Crypto market sentiment experienced a significant decline on Tuesday, with Bitcoin briefly trading below $106,000 for the first time in over three weeks.
The Crypto Fear & Greed Index dropped by half from the previous day, reaching a score of 21 out of 100, signaling "Extreme Fear" within the cryptocurrency market.
Bitcoin (BTC) reached a 24-hour low of $105,540 on Monday, a decrease from its intraday peak of over $109,000. The cryptocurrency is currently down 2% on the day, having recovered to trade above $106,500.
The current score on the crypto sentiment tracking index is the lowest it has been in nearly seven months. Previously, it had fallen to 18 out of 100 on April 9, coinciding with a broader market downturn in reaction to sweeping global tariffs imposed by the US.
"Extreme Fear" Observed During Bitcoin's Decline
The Crypto Fear & Greed Index last registered a score indicative of "Extreme Fear" on October 22, when it hit 25 out of 100 after Bitcoin's price fell from over $110,000 to below $108,000.
The index has fluctuated between "Extreme Fear" and "Neutral" following the market crash that occurred between October 9 and 10, during which Bitcoin experienced a rapid decline from its peak of over $126,000 on October 6.
Prior to the early October crash, the index had been above a "Neutral" score. In the past month, it reached a high of 74 on October 5, indicating "Greed."
Factors Influencing Bitcoin's Price Drop
Analysts have pointed to reduced institutional demand and lower blockchain activity as contributing factors to Bitcoin's current dip. Additionally, concerns over an increasingly hawkish stance from the Federal Reserve have played a role.
The Federal Reserve reduced interest rates for the second time this year on Wednesday. However, the Fed signaled fewer rate cuts in 2025 than investors had anticipated, leading to a downturn in crypto markets as expectations for further reductions were not met.
Last week, Bitcoin-tied exchange-traded funds (ETFs) experienced net outflows totaling nearly $800 million. Institutional buying also fell below the daily mined supply for the first time in seven months.
Despite the current downturn, crypto bulls are optimistic about a potential rally in November, often referred to as "Moonvember." Historically, Bitcoin has shown significant gains in November, averaging over 42% growth, making it typically the largest month for price appreciation.