Crypto Market Sentiment Falls as Bitcoin Slides Below $106,000
Bitcoin briefly dropped below $106,000 on Tuesday, prompting a significant decline in market sentiment. The Crypto Fear & Greed Index, a widely used indicator of market emotions, hit 21 out of 100, signaling "Extreme Fear." This marks the lowest score for the index in nearly seven months.
Sharp Decline in Sentiment
According to CoinGecko data, Bitcoin reached a 24-hour low of $105,540 on Monday, sliding from an earlier intraday high of more than $109,000. The cryptocurrency was down around 2% for the day on Tuesday, but managed to recover above $106,500 by the time of reporting.
- The last time the Fear & Greed Index fell to similar levels was on April 9, when it reached a score of 18 after broad declines in both stock and crypto markets.
- "Extreme Fear" was last recorded on October 22, with a score of 25 after Bitcoin fell below $108,000 from above $110,000.
- Earlier in October, the index frequently shifted between "Extreme Fear" and "Neutral" as Bitcoin cooled rapidly from its October 6 peak of over $126,000.
- The highest sentiment in the past month occurred on October 5, with a score of 74 or "Greed."
Macroeconomic Factors Weigh on Crypto
Analysts link Bitcoin's recent decline to shifts in blockchain activity and uncertainty around United States Federal Reserve policy. On Wednesday, the Fed announced its second rate cut this year but indicated there may be no further reductions in 2025. This tempered investor expectations and put pressure on risk assets, including cryptocurrencies.
Last week, Bitcoin-focused exchange-traded funds recorded nearly $800 million in outflows. For the first time in seven months, ETF demand dropped below the rate of newly mined Bitcoin supply.
Looking Ahead
Despite the recent downturn, some market participants remain hopeful for a recovery in November. Historically, Bitcoin has averaged a growth rate above 42% in the month, making it a notable period for upward movement. However, current macroeconomic concerns and declining sentiment could shape market activity in the coming weeks.
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