Bitcoin’s Losses Drag Crypto Fear and Greed Index to 5-Month Low of ‘Extreme Fear’

• Sell-offs were triggered by President Trump’s tariffs on Mexico and Canada.

On February 25, Bitcoin led the crypto market sell-off after a sharp drop to $86.8k on the charts. As expected, the bearish move soured market sentiment, bringing it down to a five-month low of ‘extreme fear’ at 25.

According to CryptoQuant data, 37.4k BTC, worth over $3.3 billion, were sent to exchanges at a loss as short-term holders feared that the plunge could extend further.

What’s Driving the Crypto Sell-Off?

The risk-off sentiment saw ETH and XRP fall by 10%, while BNB recorded a limited decline of 4%. Solana was the worst hit, shedding 12% of its value and barely holding onto the $140-level at press time. Overall, $1.5 billion worth of positions ($1.38 billion longs) were liquidated in the last 24 hours, according to Coinglass data.

Most traders are questioning what triggered the massive sell-offs. According to the crypto options trading desk, QCP Capital, the market tanked following President Trump’s implementation of tariffs on Mexico and Canada.

Part of the firm’s daily market update on its Telegram group stated:

> “Market sentiment remains under pressure following Trump’s decision to implement tariffs on Canada and Mexico and curb Chinese investment.”

The trading desk added that institutional demand from corporations like MicroStrategy could be limited going forward, with weak demand evident since last December.

CryptoQuant reports that the apparent demand for BTC turned negative for the first time since last October. Alongside low liquidity conditions, these factors accelerated BTC’s downside risks.

Some analysts, like Arthur Hayes, are projecting that low demand could drag BTC to $70k due to reduced BTC CME basis yield. He noted that large funds could sell off BTC if the yield declines any further.

BTC’s recent low of $86k marked a 20% drawdown from its record high of $109.5k; however, the range had not yet been invalidated at the time of writing.

It’s worth noting that a daily candlestick close below the range-low and bullish order block (OB, cyan) would effectively break the 3-month-long neutral market structure.