The Crypto Fear and Greed Index, which measures market sentiment for Bitcoin and the broader cryptocurrency industry, has tanked to its lowest score in nearly 18 months.

This development follows bitcoins drop below $60,000, reaching its lowest point since early May.

Crypto Fear Greed Index Plummets

The index fell 21 points on June 24, plunging into the Fear zone with a score of 30. This marks one of the steepest day-to-day drops in recent years and a shift from the Greed zone, where it stood at 74 just a week ago.

Bitcoin also experienced a dramatic price drop of over 4% within the past 24 hours, reaching a seven-week low. The cryptocurrency hit a low of approximately $58,400 on June 24 before staging a recovery. According to CoinGecko data, at writing time Bitcoin is trading at $61,115.

Several factors have contributed to this surge in fear. Over the past 10 trading days, spot Bitcoin exchange-traded funds have seen significant outflows exceeding $1 billion. Furthermore, reports that the bankrupt Mt. Gox exchange may be preparing to liquidate $8.5 billion worth of BTC to its creditors have intensified the uncertainty.

On June 24, Mt. Gox’s rehabilitation trustee announced that repayments in BTC and BCH to approximately 127,000 creditors would begin in July 2024, more than a decade after the exchange’s collapse in 2014. Adding to the situation, reports from Arkham Intelligence indicated that Germany has started selling some of its bitcoin reserves.

Experts Suggest Market Overreaction

Despite these developments, some experts believe the markets reaction might be exaggerated. Samson Mow, an executive at Galaxy Digital, addressed the situation on X, reassuring the market that there isnt a massive dump from Germany or Gox. He emphasized that the bitcoin dip is driven purely by sentiment and fear, not by the selling of large holdings.

The masses seem to assume anytime there is news of large entities selling, its a market sell, because they themselves probably market sell/buy. However, we know that large entities are very good at not moving the market. Just look at the imbalance in ETF inflows a few weeks ago;…

Mow further elaborated that the masses tend to assume any news of large entities selling indicates a market sale because they themselves likely engage in selling or buying. However, he pointed out that large entities are skilled at not moving the market. He cited the imbalance in ETF inflows a few weeks ago, where demand was 27 times the supply, yet the price remained mostly flat.

The Crypto Fear Greed Index takes into account various factors, including market volatility (25%), trading volume (25%), bitcoin’s dominance (10%), and trends (10%). Since reaching a peak score of 90 in the Extreme Greed zone on March 5, when BTC hit a high of $69,000, the index has been on a downward trend.