Crypto Market Faces Extreme Fear as Bitcoin Drops by $20K

For the first time in more than six months, crypto investors are gripped by severe anxiety. This prevailing sentiment correlates with a larger market downturn and Bitcoin’s (BTC) tumble to the $103,000 mark.

Data collected from Alternative.me indicates that the Crypto Fear and Greed Index has plunged to a level that indicates extreme fear among investors. The last instance of such widespread fear occurred in early April when BTC was valued at around $76,200.

Extreme Fear Grips Investors

The Crypto Fear and Greed Index assesses investor sentiment by considering various factors, such as market volatility, momentum, trends, BTC dominance, and social media engagement. The index fluctuates from 0 to 100, with lower values signaling extreme fear and higher values representing extreme greed. In a neutral market, the index typically hovers around 50.

Currently, the index is at 22, signifying extreme fear. Just last week, it rested at 64, suggesting a greed-driven sentiment among investors, since BTC mainly stayed above $120,000. It is notable that the index transitioned from a state of greed to fear correlating with BTC’s sharp decline during the market crash on October 10.

While BTC began to recover following last week’s downturn, the ongoing correction has triggered a deeper decline in the index. Various analysts have divergent interpretations of the market’s current condition: some forecast further challenges in the upcoming days before a potential bullish reversal, while others argue the bull cycle has concluded and predict a downward trend until the bear market’s end.

Regardless, periods dominated by fear in the market often provide investors with lucrative buying opportunities.

More Pain Incoming?

As analysts and market participants anticipate the next move, Bitcoin liquidations continue to mount rapidly. Over the last 24 hours, more than 305,000 traders have been liquidated for upwards of $1.2 billion, with long positions constituting at least $917 million and short positions suffering losses exceeding $261 million.

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Despite the turmoil, BTC bounced back in recent hours after U.S. President Donald Trump remarked that the tariffs on China he proposed last week would not be implemented. Moreover, he and President Xi are scheduled to meet in two weeks.