Crypto Market Sell-Off Deepens as Bitcoin Slips to $80K, Sentiment Index Hits Multi-Year Low
Traders remain in a cautious stance as they navigate the coming months, closely monitoring macroeconomic data and policy decisions for further market direction.
The cryptocurrency market’s downturn extended into its second consecutive week, with Bitcoin (BTC) plunging to nearly $80,000 late Sunday. The decline triggered fresh losses across major tokens and altcoins.
Dogecoin (DOGE) and Cardano’s ADA were among the hardest hit, each dropping nearly 10% in the past 24 hours, while XRP shed over 7%, according to market data. Other major assets, including BNB, Ethereum (ETH), and Tron (TRX), declined by approximately 5%, while BTC itself fell 4%.
The latest downturn has pushed the widely followed Crypto Fear and Greed Index down to 17, marking its lowest level since mid-2023 and signaling ‘extreme fear’ in the market.
Market Sentiment Plummets
The Fear and Greed Index, which ranges from 0 (extreme fear) to 100 (extreme greed), serves as an investor sentiment gauge based on factors such as price volatility, momentum, social media trends, Google search data, and Bitcoin’s market dominance. Historically, the index has functioned as a contrarian indicator, with extreme fear often presenting buying opportunities and extreme greed signaling potential corrections.
The latest sell-off has erased all gains made following President Donald Trump’s recent announcement of a strategic U.S. crypto reserve. The news had previously fueled rallies in XRP, Solana (SOL), and ADA, sending them surging by up to 60% within days.
However, traders’ hopes of a surge in government-backed crypto investments were dashed when Trump clarified that the reserve would consist of previously seized BTC holdings, with non-BTC assets merely classified as a ‘stockpile’ rather than an active reserve.
Disappointment at White House Crypto Summit
The highly anticipated White House Crypto Summit on March 7 also failed to deliver significant market-moving news. Instead of bold policy announcements, the summit concluded with a framework for stablecoin legislation expected by August and a pledge for lighter regulatory oversight—outcomes that did little to buoy investor confidence.
Broader Economic Pressures Weigh on Crypto
The crypto market’s struggles have been exacerbated by broader global economic concerns. A tariff war initiated by Trump and other world leaders has sent shockwaves through global financial markets. Meanwhile, the U.S. dollar index (DXY)—a measure of the dollar’s strength—has dropped to its lowest level since November, falling below 105. A weaker dollar typically supports risk assets, but ongoing uncertainty has kept investors wary.
Kevin Guo, Director of HashKey Research, highlighted the subdued investor sentiment. “The summit initially sparked optimism,” Guo told CoinDesk via Telegram. “However, expectations for significant announcements were not met, and crypto assets have continued to track U.S. equities downward following February’s job report, which remained stable despite government job cuts.”
Additionally, Federal Reserve Chairman Jerome Powell reaffirmed the Fed’s cautious approach to interest rate adjustments, reiterating that policymakers will remain patient on their path to a 2% inflation target. This stance has dampened expectations of a rate cut in the near term, further weighing on market sentiment.
Outlook for Crypto Investors
Despite the bearish sentiment, some traders are positioning for potential relief. Bloomberg reports that investors have been purchasing short-dated U.S. Treasuries in anticipation of the Federal Reserve resuming interest rate cuts as early as May to prevent further economic deterioration. Lower rates typically boost demand for riskier assets, offering a potential tailwind for crypto markets in the coming months.
