The crypto fear and greed index plummeted to the extreme fear zone on Monday as Bitcoin and most tokens plummeted. Bitcoin crashed to $77,000, while the total market cap of all cryptocurrencies fell by almost 10% to $2.4 trillion.
Berachain price crashed by 21% and moved to a record low of $4.6. It has crashed by over 50% from its all-time high. Similarly, blue-chip tokens like AAVE, Litecoin, Lido DAO, Maker, Movement, and Ethena plunged by over 15%.
Crypto fear and greed index crashes
The ongoing crypto market crash triggered $1 billion in liquidations, according to data by CoinGlass. Bitcoin liquidations jumped to over $342 million in the last 24 hours, while Ethereum rose to $296 million. The other top liquidated tokens were Dogecoin, Cardano, Sui, Litecoin, and Chainlink.
Data shows that over 324,760 traders were liquidated on Monday, with the largest one being a Bitfinex trader who lost over $23 million in the last 24 hours.
The ongoing crash pushed down the closely watched crypto fear and greed index to the extreme fear zone of 17.
Similarly, the CNN Money fear and greed index that looks at seven broader sub-indices like the VIX index, market momentum, stock price strength, stock price breadth, and safe haven demand plunged to 4, its lowest level in years.
The ongoing crypto crash is happening because of the ongoing trade war between the US and other countries. Trump announced a minimum tariff rate of 10%, and variable numbers for all countries.
China, the second-biggest economy, received a 34% tariff on most goods shipped to the United States. China then retaliated on these tariffs by announcing more tariffs on US goods and other measures.
Read more: Sensex and Nifty 50 crash 5% as China’s 34% tariff retaliation shakes Asian markets
Therefore, the crypto fear and greed index has plunged as investors worried that the US and other countries will go through a recession. Indeed, the stock market also continued plunging, with the Dow Jones falling by $1,120, and the S&P 500 and Nasdaq 100 indices falling by $185 and $790, respectively.
These indices lost over $5.4 trillion in value last week, a trend that may continue this year unless Trump reverses course.
Is this a golden opportunity to buy cryptocurrencies?
Warren Buffett has a quote that recommends buying assets when the rest of the market is fearful. This approach may work out fine this year now that investors are extremely fearful as recession odds rise.
The ongoing crypto crash has made many of these tokens more affordable than they were a few months ago. Bitcoin has moved from $109,200 to $77,000, while Ethereum has moved from $4,000 to $1,500.
There are three main reasons why crypto prices may go back up later this year. First, Trump pays a closer attention to the stock market, meaning that he may panic and intervene as soon as this week. Trump has a way of doing this, without seeming like a loser: he may start negotiations with other countries.
Second, the Federal Reserve may decide to intervene by cutting interest rates as it has done in the past. The bank did this in the last few major black swan events like the dot-com bubble, Global Financial Crisis (GFC), and the pandemic. These measures often lead to a strong surge of risky assets like crypto and stocks.
Third, the ongoing crypto crash has coincided with that of the stock market. This means that these cins will likely rebound when the stock market rises, as it has always done in the past decades.
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