Basri Caneri The Crypto Fear & Greed Index, which measures investor sentiment in crypto markets, fell to its lowest level in two years, increasing investor concerns about the market. With Bitcoin dipping below $85,000, the index fell as low as 10 points on February 26, entering the “Extreme Fear” zone.
This level is similar to the levels seen in June 2022 during the Terra (LUNA), Celsius and Three Arrows Capital (3AC) crises. While the markets experienced major collapses at that time, it is now thought that global economic uncertainties and macroeconomic developments are behind the index falling so sharply.
Bitcoin Drops Below $85,000: Anxiety Dominates Markets
Bitcoin, the flagship of cryptocurrency markets , fell 17.32% in 30 days to $84,408. While this decline caused anxiety among investors, it strengthened the atmosphere of fear across the market.
The recent sharp declines have been compared to the great crash of 2022. At that time:
- The collapse of the Terra ecosystem caused billions of dollars in losses.
- Celsius filed for bankruptcy after freezing user funds.
- Three Arrows Capital (3AC) went into liquidation after defaulting on its debts.
Currently, although there has not been a similar large-scale collapse in the market, global economic uncertainties seem to be driving investors away from risky assets. US President Donald Trump’s announcement that he will impose 25% tariffs on Canada and Mexico is considered as one of the developments that increased concerns in the markets.
Buying Opportunity for Investors or a New Downward Wave?
Despite this air of fear in the markets, some analysts see these levels as an opportunity for long-term investors.
Ben Simpson, founder of crypto analysis company Collective Shift, notes that markets have historically shown that buying during periods of “Extreme Fear” and selling during periods of “Greed” is a lucrative strategy:
“One of the most successful strategies in recent years has been to buy when there is panic. Investors who bought Bitcoin at extreme levels of fear have generally outperformed the broader market.”
On the other hand, Swyftx chief analyst Pav Hundal warns that the next few weeks could be quite volatile:
“The market is currently going through a period of uncertainty and investor confidence is shaken. But a gradual increase in global liquidity could be a positive signal for Bitcoin in the long run.”
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