Yesterday was quite a day in the crypto world, with markets experiencing a historic crash. Traditional markets pulled Bitcoin (BTC) and altcoins down significantly due to growing fears that the United States is heading towards a recession. After a drop of more than 16%, Bitcoin fell below $50,000 for the first time in months.
There’s a lot of fear and panic in the market right now. The well-known Fear & Greed Index has plunged firmly into the “extreme fear” zone.
Bitcoin Sentiment Plummets
Bitcoin Fear and Greed Index is 17 — Extreme Fear
Current price: $53,991 pic.twitter.com/c27hXPJByk— Bitcoin Fear and Greed Index (@BitcoinFear) August 6, 2024
Bitcoin’s price drop yesterday was enough to drive many investors out of the market, plunging from $59,000 to a low of $49,500. This dramatic fall has significantly impacted the Fear & Greed Index, which dropped from a score of 26 (fear) to 17 (extreme fear).
Just last week, Bitcoin was already trending lower after it flirted with the $70,000 mark, and the Fear & Greed Index was at 74 (greed). This recent shift marks one of the largest week-to-week drops in the index in recent years, showing just how quickly sentiment can change in the volatile crypto market.
Since hitting yesterday’s low, Bitcoin has already risen nearly 13% to $55,594 at time of writing, according to CoinMarketCap data. This will undoubtedly give the Fear & Greed Index a boost, but fear still dominates the market.
Bitcoin ETFs Can’t Escape the Bloodbath
Bitcoin spot Exchange-Traded Funds (Bitcoin ETFs) had a tough day as well, with capital outflows amounting to $168.44 million. It’s been rough, to say the least.
Grayscale’s fund (GBTC) and the joint fund of ARK Invest and 21Shares (ARKB) were the biggest losers, with outflows of $69.12 million and $69 million, respectively. Fidelity’s FBTC fund also took a hit, with an outflow of $58.04 million.
Japan Nikkei Recovered Today
On a brighter note, stock markets are showing a strong recovery today, particularly the Japanese stock market, which has significantly risen after yesterday’s heavy losses. Just before closing, the Nikkei index recorded a gain of a little over 10%. This recovery comes after a dramatic day yesterday, when the Nikkei experienced its worst day since Black Monday in October 1987, losing 12% of its value.
Why Did Prices Crash Yesterday?
The sharp decline in the Nikkei index was caused by concern among Japanese investors over the recent interest rate hike by the central bank, the first in a long time. Borrowing money to invest in stocks had been popular due to the prolonged period of zero interest rates. However, the rate hike caused nervousness and a massive sell-off of stocks.
In addition, fears of an impending recession in the U.S. economy contributed to yesterday’s financial crash. Investors were worried that tech companies might not meet high growth expectations. Today, however, there seems to be some relief among investors, resulting in rising stock prices.
Stay tuned and keep following us at HowToBuyBitcoin.org for more news and updates.