Crypto Market Mood Weakens With Fear Index at Lowest Level Since December

Crypto markets experienced a gloomy atmosphere as the Crypto Fear and Greed Index fell to 16, marking a return to "Extreme Fear" territory, down from 26 just a day prior.

Key Takeaways

The Crypto Fear and Greed Index has reached its lowest point since December, indicating "Extreme Fear" in the market.
Bitcoin has dropped about 7%, currently trading around $82,000.
Significant liquidation of leveraged positions has occurred, with $1.80 billion liquidated in the past 24 hours.
Bitcoin is facing intense competition from gold due to its status as a safe asset during geopolitical uncertainties.
Liquidity conditions remain a critical factor impacting Bitcoin's performance in the market.

This level of fear hasn't been seen since December 19, 2025, indicating that market sentiment has dropped to a one-month low.

Bitcoin dropped approximately 7% to around $82,000 as traders reacted to fresh political developments in the U.S., particularly the announcement that President Donald Trump plans to nominate former Federal Reserve Board member Kevin Warsh to replace the current Fed Chair, Jerome Powell.

Trump indicated on Thursday evening that he would announce his nominee on Friday morning, following his criticisms of Powell and the Federal Reserve for not taking action to lower interest rates.

Surge in Long Liquidations as Leverage Unwinds Across Crypto

The downturn also caused a significant unwinding of leveraged positions. According to CoinGlass data, liquidations reached $1.80 billion over the last 24 hours, predominantly in long positions totaling $1.68 billion compared to $117.30 million in shorts, affecting a total of 280,430 traders.

Linh Tran, a senior market analyst at XS.com, noted that Bitcoin is facing tough competition from traditional safe assets, particularly gold.

“With increasing geopolitical uncertainties and policy-related risks, markets tend to prefer assets with a proven track record for risk hedging,” she explained.

“Gold has recently achieved strong consecutive gains, reaching a new all-time high around $5,600 per ounce. On the other hand, Bitcoin continues to be seen primarily as a high-risk asset within the investment frameworks of many institutional investors."

Liquidity Conditions Keep Bitcoin Trailing Gold

Concurrently, the CoinSwitch markets desk remarked that the liquidation of leveraged positions could stabilize the market if spot demand increases.

“Nonetheless, if Bitcoin decisively breaks below $82,000, it may drop to the $79,000-$80,000 range. Conversely, for a sustainable rally, prices must remain above $88,500, which would require improved spot demand and ETF flows,” they noted.

Thomas Perfumo, Kraken’s global economist, stated that Bitcoin’s underperformance compared to precious metals is testing investor patience.

“On the surface, the macro environment appears favorable: decreasing interest rates and growing geopolitical uncertainty usually benefit assets seen as hedges against currency devaluation and political turmoil,” he explained.

“However, despite interest rate cuts, global liquidity remains tight, which exerts greater influence over crypto market performance. In contrast, gold typically benefits from a weakening U.S. dollar.”