On Thursday, crypto traders faced their cruelest reset yet as Bitcoin’s free fall wiped out around $2.7 billion in leveraged positions over the past 24 hours.
As the panic intensified, the Crypto Fear and Greed Index, which tracks investor sentiment using factors such as volatility, trading volume and Bitcoin’s dominance, fell to 9, its lowest reading since June 2022.
Bitcoin is trading above $65,000, reflecting a decline of about 10% over the past day. Bitcoin pared some of its losses after briefly testing the $60,000 level, but analysts are warning that most of Bitcoin’s supply is now underwater, increasing the risk of capitulation.
Gerry O’Shea, head of global market insights at global crypto asset management firm Hashdex, said Bitcoin is under pressure from global uncertainties related to AI, geopolitics and macroeconomic conditions, pushing investors away from risky assets.
He said that while investors still support gold as a store of value, he expects Bitcoin’s “digital gold” story to strengthen over time as adoption grows and regulations become clearer.
“However, despite this recent decline, we believe that as more institutions grant access to BTC and more individuals understand the theory of Bitcoin as a non-sovereign, immutable asset, Bitcoin will continue to grow in appeal as ‘digital gold’ in portfolios,” O’Shea said in a note on Thursday.
“In the short term, we expect price volatility to continue due to important developments such as the integration of digital assets into financial infrastructure, increased regulatory transparency, and traditional platforms providing customers with access to Bitcoin and other digital assets,” he said.
The analyst believes meaningful progress on the CLARITY Act could support market recovery in the coming months and expressed confidence in the Senate’s efforts to pass the bill this year.
