TLDR
- Bitcoin dropped to $112,350 before recovering to $114,500 as Fear & Greed Index moved from 44 to neutral at 50
- Whales purchased 200 BTC worth $23 million during the correction, showing institutional confidence
- Four key reversal indicators suggest potential bottom formation including positive bid-ask ratios and retail sentiment
- Federal Reserve Chair Jerome Powell’s Jackson Hole speech on Friday could drive more volatility
- Total crypto market cap recovered to $3.96 trillion with 2% gains over 24 hours
Bitcoin’s price experienced a sharp correction earlier this week, dropping to $112,350 on Coinbase before staging a recovery. The cryptocurrency fell 10% from its August peak of just over $124,000.
The decline pushed the Bitcoin Fear & Greed Index to 44, marking its lowest level in two months. This represented a shift from neutral to fear territory as market sentiment deteriorated.
Bitcoin Fear and Greed Index is 50. Neutral
Current price: $114,056 pic.twitter.com/TxMDtH9GLY— Bitcoin Fear and Greed Index (@BitcoinFear) August 21, 2025
Bitcoin has since recovered, reclaiming the $114,500 level during Thursday trading. The sentiment indicator has returned to neutral with a rating of 50, reflecting improved market conditions.
Blockchain analysts at Santiment noted that crypto markets have begun to rebound as anticipated. However, they cautioned investors to watch for more fear, uncertainty and doubt in the coming days.
The analysts highlighted several cryptocurrencies showing rising social interest. These include Bitcoin, Tether, XRP, Cardano, and the memecoin SNEK.
Bitcoin entrepreneur David Bailey observed that sentiment flickers like a flame. He noted how the cryptocurrency moves from euphoria to panic moments later, causing many coins to change hands through emotional trading.
Augustine Fan from SignalPlus pointed to macro factors creating near-term headwinds for crypto prices. She mentioned Treasury Secretary Scott Bessent’s initial comments about not purchasing more Bitcoin for a Strategic Bitcoin Reserve.
Bessent later appeared to backtrack on those remarks in a social media post. This created confusion about the government’s stance on Bitcoin accumulation.
Bitcoin Price Prediction
On-chain data shows institutional players have been buying the correction. Whale trackers identified a purchase of 200 BTC worth approximately $23 million during the downturn.
Bitcoin pioneer Adam Back suggested that dips serve to transfer Bitcoin from weak hands to stronger hands. This view reflects the long-term holder mentality during market corrections.
Glassnode data reveals that supply held by First Buyers is approaching 5 million BTC. This indicates long-term holders and large players are dollar-cost averaging into the decline.
Technical Analysis Points to Potential Reversal
Captain Faibik’s daily chart analysis showed Bitcoin broke below a rising wedge pattern. The cryptocurrency is currently trading below the 50 EMA, confirming bearish structure in the short term.
Analyst Axel Adler noted Bitcoin is in a moderate pullback, down only 8% from its peak. Key support levels include the 111-day SMA at $109,600 and the 200-day SMA at $100,400.
The pullback appears moderate: the market has only dropped 8% from its local peak, with medium-term support at 111-day SMA 109.6K and STH Realized Price 106.8K. This forms a dense demand zone of 107–110K, where it’s possible to expect stabilization attempts and bounces. pic.twitter.com/y2Sfy8OJep
— Axel 💎🙌 Adler Jr (@AxelAdlerJr) August 20, 2025
The Short-Term Holder Realized Price sits at $106,800. These zones could serve as bounce areas if the correction continues deeper.
Four conditions suggest potential reversal formation. The bid-ask ratio across order books has turned positive, which historically marks local bottoms.
Slippage spikes need to peak above 150 for confirmation. True Retail Accounts Long percentage stands at 61.95%, with readings above 60% historically marking bullish pivots.
The final condition requires price to reclaim and hold above the 50 EMA. Meeting all four criteria would suggest the correction may be ending.
Total cryptocurrency market capitalization recovered to $3.96 trillion following a 2% gain over 24 hours. However, Federal Reserve Chair Jerome Powell’s Jackson Hole speech on Friday could create more volatility.
The CME Fed Watch tool forecasts an 82% chance of a September rate cut, though this probability has been declining recently.
