Crypto market uncertainty persisted as Bitcoin notched its biggest three-day slide since FTX’s collapse, while analysts pointed to further downside momentum.
The crypto Fear & Greed Index hit its lowest point in nearly three years, as “Extreme Fear” gripped the digital asset market and risk-off sentiment depressed spot prices. According to the indicator, the multi-year sentiment low revisited levels last seen in mid-2022, when multiple corporate failures—such as Terraform Labs and Three Arrows Capital—shook virtual currency ecosystems.
Bitcoin (BTC) dropped more than 12% this week, kneecapped by trade wars from Trump tariffs and rising inflation concerns. Spot crypto exchange-traded products tracking BTC and Ethereum (ETH) also witnessed record outflows, with giants like BlackRock leading the sell off.
Downswings in the Nasdaq piled on an already volatile crypto market, despite Nvidia’s fourth-quarter earnings surpassing analyst expectations.
As digital asset investors sought relief from U.S. macroeconomic data and anticipated Federal Reserve rate cuts, one analyst said this week’s core Personal Consumption Expenditures report might deliver lackluster market movements.
Experts expect the U.S. core Personal Consumption Expenditures Index to show a 2.6% year-over-year increase in January, an improvement from the 2.8% recorded in December. This would indicate that inflation has slowed, potentially incentivizing the Federal Reserve to lower interest rates.
Noelle Acheson, author of the “Crypto is Macro Now” publication, said this time could be different. While the Personal Consumption Expenditures report is the Federal Reserve’s preferred inflation tracker, other indicators, such as the Conference Board’s consumer confidence index, predict that 12-month inflation could rise from 5.2% to 6%.
“Even if the PCE comes in softer than forecast, it could be taken as confirmation of slowing growth, sending markets into another whirlwind of concern,” Acheson wrote.
Furthermore, an estimated $5 billion worth of Bitcoin options will expire this week, adding more uncertainty to the asset’s price.
Bitcoin hovered around $85,500 at the time of publication, down over 2% on the day as the broader crypto market reeled from a multi-day correction period.
However, analysts at Bernstein said this downturn could present a major buying opportunity for investors. Financial powerhouses like Standard Chartered also reiterated high price targets, up to $200,000 by the end of the year, for Bitcoin despite recent market conditions.
Additionally, anticipated regulatory developments in Washington promise a clearer framework for stablecoins and crypto market operators. On Feb. 26, the Senate Banking Subcommittee on Digital Assets, chaired by Wyoming Republican Cynthia Lummis, held its first hearing to advance work on a bipartisan market structure and stablecoin framework.
Lummis stated that stablecoins would take center stage and that regulatory clarity for the $220 billion fiat-pegged token market could help alleviate some market uncertainty.
