- Crypto Fear and Greed showed that the market has fallen into fear.
- The volume of long liquidations also increased.
Bitcoin’s recent decline [BTC] price has had a notable ripple effect on the cryptocurrency market. This decline has significantly affected market sentiment, as evidenced by changes in the Fear and Greed crypto index.
The impact of the price drop was also visible on the liquidation map.
Fear dominates crypto
The reading of the Fear and Greed crypto Index, at 30, as reported by Coinglass, clearly indicated that fear dominated market sentiment.
This metric measures the overall sentiment among cryptocurrency investors by collecting data from various sources, including market volatility, social media sentiment, trends, and other relevant factors.
Source: Coinglass
A score of 30 falls into the fear category, indicating that investors are concerned about potential downside risks. This sentiment often arises in response to recent negative market events, such as significant price drops.
This may lead to a more cautious attitude among investors.
In such circumstances, trading volumes could decline as investors hold off on buying for fear of further losses. Conversely, they might sell their holdings to avoid bigger losses if they expect a further downturn.
This shift toward fear reflects growing uncertainty and pessimism about the market’s short-term prospects.
The market is seeing increasing liquidation
Liquidation chart analysis indicates a significant spike in liquidations on June 24, totaling over $367 million.
The liquidations were dominated by long positions, which amounted to more than $305 million. It is a crucial factor that contributed to the shift towards fear in the Fear and Greed crypto index.
When long positions are liquidated on such a large scale, it indicates that many investors, who were betting on a rise in the price of cryptocurrencies, are forced to exit their positions.
This could lead to a sharp drop in prices as the market is flooded with sell orders.
Source: Coinglass
The smaller volume of short liquidations, over $62 million, showed that fewer traders betting the market were forcibly closing their positions.
This suggested that investors expected continued growth, which did not materialize.
How fear and greed crypto could have formed
This imbalance between long and short liquidations often exacerbates downward price movements, increasing fear and uncertainty in the market. A spike in short liquidations typically has the opposite effect.
It signals that pessimistic traders are being squeezed out, which could push prices higher and potentially shift sentiment toward greed if it persists.
Read Bitcoin’s [BTC] Price forecast 2024-25
Recent events, as illustrated by these liquidations, are key indicators of market sentiment and momentum.
They reflect not only individual traders’ responses to price movements, but also the broader market psychology that can drive future trading behavior.