The second one, it has a capital letter and a full stop which is needed.
bad-tempered and negative/grumpy type
Synonyms:
ill-humored, crusty, encrusted, crustlike, husky, hoarse, ill-humoured, crusted, curmudgeonly, gruff
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Narrator feels saddened because "A flow of disappoint rushed across my mind." The creature felt amused because "He came straight up to me and laughed into my eyes."
Hope this helps, if you have any other questions please do ask :)