The Crypto Fear and Greed Index plummeted to its lowest level since July 2022, hitting a score of 17 on August 5. This sharp decline coincided with a significant outflow of $168.4 million from US spot Bitcoin exchange-traded funds (ETFs).
Crypto Fear and Greed Index Hits New Low
The index, which gauges investor sentiment in Bitcoin and cryptocurrency markets, entered the “Extreme Fear” zone at 17 on August 5, marking its lowest point since July 12, 2022. The previous week, on July 29, the index stood at 67, representing one of the steepest weekly drops in years.
On the same day, US spot Bitcoin ETFs experienced significant outflows amounting to $168 million. The Grayscale Bitcoin Trust and ARK 21Shares Bitcoin ETF were the hardest hit, losing $69.1 million and $69 million, respectively. Conversely, the Grayscale Bitcoin Mini Trust, VanEck Bitcoin ETF, and Bitwise Bitcoin ETF reported inflows of $21.8 million, $3 million, and $2.9 million, respectively, while BlackRock’s iShares Bitcoin Trust saw no inflows.
How Did the Bitcoin and Altcoin Crash Impact Investors?
Bitcoin and Ethereum faced a sharp market sentiment drop, falling 10% and 18%, respectively, within two hours on August 5. During this turmoil, over $600 million in leveraged long positions were liquidated, and many altcoins suffered more severely than Bitcoin and Ethereum. Additionally, the US stock market saw trillions of dollars in value wiped out on the same day.
The crash was triggered by weak employment data, slow growth in major technology stocks, and renewed recession fears. Independent investor Bob Loukas noted that the last three days were a once-in-7-to-10-year event, with over $500 billion lost in crypto market value.
Key Insights for Investors
- Monitor the Crypto Fear and Greed Index for market sentiment trends.
- Be cautious with leveraged positions during high volatility periods.
- Consider the broader economic indicators, such as employment data and stock market performance, which can impact crypto markets.
Bitcoin analyst Tuur Demeester expressed optimism that Bitcoin would find a bottom between $40,000 and $45,000 but warned against making such bets, emphasizing the unpredictable nature of a Bitcoin bull market. Following its bottom at $48,800 on August 5, Bitcoin rebounded by 11.85% to $55,680, indicating a potential revival of investor confidence according to CoinGecko’s data.