- The CoinMarketCap Crypto Fear & Greed Index dropped to a seven-month low of 20/100 following $2 billion in liquidations.
- Binance co-founder CZ questioned the extreme bearish sentiment, noting historical rebounds from similar levels.
- CryptoQuant data reveals short-term holders sent 45,700 BTC to exchanges at a loss, signaling panic selling.
The crypto market has undergone a severe correction over the past 24 hours, resulting in approximately $2 billion in liquidations. Consequently, the CoinMarketCap Crypto Fear & Greed Index dropped to a seven-month low of roughly 20/100. This level of extreme bearish sentiment has not been seen since April 2025.
Despite the prevailing panic, Bitcoin (BTC) price action near the $100,000 level, testing it from above for the first time since June, has drawn contrarian commentary from industry leaders.
Related: ETH Whales Buy the Dip as Ethereum Revisits $3K: Where Are Prices Headed?
Binance’s CZ Questions the Value of Significant Fear in the Crypto Market
Binance co-founder and former CEO Changpeng Zhao (CZ) has questioned the value of the high fear of further crypto capitulation. CZ sparked a support for bullish sentiment as crypto traders anticipate a rubber-band rebound in the coming weeks fueled by supportive fundamentals.
For instance, Rishabh Singhal, founder of CryptoWaley, commented that Bitcoin price surged 50% after the fear and greed index dropped below 20/100 in April, 2025. However, Singhal argued that the odds of a full-blown crash cannot be ruled out entirely.
Worth noting that CZ recently disclosed a purchase of Aster (ASTER), potentially signaling his inclination towards a bullish outlook.
Short-term Traders Capitulate on Low Liquidity
On-chain data analysis from CryptoQuant shows short-term holders have absorbed the fear of further crypto selloff. After a reported Bitcoin whale capitulation in the past month, CryptoQuant revealed that short-term holders sent 45,700 BTC to exchanges at a loss, signaling panic selling.
The low bullish enthusiasm has been attributed to low capital flow to the crypto market. According to Wintermute, a top-tier market, the crypto market is yet to benefit from the rising global liquidity amid global interest rate cuts led by the Federal Reserve.
“The market backdrop is still strong as is evidenced by the equity market performance. Liquidity is just not reaching crypto yet,” Wintermute noted.
The Liquidity Lag and Macro Outlook
Ahead of the highly anticipated Fed’s Quantitative Easing (QE), the crypto market is expected to bottom out. Furthermore, Wall Street investors have been betting on a bullish fourth quarter akin to the crypto summer of 2017.
The cumulative supportive fundamentals, including a clear crypto regulatory framework in the United States, are a bullish indicator. Furthermore, the recent crypto selloff was not triggered by major negative news but heavy liquidation of leveraged traders.
Related: Why Is Crypto Down? Data Shows Bitcoin Tracking US Liquidity Drain
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Source: https://coinedition.com/cz-questions-market-fear-crypto-index-hits-seven-month-low/