Crypto Sentiment Drops to Extreme Fear
The Crypto Fear & Greed Index, a widely followed indicator of sentiment in the Bitcoin and cryptocurrency market, has dropped to its lowest level in over two years as Bitcoin fell below $90,000.
On February 26, the index plunged further into the "Extreme Fear" category, reaching a score of 10—its lowest since June 2022.
That period was marked by the downfall of the crypto hedge fund Three Arrows Capital (3AC), which came just weeks after Terraform Labs’ Terra (LUNC) and TerraClassicUSD (USTC) collapsed, and crypto lender Celsius halted withdrawals following a massive drop in its native token.
Although no major cryptocurrency firms failed before the February 26 sentiment drop, analysts point to worsening macroeconomic conditions as a key factor.
The sentiment index had briefly entered "Extreme Greed" just a day earlier, on February 25, when Bitcoin slipped below $90,000 for the first time since November.
The decline came after U.S. President Donald Trump confirmed that his 25% tariffs on Canada and Mexico would proceed as scheduled.
On February 26, Trump announced during a cabinet meeting that he would also impose a 25% tariff on the European Union.
As of publication, Bitcoin has declined 17.32% over the past month, trading at $84,408, according to CoinMarketCap.
This market downturn bears similarities to June 19, 2022, when the index sank to 6 and Bitcoin plunged to $19,000—a 37% drop over 30 days.
That crash was largely triggered by the collapse of TerraUSD, which lost its USD peg on May 9, 2022, leading to panic selling that wiped out $60 billion from the crypto market.
The shockwaves were felt across the industry.
Three Arrows Capital faced insolvency concerns on June 16 after failing to meet margin calls.
The firm was ordered into liquidation on June 27, and Celsius filed for bankruptcy on July 13.
Collective Shift founder Ben Simpson told Cointelegraph that current market conditions could offer a buying opportunity for investors.
“The simple strategy over the past few years has been to buy during extreme fear and sell during greed,” Simpson said.
“If you’ve done that, you’ve really outperformed the market and probably outperformed most traders,” he added.
Simpson believes the negative sentiment stems from high expectations following Donald Trump’s inauguration not being met:
“There is not much to be hopeful or excited about at the moment. Everyone had put a lot of confidence in Donald Trump to push his crypto angle, but at the moment, he is busy doing other things.”
Echoing this view, Swyftx lead analyst Pav Hundal told Cointelegraph that “it is an unforgiving environment right now, and it’s draining confidence.”
“The next few weeks could be rocky, but global liquidity levels have been rising week-on-week, and historically, that is a leading indicator for Bitcoin. March is shaping up to be an important month,” Hundal said.
Sources:
https://cointelegraph.com/news/bitcoin-crypto-sentiment-tracker-levels-decline-celsius-terra-3ac
https://alternative.me/crypto/fear-and-greed-index/
https://www.theguardian.com/us-news/2025/feb/26/trump-european-union-tariffs
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