Bitcoin Plunges 25%: Panic Sells as Fear Index Hits Extreme Lows

Bitcoin's price has plummeted, dropping below $83,000 and marking a 25% decline from its January peak. This sharp decline has pushed the Bitcoin fear and greed index to extreme lows, even below levels seen during the FTX collapse in 2022. The index plummeted to 10, reflecting widespread panic among investors.

Market data shows Bitcoin trading at around $85,318, down 3.8% in recent trading. Daily trading volumes have also crashed by 17% to $68 billion, showing reduced market activity during this downturn. The Bitcoin futures open interest has fallen by 6.3% to $53.6 billion, while 24-hour liquidations have soared to $460 million, with $390.88 million coming from long positions being closed out.

Investor anxiety appears to be growing. Bitcoin deposits to exchanges surged to $1.3 billion yesterday alone, suggesting many traders are looking to sell their holdings. However, technical indicators point to potential buying opportunities. Bitcoin price is currently testing its 200-day moving average, and the Relative Strength Index (RSI) has fallen into oversold territory.

Some market veterans remain bullish despite the selloff. Veteran investor Robert Kiyosaki has called the current situation a buying opportunity. He stated, “When Bitcoin crashes, I smile and buy more.” Kiyosaki frames Bitcoin as “money with integrity” and a hedge against what he calls “fake money.” He points to issues in the U.S. monetary system as reasons to hold Bitcoin as a long-term asset.

CryptoQuant founder Ki Young Ju offered perspective on the crash. He noted that “a 30% correction in a Bitcoin bull cycle is common.” In 2021, Bitcoin dropped 53% and still recovered to reach an all-time high. The recent price drop coincides with broader market concerns, such as President Donald Trump's announcement of 25% tariffs on European Union goods, which has sparked fears of a trade war and impacted traditional markets.

Some analysts see the extreme fear as a contrarian indicator. Andre Dragosch, European Head of Research at Bitwise, suggested that “wide-spread bearishness among flows, on-chain, and derivatives data implies that downside risks are