Investor fear passes FTX crisis levels as Bitcoin struggles below $85K

• Investor sentiment hit a 3-year low of ‘extreme fear’ below FTX implosion. 
• Analysts had mixed views on BTC’s next price direction. 

On the 26th of February, investor sentiment dropped below post-FTX implosion levels as Bitcoin [BTC] extended its losses to $82K.

The crypto fear and greed index dipped to a 3-year low of 10, the worst sentiment relative to ‘extreme fear’ of 22 seen during the FTX collapse in 2022. 

The risk-off sentiment saw investors withdraw $1B from BTC ETFs on Wednesday, bringing weekly outflows to $1.8B, noted Bloomberg ETF analyst Eric Balchunas. 

Bitcoins Trump dumps markets

According to the crypto options trading desk, QCP Capital, the extra plunge was accelerated by President Trump’s 25% tariff on the European Union and inflation fears. Part of its daily market update read, 

“Equities, gold, & BTC are sliding as stagflation fears gain traction. Consumer sentiment is weakening (CCI missed: 98 vs. 103), while inflation expectations remain high. Markets are reacting with caution.”

Analysts cautioned that tariffs would increase inflation and prices of goods.

On Tuesday, BTC dropped below $90K after President Trump signalled 25% tariffs on Canada and Mexico, effective 3rd March.

A stubborn inflation could dent the Fed rate cut outlook, and QCP Capital projected that Friday’s PCE inflation print could offer more clues about next BTC’s direction. 

On the flipside, other analysts, like Ken Teng (Chicken Genius), believed that the extreme fear in the market signalled a potential bottom, and BTC could bounce higher as it was still far from topping out.  

“Clear indication of bottom; cycle tops out far from here, and it’s the final phrase I’m most looking forward too.” 

For his part, BTC trader Cryp Nuevo speculated that BTC could dip to the confluence area of the CME gap and weekly moving average at $77K-$78K.

Per the trader, these were price imbalances that tend to be filled later or sooner. 

Meanwhile, BTC bounced 5% from the $82.2K lows at press time and was valued at $86.5K. Whether the king coin will reclaim range-lows above $90K and reverse recent losses or dig deeper to $77K remains to be seen.