Crypto Market Faces 'Extreme Fear' as Bitcoin Dips Below $100,000
Market Sentiment Hits Extreme Fear
The cryptocurrency market has entered a phase of 'extreme fear,' as indicated by the Fear & Greed Index, which has plummeted to a reading of 10, its lowest since February. This sharp decline reflects a growing unease among investors.
Bitcoin's Struggle Below $100,000
Bitcoin's value has fallen below the $100,000 mark, now trading near $96,000 after a significant sell-off. This marks the second instance this month where Bitcoin has dipped under this psychological threshold, contributing to a broader market downturn.
Market-Wide Impact
The CoinDesk 20 index shows a 5.8% drop in the wider crypto market over the past week, mirroring Bitcoin's 5% decline. According to Jake Kennis, Senior Research Analyst at Nansen, the sell-off is driven by profit-taking by long-term holders, institutional outflows, macroeconomic uncertainties, and the liquidation of leveraged positions.
Additional Market Pressures
Market conditions are further strained by the potential delay in interest rate cuts from the Federal Reserve, with the CME’s FedWatch tool indicating a 50% chance of a 25 basis point reduction. Additionally, the recent U.S. government shutdown has delayed critical economic indicators, limiting traders' access to macro data.
Liquidity remains an issue, as the market has yet to recover fully from October's crash, with order-book depth on major exchanges still reduced.
Read more: Crypto Liquidity Still Hollow After October Crash, Risking Sharp Price Swings