Crypto market sentiment deteriorated sharply with the Fear and Greed Index falling to 10, a level indicating “extreme fear”, marking a nearly nine-month low as it was the lowest reading since late February.
The fall in sentiment follows a week of losses across major cryptocurrencies, led by bitcoin falling to just under $96,000 in a selloff that, for the second time this month, saw the cryptocurrency fall below the $100,000 mark.
The index, a popular indicator of investor emotions, reflects growing unease as bitcoin has 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 broader crypto market, as measured via the CoinDesk 20 Index (CD20), also lost around 5.8% of its value during the week.
“The sell-off is a confluence of LTH profit-taking, institutional exits, macroeconomic uncertainty and the erasure of leveraged long positions,” 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/packing up.”
Factors behind the selloff also include fading hopes for an interest rate cut from the Federal Reserve this month, with the CME’s FedWatch tool now putting the odds of a 25 basis point cut at nearly 50%. On prediction markets such as Kalshi and Polymarket, traders assess similar odds.
Additionally, the White House said recent key economic indicators, including October inflation, may not be released at all due to delays from the recent government shutdown. This means traders have less macro data to work with.
The icing on the cake comes in the form of low liquidity, as the market has yet to fully recover from the major crash seen in October, with order book depth on major centralized exchanges remaining structurally weaker since.
Read more: Cryptocurrency liquidity still hollow after October crash, risking sharp price swings
