Bitcoin Dips Below $106K Amid Crypto Fear & Greed Index Drop to Extreme Fear

• Crypto Fear & Greed Index falls to Extreme Fear at 21 points, down 21 from previous day.

• Bitcoin price dips to $105,540 low, recovering slightly to above $106,500 amid broader market concerns.

• Institutional BTC ETFs record $800 million outflows last week, with buying below daily mined supply for first time in seven months.

The Crypto Fear & Greed Index signals Extreme Fear as Bitcoin drops below $106,000, hitting seven-month low. Investors face volatility from Fed policies. Stay informed and explore strategies to navigate this crypto market downturn today.

What is the Crypto Fear & Greed Index and Why Did It Drop to Extreme Fear?

The Crypto Fear & Greed Index is a sentiment indicator that measures market emotions on a scale from 0 to 100, where lower scores like 21 indicate Extreme Fear among investors. It plummeted by 21 points on Tuesday after Bitcoin’s price briefly fell below $106,000 for the first time in over three weeks, reflecting widespread caution. This drop, the lowest in nearly seven months, stems from reduced institutional demand, hawkish Federal Reserve signals, and significant ETF outflows, underscoring a shift from recent greed to fear in the cryptocurrency landscape.

The Crypto Fear & Greed Index dropped from 42 to 21 points in a single day on Tuesday. Source: Alternative.me

How Does Bitcoin’s Price Decline Influence the Crypto Fear & Greed Index?

Bitcoin’s slide to a 24-hour low of $105,540 on Monday, from an intraday peak above $109,000, directly triggered the index’s descent into Extreme Fear territory. Currently down 2% on the day but recovering above $106,500 according to data from CoinGecko, this volatility mirrors broader market reactions. The index last reached such lows on October 22, scoring 25 after Bitcoin dropped from over $110,000 to below $108,000, highlighting a pattern where sharp BTC declines amplify fear.

Following the early October crash—when Bitcoin cooled rapidly from its October 6 peak of over $126,000—the index has oscillated between Extreme Fear and Neutral levels. Prior to that downturn, it peaked at 74 on October 5, indicating Greed. Analysts point to decreased blockchain activity and institutional hesitation as key factors. For instance, last week saw nearly $800 million in net outflows from Bitcoin-related exchange-traded funds, with institutional purchases falling below the daily mined Bitcoin supply for the first time in seven months.

The Federal Reserve’s actions have added pressure: It cut interest rates for the second time this year on Wednesday but indicated no further reductions in 2025, disappointing investors who anticipated more easing. This hawkish stance contributed to the crypto market’s drop, as reported by financial analysts monitoring monetary policy impacts. Expert commentary from market observers, such as those at Alternative.me, emphasizes that such sentiment shifts often precede buying opportunities, but current data shows sustained caution.

Frequently Asked Questions

What Caused the Recent Drop in the Crypto Fear & Greed Index to 21?

The index fell to 21 due to Bitcoin’s price dipping below $106,000, combined with $800 million in ETF outflows and Federal Reserve signals limiting future rate cuts. This created Extreme Fear, the lowest score since April 9 when it hit 18 amid tariff-related market reactions, affecting investor confidence across cryptocurrencies.

Why Is Extreme Fear in the Crypto Market a Concern for Bitcoin Investors?

Extreme Fear, as shown by the Crypto Fear & Greed Index at 21, signals high volatility and potential for further declines in Bitcoin’s price, currently around $106,500 after a low of $105,540. It often arises from institutional selling and policy uncertainties, like the Fed’s recent rate cut without 2025 promises, urging investors to assess risks carefully for long-term holdings.

Key Takeaways

• Crypto Fear & Greed Index at Extreme Fear (21 points): Represents a seven-month low, triggered by Bitcoin’s 2% daily drop and broader sentiment shift from greed to caution.
• Institutional Demand Wanes: ETF outflows of $800 million last week highlight reduced buying, below daily BTC supply, amid hawkish Fed outlook.
• Historical November Gains Possible: Despite current fear, Bitcoin has averaged over 42% growth in November, offering potential recovery insights for vigilant investors.

Conclusion

The sharp decline of the Crypto Fear & Greed Index to Extreme Fear underscores Bitcoin’s vulnerability to institutional flows and Federal Reserve policies, with the index’s 21-point score reflecting market-wide apprehension not seen in seven months. As Bitcoin stabilizes above $106,500 following its dip to $105,540, secondary factors like blockchain activity slowdowns continue to influence sentiment. Investors should monitor these indicators closely, drawing on historical patterns such as November’s average 42% gains, to position for potential rebounds in the evolving cryptocurrency landscape.

Crypto market sentiment took a major fall on Tuesday after Bitcoin briefly fell below $106,000 for the first time in over three weeks. The Crypto Fear & Greed Index dropped by half from the day before to a score of 21 out of 100, indicating Extreme Fear. This score is the lowest in nearly seven months, last seen at 18 on April 9 amid reactions to US President Donald Trump’s global tariffs.

“Extreme Fear” was last observed on October 22, with a score of 25 after Bitcoin slid from over $110,000 to below $108,000. Post the October 9-10 crash from a $126,000 peak, the index has fluctuated between Extreme Fear and Neutral. It was last in Greed territory above Neutral on October 5 at 74.

Analysts attribute Bitcoin’s dip to waning institutional demand, lower blockchain activity, and concerns over the Federal Reserve’s hawkish tone. The Fed’s second rate cut this year on Wednesday came without promises for 2025, leading to market drops. Crypto bulls eye “Moonvenber,” banking on November’s historical 42% average gains.

Mention of crypto whale strategies and ETF hodling insights from industry executives like Joseph Chalom highlight ongoing institutional interest despite short-term fears. Data from sources such as CoinGecko and Alternative.me provide factual backing for these trends, emphasizing the need for informed decision-making in volatile times.