Crypto market sentiment has returned to neutral as markets showed signs of recovery on Thursday following a brief dip into the “fear” zone when Bitcoin fell to $112,000 a day earlier.

However, analysts have been quick to warn that more volatility lies ahead.

Bitcoin (BTC) fell to $112,350 on Coinbase in late trading on Wednesday, marking a 10% correction from its August peak of just over $124,000, and tipping the Bitcoin Fear & Greed Index to 44, its lowest level in two months.

However, it has started to recover since, reclaiming the $114,500 level during early trading on Thursday, according to TradingView, which has resulted in improved sentiment. The index has now shifted back to neutral, with a rating of 50.

“As anticipated, crypto markets have begun to rebound,” said blockchain analysts at Santiment, who cautioned, “watch for more FUD” and “markets move opposite to crowd’s expectations.”

Santiment also specified several crypto assets that were showing a rising level of social interest, including Bitcoin, Tether (USDT), XRP (XRP), Cardano (ADA), and an obscure memecoin called SNEK.

Sentiment flickers like a flame

“One of the most hilarious aspects of Bitcoin is sentiment. It flickers like a flame. One moment euphoria, moments later panic. Many Bitcoin have exchanged hands through such emotions,” said Bitcoin entrepreneur and President Trump’s crypto adviser David Bailey, who advised zooming out and staying focused.

“Crypto prices treaded water over the past week as macro factors added near-term headwinds,” Augustine Fan, head of insights at crypto trading software service provider SignalPlus, told Cointelegraph.

She added that US Treasury Secretary Scott Bessent “disappointed observers by stating that the government is not going to purchase any more BTC for its Strategic Bitcoin Reserve,” though Bessent appeared to backtrack those remarks in an X post hours later.

Total market capitalization has recovered to reach $3.96 trillion following a 2% gain over the past 24 hours; however, more volatility may lie ahead this week.

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All eyes on Fed chair’s speech at Jackson Hole

Investors are eagerly awaiting Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole conference on Friday, which has historically moved markets.

“Markets brace for Jackson Hole as Powell’s tone could jolt equities and crypto,” stated Bitcoin solutions provider BitGo on Wednesday.

The markets have been front-running the prospect of Powell hinting at no rate cuts in September, but if he “comes in soft and leans that rate cuts are likely, we turbo rip,” commented author Jason Williams on Wednesday.

“Jackson Hole will shape crypto’s direction moving forward,” said CNBC trader Ran Neuner before adding, “Trump is pushing for a rate cut with good reason… But will Powell listen?”

The prediction futures-based CME Fed Watch tool currently forecasts an 82% chance of a rate cut on Sept. 17, though the figure has been falling.