Crypto Market Plunges into "Extreme Fear" as Bitcoin Drops Below $87,000

The crypto market has entered a state of "extreme fear" as Bitcoin's price plummeted below $87,000, marking its lowest level since mid-November. The broader crypto market has witnessed a significant drop of over 10% in the last 24 hours, with leading coins such as Solana, Ripple's XRP, and Dogecoin experiencing substantial losses during the same period.

The Crypto Fear & Greed Index, a multifactorial measure of crypto market sentiment, has dropped to a score of 25, indicating "extreme fear." This sharp decline from the previous day's "neutral" sentiment signals a rapid shift towards overly bearish sentiment. The panic is attributed to the extension of Monday's crypto market sell-off into Tuesday, as well as heavy outflows from US spot Bitcoin exchange-traded funds (ETFs).

Bitcoin is down 7.8% to trade at $87,939, while Ethereum has plummeted 11.3% to $2,377, according to CoinGecko data. Ripple's XRP remains the biggest loser among the top 10 coins, with a decline of 15.6% over the last day and 19.7% on the week, currently trading at around $2.08. Other top coins, such as Solana's SOL, Dogecoin, and Cardano, have also experienced significant losses.

Amid the price carnage, liquidations have surged to $1.48 billion over the last 24 hours, with Ethereum and Bitcoin leading the charge at about $641 million and $302 million, respectively. Most of the liquidations are for those betting on a price rise. The current pullback mirrors the 2017 market formation, where Bitcoin saw a 28% correction five times, each lasting two to three months.

The crypto market drawdown follows another wave of selling in US Bitcoin exchange-traded funds, with around $516 million in investor cash exiting the funds on Feb. 24 alone. The BTC ETFs have now witnessed six straight days of outflows. Additionally, the crypto industry was recently rocked by the largest hack in crypto history on Feb. 21, when Bybit lost nearly $1.5 billion.