Bitcoin price dropped below $83,000, marking a 25% decline from its January peak
The BTC fear and greed index hit 10, lower than during the FTX collapse in 2022
Bitcoin deposits to exchanges surged to $1.3 billion, signaling market anxiety
Some analysts see the extreme fear as a potential buying opportunity
Crypto Sentiment Index is flashing a “contrarian buy signal” despite the selloff
The price of Bitcoin has fallen sharply, dropping below $83,000 and marking a 25% decline from its January 20 peak. This steep drop has pushed the Bitcoin fear and greed index to extreme lows, even below levels seen during the FTX collapse in November 2022.
The index plummeted to 10, reflecting widespread panic among investors. For context, this reading is lower than when the crypto exchange FTX collapsed in 2022, which was a major crisis for the cryptocurrency industry.
Market data shows Bitcoin trading at around $85,318, down 3.8% in recent trading. Daily trading volumes have also crashed by 17% to $68 billion, showing reduced market activity during this downturn.
The Bitcoin futures open interest has fallen by 6.3% to $53.6 billion. At the same time, 24-hour liquidations have soared to $460 million, with $390.88 million coming from long positions being closed out.
Investor anxiety appears to be growing. Bitcoin deposits to exchanges surged to $1.3 billion yesterday alone. This large inflow suggests many traders are looking to sell their holdings.
Technical indicators point to potential buying opportunities. Bitcoin price is currently testing its 200-day moving average. The Relative Strength Index (RSI) has fallen into oversold territory.
Robert Kiyosaki is Buying
Some market veterans remain bullish despite the selloff. Veteran investor Robert Kiyosaki has called the current situation a buying opportunity. He stated, “When Bitcoin crashes, I smile and buy more.”
Kiyosaki frames Bitcoin as “money with integrity” and a hedge against what he calls “fake money.” He points to issues in the U.S. monetary system as reasons to hold Bitcoin as a long-term asset.
CryptoQuant founder Ki Young Ju offered perspective on the crash. He noted that “a 30% correction in a Bitcoin bull cycle is common.” In 2021, Bitcoin dropped 53% and still recovered to reach an all-time high.
The recent price drop coincides with broader market concerns. President Donald Trump’s announcement of 25% tariffs on European Union goods has sparked fears of a trade war. These fears have impacted traditional markets as well, with the S&P 500 losing $500 billion shortly after the announcement.
Some analysts see the extreme fear as a contrarian indicator. Andre Dragosch, European Head of Research at Bitwise, suggested that “wide-spread bearishness among flows, on-chain, and derivatives data implies that downside risks are fairly limited.”
💥BOOM: Cryptoasset Sentiment Index just flashed a massive contrarian buy signal for Bitcoin.
Wide-spread bearishness among flows, on-chain, and derivatives data implies that downside risks are fairly limited.
Risk-reward appears to be quite favourable at these prices. pic.twitter.com/A3NByCIHPA
— André Dragosch, PhD | Bitcoin & Macro ⚡ (@Andre_Dragosch) February 26, 2025
The Cryptoasset Sentiment Index is now flashing what some call a “contrarian buy signal.” This indicator suggests that extreme fear often precedes market rebounds.
US spot Bitcoin exchange-traded funds (ETFs) recorded their largest daily net outflow on record yesterday. This outflow highlights the level of bearishness currently surrounding crypto assets.
On-chain data shows some large investors are buying during the dip. According to crypto analyst Ali Martinez, long-term holders have accumulated nearly 20,400 BTC following the recent sell-off.
The Bitcoin drop has also affected related stocks. Strategy stock (MSTR) has fallen 55% from its peak of $543 in November 2024. It now trades at $249, down about 29% over the past month.
Despite the current downturn, Bitcoin’s long-term performance remains strong compared to traditional assets. Analysis shows that while Bitcoin’s growth rate has slowed in recent years, it still outperforms asset classes like gold and stocks by a wide margin.
