The overall sentiment in the cryptocurrency market sharply deteriorated on Tuesday following Bitcoin’s brief drop below the $106,000 mark, a level not seen in over three weeks. This decline coincided with the Crypto Fear & Greed Index plummeting to 21 out of 100, signaling a state of “Extreme Fear” among investors.
Bitcoin (BTC) reached an intraday low of approximately $105,540 on Monday, sliding down from a peak exceeding $109,000 earlier the same day. Although BTC recovered slightly, crossing back above $106,500, it remained down around 2% on the day according to data from CoinGecko.
The 21-point reading on the Crypto Fear & Greed Index marked the lowest level in nearly seven months. The index previously recorded a similar trough on April 9, when it hit 18 out of 100 amid widespread market turmoil triggered by the implementation of global tariffs announced by then-U.S. President Donald Trump.
This steep decline resulted in the index falling from 42 points to 21 points within 24 hours, demonstrating a rapid shift in market dynamics. Historical data shows that the last time the index reflected “Extreme Fear” was on October 22, when a Bitcoin price drop from above $110,000 to below $108,000 pushed the index down to 25 out of 100.
Since a sharp market correction in early October—following Bitcoin’s peak near $126,000 on October 6—the index has oscillated between “Extreme Fear” and “Neutral” sentiment levels. Before that correction, the sentiment was notably more positive, reaching a “Greed” rating of 74 points on October 5, the highest in the past month.
Analysts have pointed to several factors behind the recent Bitcoin decline, including diminished institutional demand and lower blockchain activity. Additionally, concerns about a more hawkish approach from the U.S. Federal Reserve have weighed on the market. The Fed recently reduced interest rates for the second time this year but hinted that further cuts may not occur until 2025, disappointing investors who had hoped for more immediate easing.
Institutional activity also reflected this caution, with Bitcoin-focused exchange-traded funds experiencing net outflows nearing $800 million last week. Moreover, institutional buying of BTC fell below the daily supply of mined coins for the first time in seven months, indicating reduced appetite among larger market players.
Despite short-term challenges, some in the crypto community remain optimistic about November’s historical performance. Bitcoin has typically seen gains averaging more than 42% during this month, making it one of its strongest periods historically.
In summary, the recent drop below $106,000 in Bitcoin’s price has catalyzed a marked shift towards fear in the crypto market, as reflected by the Crypto Fear & Greed Index moving to its lowest point in over half a year. Ongoing macroeconomic factors and institutional trends continue to influence sentiment as market participants navigate the current landscape.
