The Crypto Fear and Greed Index has plunged to an extreme low of 17 on August 6, marking its most severe level of fear since July 2022. This dramatic shift in market sentiment coincides with notable outflows from Bitcoin exchange-traded funds (ETFs).
The index’s sharp decline from a score of 67 on July 29 to its current level highlights a surge in investor apprehension. On the same day, Bitcoin ETFs experienced significant outflows amounting to $168.4 million. The largest withdrawals were recorded by the Grayscale Bitcoin Trust and ARK 21Shares Bitcoin ETF, which saw outflows of $69.1 million and $69 million, respectively.
Bitcoin ETF Outflows and Inflows
Despite the overall outflows, several Bitcoin ETFs reported positive inflows. The Grayscale Bitcoin Mini Trust attracted $21.8 million, while the VanEck Bitcoin ETF and Bitwise Bitcoin ETF saw inflows of $3 million and $2.9 million, respectively. The BlackRock iShares Bitcoin Trust remained unchanged.
In contrast, Ether ETFs showed a more favorable performance, with a total inflow of $48.8 million. The iShares Ethereum Trust led the way with $47.1 million in new investments, while VanEck and Fidelity’s Ether products received $16.6 million and $16.2 million, respectively.
Market Impact and Investor Sentiment
On August 5, Bitcoin suffered a 10% drop, and Ether experienced an 18% plunge within a two-hour window, leading to over $600 million in liquidations of leveraged long positions and substantial losses across altcoins. The broader U.S. stock market also faced significant declines due to weak employment data, sluggish tech growth, and rising recession fears.
Trader Bob Loukas described the past three days as exceptionally rare, noting that $500 billion in market capitalization has been wiped out from the crypto sector. Despite this, Bitcoin has rebounded by 11.85%, reaching $55,680. The significant drop in the Crypto Fear and Greed Index, coupled with substantial ETF outflows, underscores the deepening investor anxiety amidst ongoing market volatility.
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