Crypto Market Sentiment Stuck in "Extreme Fear" as Prices Slide

The crypto market sentiment has remained locked at “extreme fear” on Friday, making it the 14^th day of the market sentiment remaining pessimistic. According to the Crypto Fear & Greed Index, market sentiment dropped three points to a reading of 20 out of 100 on December 26, marking the 14^th day in the index’s lowest category. The index has now spent one of its longest-ever periods in “extreme fear” since its launch in February 2018, with the current downturn beginning on December 13. 

The market sentiment has been trending down since early October after the renewed US-China tariff fears wiped nearly $500 billion from the crypto market on October 10. 

Market Sentiment Not Improving

Adding to the pressure are fears that the US Federal Reserve may pause interest rate cuts in the first quarter of 2026. Jef Mei, the Chief Operating Officer of cryptocurrency exchange BTSE, warned earlier this week that Bitcoin could fall as low as $70,000 if the Feds keep the rates unchanged. 

According to CoinGecko, Bitcoin is currently trading around $88K, roughly 30% below its all-time high of $126K reached on October 6. Despite the pullback, market sentiment has sunk even lower than the level recorded during the collapse of FTX in November 2022. That event severely damaged confidence in the crypto industry and pushed Bitcoin towards $16K. 

The Crypto Fear & Greed Index aggregates several indicators, including price volatility, trading volume, social media sentiment, Bitcoin dominance, and trend data to gauge overall market sentiment. Data analytics firm Alphractal reported that crypto-related Google searches, Wikipedia views, and online forum discussions have dropped sharply. The firm released a statement, “Crypto social volume has returned to levels typically seen during bear markets. December 2025, retail investors appear discouraged, disengaged, and largely absent from the crypto market.”

Bitwise chief investment officer Matt Hougan has attributed much of the pullback to “crypto-native retail” investors who were shaken by events such as the FTX collapse, the memecoin downturn, and the failure of a broad altcoin rally. In contrast, Hougan said traditional finance investors remain active, pointing to strong inflows into spot Bitcoin exchange-traded funds.

US Bitcoin ETFs have attracted more than $25 billion in inflows so far in 2025, even as Bitcoin is down 5% year-to-date, underscoring a growing divide between institutional interest and retail sentiment.