Crypto Fear Index Plummets to Two-Year Low Amidst Market Uncertainty

The Crypto Fear & Greed Index, a key Bitcoin and crypto sentiment tracker, has plummeted to its lowest score in over two years, reaching a level of "Extreme Fear" on February 26. This score of 10 is reminiscent of the collapse of crypto hedge fund Three Arrows Capital (3AC) in June 2022 and the Terra (LUNC) and TerraClassicUSD (USTC) tokens' collapse just a month prior.

Bitcoin's price has fallen below $90,000, its lowest level since November, following US President Donald Trump's announcement of planned 25% tariffs on Canada, Mexico, and the European Union. This uncertainty has contributed to the index's decline. At the time of publication, Bitcoin is trading at $84,408, down 17.32% over the past 30 days.

The index's last significant drop to 6 occurred on June 19, 2022, when Bitcoin tumbled to $19,000, losing 37% over 30 days. This downfall was largely attributed to the collapse of the TerraUSD stablecoin, which wiped out a combined $60 billion from the crypto ecosystem. The impact rippled through the industry, with 3AC facing insolvency fears and Celsius pausing user withdrawals.

Analysts have weighed in on the current fearful crypto sentiment. Collective Shift founder Ben Simpson suggests that the current market conditions could present a buying opportunity for crypto investors, as the simple strategy of buying during extreme fear and selling during greed has historically outperformed the market. However, he notes that the market's negative sentiment comes from high expectations following Donald Trump's inauguration not being met.

Swyftx lead analyst Pav Hundal echoes a similar sentiment, stating that the environment is unforgiving and draining confidence. He believes that the next few weeks could be rocky, but global liquidity levels have been rising week-on-week, which historically has been a leading indicator for Bitcoin. March is shaping up to be an important month for the crypto market.