Extreme Fear Grips Crypto as Market Cap Falls to 8-Month Low

TLDR

• Total crypto market cap dropped to $2.93 trillion on Thursday, its lowest point since April, down 33% from October’s $4.4 trillion peak
• Bitcoin fell to $84,500 before recovering slightly, while Solana dropped below $120 to its weakest price since April
• The selloff triggered $550 million in liquidations across derivatives markets in 24 hours
• Bank of Japan raised interest rates to 0.75% on Friday, though Bitcoin climbed 2.3% following the announcement
• Social sentiment hit extreme fear levels with the Fear & Greed Index at 16, but analysts see this as a potential buying opportunity

The cryptocurrency market experienced sharp losses on Thursday as the total market capitalization fell to $2.93 trillion, marking its lowest level since April. The decline erased most of the gains made throughout 2025.

Bitcoin dropped to $84,500, its weakest price in nearly three weeks, after breaking through the key $85,000 support level. The leading cryptocurrency later recovered slightly but remains down 1.6% over the past 24 hours.

The total market value of cryptocurrencies has declined by approximately 33% since reaching an all-time high of $4.4 trillion in early October. Market cap is now down almost 14% since the start of 2025.

Ethereum fell below $2,800, recording a 1.1% decline over 24 hours. The second-largest cryptocurrency by market cap joined the broader market selloff.

Altcoins experienced steeper losses than Bitcoin during Thursday’s trading session. Solana tumbled below $120 to its lowest price since April, dropping 4% in 24 hours.

Cardano’s ADA, Dogecoin, and SUI all plunged more than 5% during the same period. These declines outpaced Bitcoin’s relatively smaller daily drop.

Liquidations Hit Derivatives Markets

The volatile price movements triggered $550 million in liquidations across derivatives markets over the past 24 hours, according to CoinGlass data. Both short and long leveraged trading positions were flushed out during the selloff.

Analysts at AmberData described the $85,000 level as crucial for Bitcoin. They warned that losing this support decisively could open the door to a deeper correction toward $80,000.

Perpetual swaps data shows that funding rates for many altcoins turned negative. This means short positions are paying long positions a fee to keep their positions open.

The negative funding rates signal that traders remain cautious about market conditions. However, the lack of a spike in trading volume suggests orderly deleveraging rather than panic selling.

Central Bank Decision and Market Outlook

The Bank of Japan raised interest rates to 0.75% on Friday morning. MN Fund co-founder Michaël van de Poppe predicted more short-term pain before this announcement.

Van de Poppe stated that Bitcoin could experience a 10-20% move lower on altcoins within 24 hours. Despite the rate hike, Bitcoin climbed 2.3% following the central bank’s decision.

Nick Ruck, director of LVRG Research, said the decline reflects a correction driven by macroeconomic pressures. He noted reduced risk appetite among investors as a contributing factor.

Fear Dominates Market Sentiment

Social media commentary showed fear levels after Bitcoin bounced to $90,200 on Wednesday before quickly retracing to $84,800. Blockchain analytics platform Santiment reported bearish sentiment across social platforms.

The crypto Fear & Greed Index sits at 16, indicating extreme fear among market participants. The index has remained below 30 in fear territory since early November.

Santiment noted that historically, retail investors pushing bearish narratives harder than bullish ones is a strong contrarian signal. Prices often move opposite to crowd expectations during periods of high fear.

Ruck suggested the current pullback presents potential accumulation opportunities in fundamentally strong projects. The crypto market cap previously fell to a 2025 low of $2.5 trillion on April 9 before recovering to all-time highs six months later.

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