A crypto market sell-off extended into its second week as Bitcoin (BTC) prices dipped to nearly $80,000 late Sunday, triggering a fresh decline in major tokens and altcoins.
Notably, Dogecoin (DOGE) and Cardano’s ADA led the losses with a nearly 10% slump over the past 24 hours, while XRP fell more than 7%. Other significant players such as BNB Chain’s BNB, Ether (ETH), and Tron’s TRX experienced declines of around 5%, with BTC suffering a 4% loss.
This downward trend has sent the well-followed crypto fear and greed index to a multi-year low reading of 17, marking a phase of ‘extreme fear’, the lowest level observed since mid-2023.
The index serves as a barometer of investor sentiment, ranging from 0 (indicating low sentiment) to 100 (indicating high sentiment). It is designed to help identify periods where investors are overly fearful (potential buying opportunities) or excessively greedy (possible market corrections).
Factors influencing this index include price volatility, momentum, social media sentiment, Google trends data, and Bitcoin’s overall market share. Often, it operates as a contrarian indicator in the short term.
Major tokens have fully erased all gains made following former President Donald Trump’s announcement regarding a strategic crypto reserve in the U.S. earlier this month. This announcement initially propelled tokens such as XRP, Solana’s SOL, and ADA up by as much as 60% in the days that followed.
However, expectations of substantial buying pressure from the U.S. were dampened when Trump clarified that previously seized Bitcoin holdings would be designated as a reserve, while other non-Bitcoin seized assets would be regarded merely as a ‘stockpile’ of tokens.
Further complicating market conditions, the anticipated White House Crypto Summit on March 7 concluded as a “nothingburger” with little to satisfy investors. Although it resulted in a framework for stablecoin legislation by August and a commitment to lighter regulation, these outcomes failed to ignite market enthusiasm as hoped.
The prevailing losses have been exacerbated by global market pressures, driven by an ongoing tariff war ignited by Trump and other world leaders. A widely tracked dollar index (DYX), measuring the strength of the U.S. dollar, has recently dipped to its lowest level since November, falling below 105 (generally, a DXY index above 100 signifies a strong dollar, leading to pressure on risk assets).
As traders brace themselves for the coming months, many are adopting a watchful approach, closely monitoring macroeconomic data and decisions for cues on future positioning.
Kevin Guo, Director of HashKey Research, shared insights via Telegram: “The summit signaled for more optimism. However, expectations for more substantial announcements have been tempered as crypto assets continue to track U.S. equities downwards following February’s job report, which revealed stable results despite ongoing government job cuts.
Furthermore, as Federal Reserve Chairman Jerome Powell reassured that the Fed will maintain patience on its path to achieving a 2% inflation rate, the outlook for a rate cut this year appears bleak for many investors,” Guo added.
In a sign of optimism for crypto bulls, traders have been turning to short-dated treasuries, as reported by Bloomberg, anticipating that the Federal Reserve might resume cutting interest rates as early as May to stave off economic deterioration—typically a stimulus for inflows into riskier assets.
