Fear index hits bottom. Is the cryptocurrency market out of its golden age?
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The cryptocurrency market has just undergone two consecutive days of panic selling, causing the prices of major cryptocurrencies such as Bitcoin (BTC), Ether (ETH), XRP, Solana (SOL), and Cardano (ADA) to plummet sharply. The Fear and Greed Index, which measures investor sentiment, has dropped to 17 – the lowest in nearly two years (since mid-2023), indicating that the market is in a state of "extreme fear." This index (ranging from 0 to 100) is calculated based on price volatility, momentum, social media, Google trends, and Bitcoin market share, and it often serves as a short-term contrarian indicator.
Bitcoin fell below the 80,000 USD mark, hitting a low of 76,600 USD – a four-month bottom. Ether faces the risk of liquidating 336 million USD in collateral if it drops another 20%. Other major coins like XRP, SOL, and ADA have lost over 60% of their value, wiping out profits since President Trump's announcement of the cryptocurrency reserve in early March.
The primary cause is concerns over escalating U.S.-China trade tensions and an economic downturn in the U.S. U.S. stocks have also plummeted (Nasdaq down 4%, S&P 500 the biggest drop of the year), dragging down shares of cryptocurrency companies like Strategy and Coinbase by over 10%. The cryptocurrency market currently lacks positive factors and is under pressure from tariffs and a slowing economy. President Trump on March 9 did not deny the risk of recession, stating that the U.S. is undergoing a "major shift."
QCP Fund noted that cryptocurrencies need a new narrative to recover, but volatility may increase as U.S. economic data is released, due to the close relationship with risk stocks.
