Crypto Sentiment Tracker Hits Two-Year Low Amid Bitcoin Decline
The Crypto Fear & Greed Index, a prominent gauge of market sentiment for Bitcoin and other cryptocurrencies, has dropped to its lowest reading in over two years, coinciding with Bitcoin’s decline below $90,000. As of February 26, the index fell deeper into the “Extreme Fear” category, scoring just 10.
Bitcoin Dips Below $85,000
This marks the lowest score since June 2022, a time when the crypto hedge fund Three Arrows Capital (3AC) began to experience significant troubles. This period also followed the collapse of Terraform Labs’ Terra (LUNC) and TerraClassicUSD (USTC) tokens, and the crypto lending platform Celsius had recently halted all user withdrawals after its native token, Celsius (CEL), plummeted by 90%. While no major incidents preceded this latest drop in sentiment on February 26, many analysts attribute the fear to growing macroeconomic uncertainties.
The sentiment tracker was in the “Extreme Greed” zone just a day earlier, on February 25, as Bitcoin (BTC) first fell below the $90,000 threshold since November. This downturn followed a statement from former President Donald Trump regarding the continuation of a 25% tariff on imports from Canada and Mexico. Furthermore, Trump announced on February 26 that he would impose the same tariff on the European Union.
At the time of this report, Bitcoin had decreased by 17.32% over the past month, trading around $84,408 according to data from CoinMarketCap. The price reflected an ongoing trend, with Bitcoin trading at approximately $84,940 at the time of publication.
Market Comparison to Previous Downturns
This situation mirrors the events of June 19, 2022, when the index plummeted to 6 as Bitcoin’s value fell to $19,000, representing a 37% loss over the preceding month. At that time, the downturn was largely connected to the collapse of the TerraUSD stablecoin, which lost its dollar peg on May 9, 2022, resulting in a panic sell-off that erased around $60 billion from the cryptocurrency market. This turmoil had a cascading effect across the industry, leading to insolvency fears for 3AC, which was ultimately liquidated on June 27, while Celsius filed for bankruptcy on July 13.
Expert Insights on Current Market Sentiment
Ben Simpson, founder of Collective Shift, shared insights with Cointelegraph, indicating that the current market dynamics may represent a potential buying opportunity for investors in the cryptocurrency space. “The straightforward strategy over the years has been to purchase during periods of extreme fear and sell during times of greed,” Simpson noted. He added that those who have followed this approach have likely outperformed the broader market and many traders. He attributed the prevailing negative sentiment to unmet high expectations following Trump’s inauguration, stating, “There isn’t much to feel hopeful about right now. Many had high hopes for Trump to advance his crypto initiatives, but he seems occupied with other matters.”
Pav Hundal, lead analyst at Swyftx, echoed this sentiment, describing the current market as particularly unforgiving, which is affecting investor confidence. He cautioned that the upcoming weeks might be turbulent; however, he observed that global liquidity levels have been steadily increasing, which historically serves as a positive indicator for Bitcoin’s performance. “March is shaping up to be a pivotal month,” Hundal concluded.
Disclaimer
This article does not provide investment advice or recommendations. It is essential to understand that all investment and trading endeavors carry risks, and individuals should perform their own due diligence before making financial decisions.
