The crypto fear and greed index has changed its course to take a dramatic turn.
Ali Martinez via a X post pointed out that after a prolonged period of greed, the cryptocurrency market has entered a state of fear for the first time since October.
The change comes amid regulatory concerns and a lack of positive cues in the market.
How Does Crypto Fear and Greed Index Influence Crypto Trade?
Investor behavior is influenced by the Crypto Fear and Greed Index, which measures market mood. Investors often sell off assets when fear takes over, which lowers prices.
On the other hand, times of greed promote purchasing, which raises prices. While excessive greed may be an indicator of market bubbles, extreme fear frequently indicates purchasing opportunities.
By providing information about possible trends and risk levels, this index aids investors in understanding market psychology and influences trading tactics and decision-making.
Donald Trump’s Tariff Confusion Creates Market Panic
One of the biggest sentiment changes in the crypto world occurred this week when Donald Trump’s tariff decision landed. US President Donald Trump’s unexpected declaration of broad tariffs on imports from China, Canada, and Mexico set off this unrest in the market.
As a result, since FTX’s demise, the cryptocurrency market has experienced its most severe wave of liquidations, wiping away approximately $273 billion in a single day.
However, as the US and Mexico agreed to later postpone tariffs, the Bitcoin and cryptocurrency markets rebounded. Following a trade agreement between Donald Trump and the president of Mexico, Bitcoin recovered its $100,000 level. Trump and President Claudia Sheinbaum agreed to halt US-Mexico tariffs for a month.
Other Reasons For Crypto Market’s Bearish Trade
Numerous additional reasons are contributing to the present gloomy trend in the cryptocurrency market. First of all, governments’ tighter stance on cryptocurrency has raised regulatory uncertainty and caused market fear.
As investors turn their attention to safer assets, rising interest rates around the world have also resulted in a decreased appetite for risk.
Institutional investors have also been more cautious due to worries about inflation and macroeconomic instability.
Price swings are exacerbated by the market’s reliance on speculative investments, and investor sentiment is being negatively impacted by the overall economic crisis. Because of this, a lot of people are reluctant to invest in digital assets, which adds to the current bear market.
Will Prices Fall Even Further?
With the current aggressive bearish sentiment, crypto market is struggling to find a better direction.
However, due to changes in regulations, or macroeconomic considerations, sentiment in cryptocurrency markets can fluctuate quickly.
Announcements of good news, like institutional acceptance or technical developments, can further boost confidence and raise prices. On the other hand, sell-offs may result from market collapses, security lapses, or regulatory crackdowns.
Additionally, in the extremely volatile cryptocurrency field, market sentiments can be swiftly amplified or dampened by social media and influencer viewpoints, leading to large price changes.
Also Read: Bitwise CIO Matt Hougan Sees Bitcoin’s Traditional Cycle End, Says “2025 May See Strong Gains”