- The Crypto Fear & Greed Index fell sharply to 10, indicating “extreme fear,” the lowest level in nearly nine months.
- Bitcoin dropped below $100,000 twice this month, trading near $96,000 after a more than 5% decline in the past week.
- The broader crypto market, tracked by the CoinDesk 20 index, lost about 5.8% over the same period.
- Key factors behind the selloff include profit-taking, institutional outflows, Fed rate cut uncertainty, reduced economic data following a government shutdown, and low market liquidity.
Crypto market sentiment has declined significantly, with the Fear & Greed Index dropping to 10, a level signaling “extreme fear” unseen since late February. This downturn follows a week of notable losses among major cryptocurrencies. Bitcoin fell below the $100,000 mark twice this month, currently trading just under $96,000 after losing over 5% in the past seven days.
The CoinDesk 20 (CD20) index, which tracks the broader crypto market, declined approximately 5.8% during the week. The drop in prices and investor confidence coincides with multiple contributing factors. According to Jake Kennis, Senior Research Analyst at Nansen, the selloff results from a mix of long-term holders taking profits, institutional withdrawals, uncertainty around macroeconomic conditions, and the liquidation of leveraged long positions.
Additional pressure stems from diminished expectations of a Federal Reserve interest rate cut this month. The CME’s FedWatch tool places the chance of a 25 basis points cut at about 50%, with similar odds shown in prediction markets like Kalshi and Polymarket. Furthermore, the recent government shutdown may delay key economic reports, including October inflation data, reducing available information for traders as reported by the White House here.
Liquidity in the crypto market remains low following a significant crash in October, with order-book depth across major centralized exchanges still below usual levels. This limited liquidity can increase price volatility in market conditions like those seen in the recent selloff.
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