Crypto market sentiment has plunged significantly, with the Fear & Greed Index falling to 10, indicating “extreme fear,” which marks a near nine-month low, the lowest since late February.
This sharp decline in sentiment follows a week of losses across major cryptocurrencies, primarily driven by bitcoin’s drop to just below $96,000 during a major sell-off, which, for the second time this month, saw the cryptocurrency dip under the $100,000 threshold.
The index, a popular measure of investor emotions, shows increasing anxiety as bitcoin lost over 5% in the past week. The leading cryptocurrency is now trading at levels not observed since early March, following a steady decline from its all-time high above $120,000.
The broader crypto market, represented by the CoinDesk 20 (CD20) index, also experienced a loss of around 5.8% in value over the week.
“The sell-off results from a combination of profit-taking by long-term holders, institutional outflows, macroeconomic uncertainty, and liquidated leveraged longs,” said Jake Kennis, Senior Research Analyst at Nansen, in an emailed statement. “It’s evident that the market has temporarily opted for a downward trajectory after a prolonged period of consolidation/ranging.”
Factors contributing to the sell-off also include diminishing expectations for an interest rate cut from the Federal Reserve this month, with the CME’s FedWatch tool estimating the odds of a 25 basis point cut at nearly 50%. Traders on prediction markets weigh similar probabilities.
Furthermore, the White House indicated that key economic indicators, including October inflation, could face delays due to the recent government shutdown, leaving traders with less macro data to analyze.
Adding to this is low liquidity, as the market is still recovering from the significant crash in October, with order-book depth across major centralized exchanges remaining structurally lower since then.
Read more: Crypto Liquidity Still Hollow After October Crash, Risking Sharp Price Swings
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