Bitcoin Enters ‘Extreme Fear’ Zone on August 5 Following $168 Million ETF Outflows

The Crypto Fear and Greed Index registered a score of 17 out of 100 on August 5, marking the lowest point since July 12, 2022.

Market Sentiment Shifts

The recent drop into the “Extreme Fear” category comes as spot Bitcoin exchange-traded funds (ETFs) reported substantial outflows totaling $168.4 million on the same day.

• This score represents a significant decline from 67 just a week prior on July 29.
• The index is widely recognized for reflecting the market sentiment within the Bitcoin and broader cryptocurrency landscape.

Details of ETF Outflows

The outflows mainly originated from:

• Grayscale Bitcoin Trust: $69.1 million
• ARK 21Shares Bitcoin ETF: $69 million

Conversely, some Bitcoin ETFs, including the Grayscale Bitcoin Mini Trust, VanEck Bitcoin ETF, and Bitwise Bitcoin ETF, registered inflows of:

• Grayscale Bitcoin Mini Trust: $21.8 million
• VanEck Bitcoin ETF: $3 million
• Bitwise Bitcoin ETF: $2.9 million

Ether Market Performance

In contrast, spot Ether ETFs experienced inflows totaling $48.8 million, with the iShares Ethereum Trust leading at:

• iShares Ethereum Trust: $47.1 million
• VanEck Ether products: $16.6 million
• Fidelity’s Ether products: $16.2 million

Market Reaction to Price Decline

The sentiment notably declined when Bitcoin and Ether dropped by 10% and 18%, respectively, within two hours on August 5. In total, the market witnessed:

• Over $600 million in leveraged long positions liquidated.
• Trillions in value erased from the US stock market.

Economic Factors Affecting Markets

This downturn has been attributed to various economic concerns, including:

• Weak employment data.
• Slowed growth among major technology companies.
• Resurrected fears of potential recession.

Trader Bob Loukas characterized the recent market activity as a rare event, one that could be seen once in a decade, indicating the significant volatility impacting over $500 billion in the cryptocurrency market cap.

Analyst Tuur Demeester suggested that Bitcoin might find its bottom between $40,000 and $45,000 but cautioned against making premature bets on this outcome.

“In a Bitcoin bull market you don’t take bearish bets because prices can whipsaw back up in no time.”

As of now, Bitcoin has partially rebounded, increasing by 11.85% to reach $55,680 after bottoming out at $49,780 on August 5, according to CoinGecko data.

Further Reading

Magazine: Could a financial crisis end crypto’s bull run?