Crypto Market Slips Into ‘Extreme Fear’ After Bitcoin Fails to Hold $100,000 Level

What to know:

• Crypto market sentiment has plummeted to "extreme fear" with the Fear & Greed Index dropping to 10, its lowest level since late February, amid a week of losses across major cryptocurrencies.
• Bitcoin led the decline, dropping over 5% in the past seven days to trade at levels not seen since early March, with the wider crypto market also losing 5.8% of its value.
• The sell-off is attributed to a combination of factors, including profit-taking, institutional outflows, macro uncertainty, and low liquidity.

Crypto market sentiment has deteriorated sharply, with the Fear & Greed Index dropping to 10, a level indicating “extreme fear,” marking a near nine-month low as it’s the lowest reading since late February.

The plunge in sentiment follows a week of losses across major cryptocurrencies, led by bitcoin's decline to just under $96,000 in a major sell-off that, for the second time this month, saw the cryptocurrency drop below the $100,000 mark.

The index, a popular gauge of investor emotions, reflects growing unease as bitcoin lost more than 5% over the past seven days. The largest cryptocurrency is now trading at levels not seen since early March, following a steady decline from its all-time high above the $120,000 level.

The wider crypto market, as measured via the CoinDesk 20 (CD20) index, alsolost around 5.8% of its value over the week.

“The selloff is a confluence of profit-taking by LTHs, institutional outflows, macro uncertainty, and leveraged longs getting wiped out,” Jake Kennis, Senior Research Analyst at Nansen, said in an emailed statement. “What is clear is that the market has temporarily chosen a downward direction after a long period of consolidation/ranging.”

The factors behind the sell-off also include fading hopes of an interest rate cut from the Federal Reserve this month, with the CME’s FedWatch tool now placing the odds of a 25 bps cut near 50%. On prediction markets such as Kalshi and Polymarket, traders weigh similar odds.

On top of this, the White House said that recent key economic indicators, including October inflation, may not be released at all due to delays from the recently ended government shutdown. This means traders have less macro data to work with.

The cherry on top comes in the form of low liquidity, as the market has yet to fully recover from the major crash seen back in October, with order-book depth across major centralized exchanges remaining structurally lower since.