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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What Is the Fear and Greed Index?

The Fear and Greed Index measures and analyzes investor sentiment in the market. Though also used in traditional finance, it’s especially popular in the crypto space, mainly focusing on Bitcoin. With a range from 0 to 100, it helps identify periods dominated by emotional decisions.

• 0–24: Extreme Fear
• 25–49: Fear
• 50–74: Greed
• 75–100: Extreme Greed

As shown in the chart above, a current value of 61 indicates a period of greed, reflecting strong risk appetite among investors.

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How Is It Useful? How Should It Be Interpreted?

The Fear and Greed Index reflects collective investor behavior, helping traders and analysts make informed decisions. For instance:

• Extreme fear usually aligns with market sell-offs and can present buying opportunities for long-term investors.
• Extreme greed often indicates market overconfidence and the potential for corrections.

That’s why many experts recommend a contrarian approach: “Buy when there’s fear, sell when there’s greed.”

Why Should You Monitor the Fear and Greed Index?

Crypto markets are highly reactive to news, social media, and sudden events. Since price movements often reflect emotions more than fundamentals, tools like the Fear and Greed Index are vital for identifying emotional swings.

Sharp moves in major coins like Bitcoin or Ethereum can cause the index to shift dramatically. For short-term traders, these changes can offer valuable timing insights for entering or exiting positions.,

You can also freely share your thoughts and comments about the topic in the comment section. Additionally, don’t forget to follow us on our Telegram, YouTube, and Twitter channels for the latest news and updates.

The post What Is the Fear and Greed Index? Why Does It Matter So Much? appeared first on Coin Engineer.