Sentiment in the crypto market has worsened sharply, with the Fear and Greed Index falling to 10, a level indicating “extreme fear”, marking a nearly nine-month low as it is the lowest reading since late February.
The dip in sentiment follows a week of losses across major cryptocurrencies, led by bitcoin’s drop to just below $96,000 in a major selloff that saw the cryptocurrency fall below the $100,000 mark for the second time this month.
The index, a popular gauge of investor sentiment, reflects growing unrest as bitcoin lost more than 5% over the past seven days. The largest cryptocurrency is now trading at levels not seen since early March, after a steady decline from its all-time high above the $120,000 level.
The broader crypto market, as measured by the CoinDesk 20 (CD20) index, also lost about 5.8% of its value during the week.
“The selloff is a confluence of profit taking from LTHs, institutional outflows, macro uncertainty and leveraged longs being 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/tension.”
Factors behind the selloff also include faint hopes of a rate cut by the Federal Reserve this month, with CME’s FedWatch tool now placing the odds of a 25bps cut near 50%. On prediction markets like Kalshi and Polymarket, traders weigh similar odds.
On top of this, the White House said the latest 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 big crash back in October, with order book depth across major centralized exchanges remaining structurally lower since.
Read more: Crypto liquidity still gaping after October crash, risks sharp price swings
