Haciyev Reşit 
The sharp increase in volatility in the crypto market in recent days has severely impacted investor sentiment, pushing the Crypto Fear and Greed Index into the “Extreme Fear” zone at 10 points its lowest level since February. Such a drop indicates that risk-off behavior has strengthened sharply across the market. However, experts say the situation may not be as grim as it appears.
Index at Its Most Fearful Level in Eight Months
Current data shows that the sentiment index falling to 10 points has driven investors into a strong panic mode. The main driver behind this decline was Bitcoin slipping below $95,000 on Friday and struggling to recover through the weekend. These levels align with the lows tested during the sharp February sell-off.
During the February crash:
- Bitcoin fell from $102,000 to $84,000
- Spot BTC ETFs saw a record $1.14 billion outflow
- The index dropped to 10 points
Although today’s decline reflects similar sentiment, technical indicators and market structure may be on firmer ground compared to previous cycles. While sentiment indices often signal the beginning of major downturns, analysts say this time the data points to a more constructive backdrop.
“The Situation Is Not as Severe as It Looks”
Andre Dragosh, Head of European Research at Bitwise, said that despite low sentiment, the negative signals appear weaker compared to previous major corrections. Dragosh noted:
“The fear index is clearly trending downward, but despite the price drop, the market is holding up better than in previous corrections. This suggests a positive divergence.”
His assessment indicates that even though fear is rising, investor behavior has not fully shifted into panic mode.
Macro Uncertainty Persists
While the reopening of the U.S. government briefly reduced uncertainty, the Federal Reserve’s unclear stance on rate cuts continues to negatively affect risk perception. The Fed’s refusal to signal early easing has:
- increased the flight from risk assets
- heightened volatility in the crypto market
- pressured investor sentiment
Rate-cut uncertainty remains one of the main reasons behind the index’s decline.
Analysts: A Lack of Year-End Rally Could Be Healthy
Some experts view the absence of an explosive year-end rally as a “healthy cooling period” for the market. Bitwise CIO Matt Hougan commented:
“The riskiest scenario would have been a massive pump followed by a sharp crash as we approach the end of 2025. This year’s more moderate performance is building a stronger foundation for the future.”
His perspective suggests that the market is finding new equilibrium levels naturally.
Extreme Fear Is Here — But Not a Classic Crash Signal
The drop of the sentiment index to 10 points shows widespread anxiety. However:
- positive divergences in technical charts
- more measured declines compared to past cycles
- continued institutional interest
- strong developer activity
all suggest that this fear may not be long-lasting.
The market may be in fear, but many analysts believe this is a short-term panic phase, potentially followed by a more balanced period of recovery.
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