According to CoinGecko, the total market cap dropped to $2.93 trillion in late trading on Thursday. Since early October, when the market reached an all-time high of around $4.4 trillion, total capitalization has fallen roughly 33% and is down nearly 14% year-to-date. This decline has led many analysts and observers to declare that the bear market has begun.

The market had previously dropped to $2.5 trillion on April 9, 2025, before climbing to all-time highs six months later. Since March 2024, the market had largely traded sideways and has now returned to the middle of that range.

Bank of Japan Hikes Rates

Michaël van de Poppe, co-founder of MN Fund, said on Friday that more short-term pain is likely and the downward trend may continue until the Bank of Japan makes its interest rate decision. Japan’s central bank raised rates to 0.75% Friday morning. While some analysts said this could be negative for crypto, Bitcoin BTC $87,165 rose by 2.3%.

Van de Poppe said: “I wouldn’t be surprised if BTC continues to cascade and enters a form of capitulation in the next 24 hours. This would imply a 10-20% drop in altcoins, which should then bounce quickly.”

Social Sentiment at Rock Bottom

Blockchain analytics platform Santiment reported that crypto sentiment is back at fear levels following a minor pump-and-dump on Thursday.

“Bitcoin bounced to $90.2K yesterday and quickly retraced to $84.8K. Commentary mainly shows fear. Bearish mentions, especially #selling, #sold, #bearish, or #lower, are notably higher across X, Reddit, and Telegram. Historically, when retail pushes the bearish narrative harder than bullish, prices often move opposite to the crowd. This fear-marked volatility is a strong signal for those patient enough to ride it out,” Santiment noted.

“Prices moving opposite to crowd expectations and volatility marked by fear are a good signal for patient investors.”

Meanwhile, the Crypto Fear & Greed Index is at 16, signaling “extreme fear,” and has remained below 30, in “fear” territory, since early November.

Why It Matters

The crypto market returning to an 8-month low highlights declining investor risk appetite and the impact of macroeconomic pressures. Social sentiment dominated by fear signals potential short-term buying opportunities while providing crucial insight for institutional strategy.

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Sharp Outflows in Bitcoin ETFs 

The largest outflow of the day came from Fidelity’s FBTC fund, which saw $99.11 million withdrawn. Grayscale’s GBTC fund experienced a $19.65 million outflow, while BlackRock’s IBIT fund saw $77.42 million exit. Combined, the three major funds accounted for the entire $196.2 million outflow. Their total net assets now stand at $146.18 billion. Analysts attribute the withdrawals to market volatility, short-term profit-taking, and lingering uncertainty over Bitcoin’s short-term outlook. 

Ethereum ETFs Show Strong Inflows 

In contrast, Ethereum ETFs had a positive day with a net inflow of $73.3 million. The most notable investment was into BlackRock’s ETHA fund, which alone attracted $88.77 million. Overall, Ethereum ETFs now hold $9.10 billion in net inflows and $19.99 billion in total assets. Experts point to optimism around upcoming network upgrades and long-term growth potential as key drivers behind the demand. 

Shifting Investor Preferences 

The simultaneous exit from Bitcoin and entry into Ethereum reflects a strategic pivot among investors. Ethereum’s evolving technology and expanding ecosystem are generating renewed interest and potential opportunities, signaling that the momentum behind Ethereum ETFs could continue in the coming months. 

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