|
▲ Bear market
|
The cryptocurrency market briefly entered the greed zone last week. However, in just one week, it has fallen to an extreme level of fear and investment sentiment is freezing.
According to BeInCrypto, a cryptocurrency media outlet, on January 21 (local time), the cryptocurrency fear and greed index recorded 24, rapidly deteriorating to an extreme fear stage. This is in contrast to the situation on January 15th, when the index recorded 61 and entered the greed zone, and is the result of a combination of heightened geopolitical tensions and large-scale price adjustments that dampened investor sentiment. U.S. President Donald Trump’s remarks threatening tariffs triggered a sell-off across the market, and U.S. Treasury Secretary Scott Bessent reaffirmed his stance to use tariffs as a major geopolitical tool at the Davos Forum, increasing uncertainty.
According to market data, the price of Bitcoin (BTC) fell below $88,000 at one point, reaching the $90,000 level, and Ethereum (ETH) also broke the $3,000 support line. This bear market wiped out more than $120 billion from the entire cryptocurrency market capitalization over the past 24 hours. The impact on the derivatives market was even greater, with more than 182,000 investors forced into liquidation in one day, with the total liquidation volume reaching $1.08 billion. In particular, the liquidation of long positions betting on rising markets accounted for $989.9 million, showing that the buying power was hit hard.
Market experts are concerned that the current situation is going beyond simple price adjustments and is leading to a decline in trust in the cryptocurrency industry as a whole. Analyst Rex pointed out that investors’ attention is shifting to stocks and raw materials, and even long-term investors are observed leaving the market. He said that the current atmosphere is more serious than the crash during the COVID-19 pandemic, and that although there was faith in the industry at the time, now disillusionment with the narrative itself has grown.
On the other hand, some experts interpreted the current fear phase as an opportunity. Analyst Doc predicts that the sentiment when Bitcoin actually bottoms will be bleaker than it was immediately after the FTX collapse, arguing that cryptocurrencies remain the asset that offers the most asymmetric return opportunities in the capital markets. He expressed his intention to remain in the market based on the belief that the long-term upside potential outweighs the short-term downside risk.
The future direction of the market is expected to be determined by how macroeconomic and geopolitical variables develop. For the time being, high volatility and icy investment sentiment are expected to continue until a clear signal of a reversal appears.
*Disclaimer: This article is for investment reference only and we are not responsible for any investment losses based on it. The content should be construed for informational purposes only.*
