Bitcoin faced a staggering plunge this week, dropping to approximately $60,000 on Coinbase during early Friday trading. This marks its lowest level since October 2024, sending shockwaves through the crypto community.
The broader cryptocurrency market mirrored Bitcoin’s downturn, reaching sentiment levels reminiscent of the FTX collapse in late 2022. The Crypto Fear & Greed Index plummeted to a staggering 9 out of 100, indicating extreme fear among investors—a low not seen since June 2022, following the collapse of the Terra blockchain ecosystem.
This rapid shift in sentiment caught many traders off guard. Just a month prior, the index was positioned at 42, highlighting the drastic alteration in market psychology within weeks.
Bitcoin recorded a loss of over $10,000 in a single day, with a remarkable 13% drop representing its largest single-day loss since mid-2022. The cryptocurrency has now tumbled 38% from its 2026 high of $97,000, which it achieved only three weeks ago.
Liquidations Surge Amidst Market Chaos
The swift decline in Bitcoin’s price triggered unprecedented liquidation levels across various crypto exchanges. Over 588,000 traders were liquidated in a single day, with the total value of these liquidations soaring to $2.7 billion.
A staggering 85% of these liquidations were tied to leveraged long positions, with the majority stemming from Bitcoin trades. This liquidation cascade created further downward pressure on market prices, exacerbating the bearish trends.
As of the latest trading data, Bitcoin’s price hovered around $64,000 after a slight recovery from the lows of $60,000, but it stands 50% down from its all-time high of $126,000, a decline that has wiped out gains amassed over the past 16 months.
Technical Indicators Signal Bear Market
The breach of Bitcoin’s 200-week exponential moving average, a critical long-term trend indicator, suggests that the current downturn may signify more than a mere correction. Experienced technical analysts see this as a troubling sign, often associated with larger bear market phenomena.
Traditional Market Weakness Exacerbates Crypto Decline
Jeff Ko, chief analyst at CoinEx Research, attributes part of the pressure on Bitcoin to declining US tech stocks. Concerns regarding stretched stock valuations and the potential of an AI-driven bubble have weighed heavily on market sentiment. Following disappointing earnings results, Amazon’s stock plummeted, further adding to the tremors in traditional markets.
Ko observed that contrary to its perceived role as a safe haven, Bitcoin has drastically underperformed, with gold appreciating more solidly in recent weeks. This challenges Bitcoin’s narrative as “digital gold.”
Adding to the bearish sentiment, macroeconomic factors such as weaker job market data and rising unemployment claims have fostered increased risk aversion among investors. These labor market signals are also influencing Federal Reserve policy expectations, creating further uncertainty in the risk asset landscape.
The Fear & Greed Index synthesizes multiple data points to gauge investor sentiment, including market volatility, momentum, trading volumes, and social media engagement. A significant increase in volatility coupled with fear-driven searches have contributed to the index’s current abysmally low readings.
Historically, extreme fear readings have coincided with local price bottoms, though they do not assure immediate recovery. The index reflects the current market stress levels, not future price movements. After touching the $60,000 level, Bitcoin displayed some resilience by rebounding towards $65,000, indicating that buyers are beginning to emerge at these lower price points.
Investors continue to monitor developments in both crypto and traditional markets, with cautious optimism towards potential recovery following this tumultuous week.
