The cryptocurrency market showed signs of recovery on Thursday (August 21) after falling into a "fear" state when Bitcoin suddenly dropped sharply to nearly $112,000 the day before. Although investor sentiment has temporarily stabilized, experts warn that the period of strong volatility is not yet over.

Bitcoin Recovers After Dropping 10%

According to data from Coinbase, on Wednesday evening, Bitcoin dropped to $112,350, marking a significant adjustment of over 10% from a recent peak near $124,000 established earlier in August. This drop pulled the Bitcoin Fear & Greed Index down to 44 points, the lowest in two months, indicating a shift in market sentiment towards fear.

However, on Thursday morning, BTC had recovered to around $114,500 (according to TradingView), helping improve the sentiment index and return to neutral territory with a score of 50.

Analysts from Santiment stated:

"As expected, the cryptocurrency market has begun to recover. But caution is needed, as there may be unexpected waves of FUD. The market often moves contrary to the crowd's predictions."

They also noted the increasing social interest in several prominent assets including: Bitcoin (BTC), Tether (USDT), XRP (XRP), Cardano (ADA), and a lesser-known memecoin called SNEK.

Market Sentiment: "Flickering Like a Flame"

David Bailey – Bitcoin entrepreneur and cryptocurrency advisor to former President Donald Trump – stated:

"One of the most interesting aspects of Bitcoin is market sentiment. It flickers like a flame: sometimes, it is very excited, and right after that, it turns to panic. Many Bitcoins have changed hands just because of this psychological volatility."

He advises investors to look at the long-term picture, avoiding letting emotions dictate decisions.

Macro Factors Still Pressuring

Augustine Fan – Director of Research at SignalPlus – believes that the cryptocurrency market "has been nearly stagnant over the past week due to macro factors creating short-term pressure."

One of these factors comes from the controversial statement by U.S. Treasury Secretary Scott Bessent. He stated that the government "will not continue to purchase more Bitcoin for the Bitcoin Strategic Reserve Fund." However, just a few hours later, Bessent took to social media to "clarify" that the above opinion was not a final decision.

In the past 24 hours, the total cryptocurrency market capitalization has increased by 2%, reaching $3.96 trillion. However, analysts warn that volatility may continue in the coming days.

Focus: The Fed Chairman's Speech at Jackson Hole

The most anticipated event in the market is the speech of Federal Reserve Chairman Jerome Powell at the annual Jackson Hole conference on Friday. This event has historically had a significant impact on both stock and cryptocurrency markets.

Bitcoin solution company BitGo stated:

"Investors are preparing for Jackson Hole, as even a change in Powell's tone could lead to strong volatility in both the stock and cryptocurrency markets."

If Powell maintains a "hawkish" mindset and denies the possibility of cutting interest rates in September, the risk of selling could occur. Conversely, if he signals a softer approach, implying that rate cuts are imminent, the market could "rally significantly."

According to the CME Fed Tracker Tool, there is currently an 82% chance that the Reserve Bank will cut interest rates on September 17. However, this number is gradually decreasing as the decision announcement date approaches.

Trader Ran Neuner from CNBC commented:

"Jackson Hole will shape the next direction of cryptocurrency. Trump is pushing the Fed to cut interest rates, and he has a reasonable argument... But will Powell listen?"

👉 In summary, although the cryptocurrency market has experienced a short-term recovery, the macro context – especially the Fed's decision – will be the determining factor for the upcoming trend. Investors need to prepare for strong volatility and avoid being misled by short-term emotions.

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