Key Points
- Bitcoin’s price drop under $92,000 has caused the Crypto Sentiment Index to hit a three-month low.
- The overall sentiment in the crypto market remains optimistic despite the current turbulence.
Bitcoin’s price has further corrected, hitting a low of $91,380. This has led to a significant drop in the Crypto Fear and Greed Index, which measures overall market sentiment. The index has seen a 19-point drop, hitting its lowest level since October 14.
The index’s sharp decline to a score of 50 out of 100 marks one of its most significant daily decreases in recent years. Market sentiment has now entered the “Neutral” zone after three months in the “Extreme Greed” and “Greed” zones.
Market Sentiment and Recent Events
The Crypto Fear and Greed Index reached a high of 94 out of 100 on November 22, amid strong market optimism following Donald Trump’s presidential election victory. Additionally, there is strong speculation of a potential US Bitcoin reserve strategy in 2025.
Bitcoin is facing continuous selling pressure, with reports suggesting that the US government sold over 69,000 Bitcoins worth $6.7 billion. Market analysts believe that macro headwinds will continue to play a role in Bitcoin’s price volatility.
Analysts attribute the decline to expectations of tighter monetary policy from the US Federal Reserve in 2025. Rising Treasury yields and a strengthening US dollar have also contributed to Bitcoin remaining largely below the $100,000 mark in recent weeks.
Investors are closely monitoring the December jobs report for new insights into the state of the US labor market, amid ongoing concerns about inflation and the monetary policy trajectory under Trump’s presidency.
Optimism in the Crypto Market
Despite the current turbulence in the crypto market, Wall Street investor and macro analyst Raoul Pal remains optimistic for Bitcoin and the overall altcoin space.
Raoul Pal, co-founder and CEO of Real Vision, stated that the crypto market has entered the “Banana Zone”, signaling the phase of a strong rally. Pal predicts this could lead to a “Banana Singularity,” a period characterized by widespread market surges where “everything goes up.”
The macro investor added that the first phase of the bull market started with a breakout in November 2024 after Donald Trump’s election victory. This was later followed by the current phase of consolidation similar to that witnessed in 2016/17. Pal predicts that the Bitcoin price and the overall crypto market will go up.
