Bitcoin Dips to Extreme Fear Levels, Erasing Weekend Gains

Bitcoin has dropped sharply losing over $3,000 in two hours and erasing gains made over the weekend. The sell off has pushed the Crypto Fear & Greed Index to historic lows reflecting renewed market anxiety among traders and investors.

Extreme Fear Signals Return

The Crypto Fear & Greed Index which measures overall market sentiment, fell to 5 out of 100, signaling “extreme fear.” Since its launch in 2018, the index has only reached similar lows a few times, including August 2019, June 2022, and earlier this month. On chain analytics show that the seven-day moving average for net realized losses among recent investors remains near $500 million per day, indicating ongoing capitulation.

Liquidations and Market Pressure

Over 136,000 traders were liquidated in the past 24 hours, totaling $458 million, with 92% of liquidations coming from leveraged long positions. Bitcoin’s current price around $64,300 places it near the bottom of a range-bound channel established after the February 6 drop to $60,000. The cryptocurrency remains 48% below its October all time high of $126,000 and slightly below its 2021 bull market peak of $69,000.

Analysts note Bitcoin’s Sharpe Ratio has fallen to -38.4, historically associated with low risk accumulation zones. This suggests that despite extreme fear, longer term investors may view current prices as an opportunity for strategic buying, even amid short-term volatility.

 Michael van de Poppe posted on X;

Disclaimer

This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.