As Bitcoin falls below $90,000, the key tracking indicator of Bitcoin and cryptocurrency sentiment, the "Crypto Fear and Greed Index," has dropped to its lowest point in over two years.
On February 26, the Crypto Fear and Greed Index further declined into the "Extreme Fear" range, reaching a score of 10.
This is the lowest level since June 2022, when the crypto hedge fund "Three Arrows Capital" (3AC) began to collapse—just a month after the collapse of Terraform Labs' Terra (LUNC) and TerraClassicUSD (USTC) tokens, and weeks after the cryptocurrency lender Celsius paused all user withdrawals following a 90% drop in its native token Celsius (CEL).
Despite the market sentiment plummeting on February 26, there was no significant crash in the cryptocurrency market prior to this. Many observers attribute this phenomenon to heightened macroeconomic uncertainty.
The day before, on February 25, the sentiment indicator had first entered the "Extreme Greed" zone. At that time, Bitcoin (BTC) fell below $90,000 for the first time since November. U.S. President Donald Trump had stated the previous day (February 24) that his plan to impose a 25% tariff on Canada and Mexico was "on schedule." Recently, Trump mentioned in a cabinet meeting on February 26 that he would also impose a 25% tariff on the European Union.
According to data from CoinMarketCap, as of the time of writing, Bitcoin has dropped 17.32% in the past 30 days, trading at $84,408.
As of the time of writing, Bitcoin's trading price is $84,940. Source: CoinMarketCap
This situation is similar to June 19, 2022, when the index fell to 6, and Bitcoin dropped 37% in 30 days, falling to $19,000.
Related: Analyst: Key indicators show Bitcoin has not peaked, bullish outlook for the next year
The decline at that time was largely attributed to the collapse of the TerraUSD stablecoin, which lost its peg to the U.S. dollar (USD) on May 9, 2022. Panic selling resulted in a total loss of $60 billion for the crypto ecosystem.
This impact rippled through the entire cryptocurrency industry. On June 16, 3AC faced bankruptcy due to its inability to meet creditors' margin calls. On June 27, 3AC was ordered to liquidate. On July 13, Celsius entered bankruptcy proceedings.
Ben Simpson, founder of Collective Shift, stated in an interview with Cointelegraph that the current market conditions may present a buying opportunity for cryptocurrency investors.
Simpson said, "The simple strategy over the past few years has been to buy when there is extreme fear and sell when there is greed."
He added, "If you did that, you have already outperformed the market and likely surpassed most traders."
He explained that the negative sentiment in the crypto market stems from unmet high expectations following Donald Trump's inauguration:
Swyftx chief analyst Pav Hundal also expressed a similar view, telling Cointelegraph, "The current environment is very harsh and is undermining confidence."
Hundal said, "The next few weeks may be tough, but global liquidity levels have been rising week by week, which historically has been a leading indicator for Bitcoin. March will be a key month."
Related: Bitcoin's rally "stalls," contradicting institutional predictions?
This article does not contain investment opinions or advice. Every investment and trading activity involves risk, and readers should conduct their own research before making decisions.
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