Bitcoin’s pullback on Monday quickly chilled the crypto markets, sending sentiment down to levels not seen in months. Prices dropped to a 24-hour rate low of $103,938 after earlier trading above $109,000, and gauges of market sentiment turned sharply negative as investors reassessed risk.
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Crypto fear reaches extreme measurements
According to the Crypto Fear & Greed Index, the score dropped to 21 out of 100 on Tuesday, a move that registers as “Extreme fear.”
That figure is the lowest in almost seven months; The index previously reached a score of 18 out of 100 on April 9, as markets reacted to US President Donald Trump’s global statements. tariff measures.
Reports show the index has been swinging between calm and turmoil since the big sell-off in early October, when prices tumbled after falling from a peak above $126,000 on October 6.
Market participants pointed to a mix of weak institutional flows and macro concerns. Based on reports, Bitcoin exchange-traded funds recorded net outflows of nearly $800 million last week.
Analysts said institutional purchases recently fell below the amount of newly mined Bitcoin for the first time in seven months. These trends are reducing the steady inflows that had helped support prices.
Price action and short-term drivers
Bitcoin recovered from bottoming above $104,100, but the sharp intraday swing highlighted its vulnerability. Some traders blamed stock markets and wallets for the cooling activity, while others expressed concerns about the Federal Reserve’s stance.
The Fed cut interest rates for the second time this year on Wednesday, but still indicated that there may be no further cuts until 2025. That hint of a less favorable outlook seemed to catch investors off guard, leading to rapid repricing in both the stock and crypto markets.
There are also technical points that come into play. The Crypto Fear & Greed Index last fell into the ‘Extreme Fear’ zone on October 21 when it reached 25 out of 100, after Bitcoin fell from over $110,000 to below $108,000.
Previously, the index was above 70 – a ‘greed’ level – showing how quickly sentiment can change as price movements accelerate.
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What traders look at next
Traders will be watching ETF flowsactivity in the chain and any new signals from American policymakers. Based on reports, lower blockchain activity and fewer large purchases by institutions are cited as direct reasons for the decline.
If inflows return, they can stabilize the market. If the outflow continues, the pressure may increase.
However, market bulls still point to seasonal history. According to historical patterns cited by some analysts, November has often been a strong month for Bitcoin, with average gains of over 40% in recent years.
Featured image of Gemini, chart from TradingView