Digital Asset Market Clarity Act remains a key variable for crypto markets. A clearer, balanced framework could unlock broader institutional participation, while prolonged uncertainty may continue to pressure sentiment.