Crypto Sentiment Tracker Hits Two-Year Low as Bitcoin Dips
The Crypto Fear & Greed Index, a crucial gauge for Bitcoin and cryptocurrency sentiment, has plummeted to its lowest point in over two years, coinciding with Bitcoin’s fall below the $90,000 mark. As of February 26, the index dropped deeper into the “Extreme Fear” category, registering a score of 10.
Bitcoin Dips Below $85,000
This recent decline marks the lowest score since June 2022, a period that saw the crypto hedge fund Three Arrows Capital (3AC) begin its decline, shortly after the collapse of Terra (LUNC) and TerraClassicUSD (USTC) tokens, as well as the suspension of user withdrawals by crypto lender Celsius following a dramatic 90% drop in its native token, Celsius (CEL). Although there were no significant collapses leading up to the sentiment drop on February 26, many analysts attribute the negative sentiment to increasing macroeconomic unease.
The index had briefly entered the “Extreme Greed” zone just a day earlier, on February 25, when Bitcoin (BTC) first dipped below the $90,000 threshold since November. This decline followed remarks from former US President Donald Trump regarding the implementation of a 25% tariff on goods from Canada and Mexico, which he confirmed would proceed as planned. On February 26, Trump further announced similar tariffs targeting the European Union.
Currently, Bitcoin has experienced a 17.32% decrease over the past month, trading at approximately $84,408 according to CoinMarketCap data. At the time of reporting, Bitcoin is valued at $84,940.
Historical Parallels to Previous Market Conditions
This situation bears resemblance to June 19, 2022, when the index fell to a low of 6, as Bitcoin’s value dropped to $19,000, reflecting a 37% decline over 30 days. The downturn back then was primarily linked to the collapse of the TerraUSD stablecoin, which lost its dollar peg on May 9, 2022, leading to panic selling that wiped out around $60 billion from the crypto market. The fallout affected the entire sector, with 3AC facing insolvency fears by June 16 after failing to meet margin calls, ultimately leading to its liquidation on June 27. Celsius also entered bankruptcy proceedings on July 13.
Market Analysts Offer Insights on Current Sentiment
Ben Simpson, founder of Collective Shift, shared with Cointelegraph that the present market conditions might present a unique buying opportunity for crypto investors. “The straightforward strategy over the last few years has been to buy during extreme fear and sell during greed,” he mentioned. Simpson added that those who have adhered to this strategy have often outperformed the market compared to many traders. He attributed the current negative sentiment in the crypto market to unmet high expectations following Trump’s inauguration, stating, “There isn’t much to look forward to right now. A lot of confidence was placed in Trump to advance his crypto agenda, but he seems occupied with other matters.”
Pav Hundal, lead analyst at Swyftx, echoed similar sentiments, noting that “the current climate is harsh, and it’s undermining confidence.” He cautioned that the forthcoming weeks may be turbulent, although he observed that global liquidity levels have been increasing week by week, which historically serves as a positive indicator for Bitcoin. Hundal emphasized that March could prove to be a pivotal month for the cryptocurrency.
Disclaimer on Investment Advice
This article is not intended as investment advice or recommendations. Every investment and trading decision carries inherent risks, and readers are encouraged to conduct their own research prior to making any financial decisions.
