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Bitcoin Updates: Is the Crypto Market's Intense Fear a Sign to Buy or a Warning of Impending Crash?

Bitcoin Updates: Is the Crypto Market's Intense Fear a Sign to Buy or a Warning of Impending Crash?

Bitget-RWA2025/11/05 03:08
By:Bitget-RWA

- Crypto Fear and Greed Index hit 21 (extreme fear), signaling heightened capitulation risk as BTC/ETH/SOL dropped 3-8% amid $40B+ long-term holder selling. - Derivatives liquidations reached $1.33B (90% longs), while Ether ETFs outperformed Bitcoin ETFs in Q3 2025 despite BlackRock's altcoin ETF absence. - Market divides: Van de Poppe calls sub-$112k BTC a "great entry point," while Schiff dismisses crypto as "decentralized Ponzi scheme." - Fed policy uncertainty and U.S.-China trade deal ambiguity persis

The cryptocurrency sector has entered a phase of "Extreme Fear," with the popular Fear and Greed Index dropping sharply to 21 on November 4, a significant decline from 42 the day before,

. This marks the lowest point since the index hit 18 during the October 11 sell-off, indicating increased risk of capitulation and a move toward risk aversion among market participants, . The index, which combines factors such as volatility, trading activity, social sentiment, and market share, now suggests that investors are bracing for more instability, .

Bitcoin (BTC) declined by 3% to $104,500, while

(ETH) and (SOL) saw losses of 5% and 8% respectively, Coinotag highlighted. The downturn intensified as long-term Bitcoin investors sold off $40 billion in October, adding to the downward momentum. In the derivatives space, $1.33 billion was liquidated over the last day, with 90% of the impact on long positions, . Gabriel Selby from CF Benchmarks commented that "the October 10 liquidation created price distortions that made a short-term pullback unavoidable."

Bitcoin Updates: Is the Crypto Market's Intense Fear a Sign to Buy or a Warning of Impending Crash? image 0

This decline happened alongside growing concerns about the broader economy. Federal Reserve Chair Jerome Powell suggested a possible halt to rate reductions, dampening optimism for risk assets, while leaders at Goldman Sachs and Morgan Stanley cautioned about potential corrections in stock markets, further unsettling crypto traders. The U.S.-China trade agreement, announced on October 30, also failed to trigger a lasting rally, with Bitcoin gaining only 0.26% after the news,

. Experts attributed the lackluster reaction to ongoing geopolitical tensions and uncertainties about how the deal would be enforced.

Institutional trends added further complexity. Ether ETFs outshined Bitcoin ETFs in the third quarter of 2025, drawing $9.6 billion in new investments compared to Bitcoin's $8.7 billion,

. However, BlackRock's decision not to propose altcoin ETFs raised doubts about the potential for significant inflows into non-Bitcoin assets. Bitget introduced a $2 million interest-free loan initiative for altcoin liquidity providers to address shallow market depth, but the Altcoin Season Index remains low at 27 out of 100.

Opinions among traders are split regarding the future. Some interpret the fear index at 21 as a possible buying signal; "Anything below $112,000 is an excellent entry," argued Michaël van de Poppe in the Yahoo article. In contrast, economist Peter Schiff dismissed cryptocurrencies as a "decentralized Ponzi scheme," criticizing President Trump's advocacy for U.S. crypto dominance. Trump, on the other hand, described the sector as vital for national security, asserting that China aims to lead in an industry he called "crucial for employment and technological progress,"

.

The market's direction will depend on several upcoming events. The Federal Reserve's December meeting could shape risk sentiment, while the rollout of the U.S.-China trade deal might ease geopolitical pressures. Blockchain data indicates that if Bitcoin stays above $100,000, the market could stabilize, though large holders selling remains a significant risk,

. For now, the prevailing "extreme fear" highlights a delicate balance—one where shifts in sentiment could either trigger renewed volatility or set the stage for a lasting rebound.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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