Crypto Fear & Greed Index Stays Greedy Amid Israel-Iran Tensions Bitcoin Drops 2.8%

The Crypto Fear & Greed Index, which measures overall sentiment in the crypto market, has stayed within the "greed" zone despite heightened geopolitical tensions following Israel's airstrikes on Iran. The Index recorded a score of 60 on Sunday, maintaining its position in the greed territory despite Bitcoin (BTC) falling 2.8% to $103,000 on Friday. This decline followed explosions reported in Tehran at 22:50 UTC on Thursday, which Israel claimed responsibility for. Iran reportedly retaliated with “dozens of ballistic missiles” on Friday night.

On Thursday, the Index was holding a Greed score of 71. Bitcoin’s price decline came as it was nearing its all-time high of $111,970. At the time of publication, Bitcoin was trading at $105,670. Bitcoin was up 0.07% over the past seven days. Ether (ETH), meanwhile, dropped 10.79% over the same period to a low of $2,454 before recovering to $2,534 at the time of publication.

Crypto market participants noted Bitcoin’s relative strength given the circumstances. Crypto analyst Za said in a Saturday post, “Bitcoin does not seem concerned about the Israel and Iran conflict (yet).” “There is no better indicator than Bitcoin, which makes this notable, in my opinion,” Za said. Crypto entrepreneur Anthony Pompliano said in a post on the same day, “Bitcoin is relentless.”

Traders appear to be holding confidence that it will remain above the psychological $100,000 price level, which it reclaimed on May 8 for the first time in three months. A drop below this price level could put over $1.74 billion in long positions at risk of liquidation. Meanwhile, spot Bitcoin exchange-traded funds (ETF) posted a straight week of inflows for the trading week ending Friday, accumulating $1.37 billion in inflows over the five days. However, spot Ether ETFs ended its 19-day inflow streak on Friday, with net outflows of $2.1 million.

Bitcoin’s price decline following the airstrike on Friday was less severe than in April 2024, when Iran launched an unprecedented direct attack on Israel. The strike, which was a retaliatory measure against Israeli bombings of the Iranian embassy in Damascus, sent the price of BTC plummeting 8.4% on April 13, 2024. Although the index registered a “Greed” score of 72 on the same day, it had dropped to a “Fear” score of 43 by May 2, 2024.

The Crypto Fear & Greed Index, a metric that gauges investor sentiment towards cryptocurrencies, has remained in the "greed" territory despite the escalating tensions between Israel and Iran. This index, which ranges from 0 to 100, indicates that investors are still optimistic about the crypto market despite the geopolitical risks. The index has fluctuated between 54 and 61, showing a slight retreat from extreme greed but still reflecting a bullish sentiment overall.

The recent geopolitical tensions have had a noticeable impact on the crypto market. Bitcoin, for instance, experienced a drop from its peak of $110,653 to around $104,700. This decline can be attributed to the flight to safety triggered by the potential military escalation between Iran and Israel. Investors have been reducing their exposure to volatile assets like cryptocurrencies, leading to a broader risk-off mood across global markets. Technical indicators, such as the Relative Strength Index (RSI), have also shown signs of fading bullish momentum, with the RSI dropping to 45.52 after briefly peaking near 60. This aligns with fractal analysis that previously warned of a similar pattern, where Bitcoin failed to reclaim highs and corrected lower.

Ethereum, another major cryptocurrency, saw a steep decline of over 10% following Israeli airstrikes on Iran. The sharp downturn was part of a broader market correction that liquidated over $1.1 billion in crypto positions within 24 hours. The move erased much of Ethereum’s monthly gains and ended its recent uptrend abruptly. From a technical perspective, the ETH/USD chart reflects oversold momentum, with the RSI sitting near 40 and showing limited recovery. The sell-off appears to have stabilized near $2,500, but the RSI suggests bearish pressure persists. Analysts caution that Ethereum’s recovery will depend less on chart patterns and more on macro news in the coming days, particularly around developments in the Middle East and U.S. monetary policy.

Despite the geopolitical risks, the broader crypto market is showing signs of cautious optimism. Easing inflationary pressures and renewed geopolitical stability have helped create a favorable environment for risk assets, including cryptocurrencies. The total crypto market cap remains resilient, with the Fear and Greed Index sitting at a neutral 54, reflecting mixed investor sentiment. While altcoins lag behind, Bitcoin dominance continues amid fiscal concerns and uncertainty about future U.S. monetary policy. As traditional markets falter and inflation cools, crypto assets are increasingly seen as alternative hedges, poised to benefit from any pivot toward looser monetary conditions.

The regulatory front has also seen significant developments. The U.S. Senate advanced the GENIUS Act, which mandates full dollar backing for stablecoins and introduces strict auditing requirements for issuers with more than $50 billion in circulation. This move clears the way for a final Senate vote and reflects ongoing efforts to regulate the crypto space. Additionally, the U.S. Securities and Exchange Commission (SEC) has intensified scrutiny over staking-based ETF proposals, particularly those involving Ethereum and Solana. The SEC’s recent objections have reignited concerns around regulatory inconsistency, although the agency previously hinted that staking might not qualify as securities activity.

In summary, the Crypto Fear & Greed Index remaining in the "greed" territory amid the Israel-Iran conflict highlights the resilience of investor sentiment in the crypto market. Despite geopolitical risks and regulatory uncertainties, the market continues to show signs of cautious optimism. The recent fluctuations in Bitcoin and Ethereum prices reflect the impact of geopolitical tensions and technical factors, but the overall sentiment remains bullish. As the market matures, investors are increasingly looking at cryptocurrencies as alternative hedges against traditional market risks.