 ▲ Bitcoin steep sell-off |
Although the fear indicator has plunged to its lowest level since 2022, experts say this is a phase where investors should be cautious about the possibility of further bottom formation rather than rushing to “buy the dip.”
According to investment media outlet FXStreet on February 6 (local time), the global cryptocurrency market saw its market capitalization drop by more than 8% in a single day, falling from around $2.22 trillion to as low as $2.09 trillion. Prices retreated to levels not seen since September 2024, breaking below a key trendline that had served as both support and resistance for more than two years.
The Crypto Fear and Greed Index, which reflects market sentiment, fell to 9, marking its lowest level since June 2022. While a single-digit reading is extremely rare, FXStreet noted that “there is no guarantee that an extremely oversold condition will immediately lead to a rebound,” warning that a prolonged period of sideways movement and base-building, similar to 2022, could repeat.
Bitcoin (BTC) slid to $60,000 early Friday, trading just above its 200-week moving average. This moving average currently sits around $58,000. While this level stopped selling pressure in 2015, 2019, and 2020, there were instances in 2022 and 2023 when prices briefly fell below it.
The news environment is also weighing on the market. Deutsche Bank analyzed that continued institutional outflows, changes in the existing Bitcoin market structure, and weakening regulatory momentum are acting simultaneously. Technical analyst Peter Brandt interpreted the recent decline not as retail panic but as potentially “planned selling” led by large participants, highlighting that BTC has posted lower lows for eight consecutive trading days.
Unverified rumors that a Galaxy Digital client sold $9 billion worth of Bitcoin, along with warnings from Stifel that BTC could fall to $38,000 due to its high correlation with weakening U.S. technology stocks, further pressured investor sentiment. However, according to DeFiLlama, approximately $700 million in net inflows moved into Binance over the past 24 hours, suggesting that claims of massive withdrawals are unfounded.
Bloomberg also reported that disagreements surrounding the U.S. crypto market structure bill, known as the CLARITY Act, have yet to be resolved. The current draft restricts staking reward payments, prompting ongoing industry backlash, while negotiations between banks and crypto firms remain stalled. FXStreet cautioned that “this is a phase that requires patience rather than greed,” warning that volatile market conditions may persist until clear bottom signals emerge.
*Disclaimer: This article is for investment reference only, and no responsibility is assumed for any investment losses based on it. The content should be interpreted solely for informational purposes.*