Since the end of 2022, the crypto market has been experiencing much worry and fear. This is mainly because Bitcoin’s price recently fell below $54,000, which has caused a big stir in digital money markets.

There’s this tool called the Crypto Fear & Greed Index by a company called Alternative. me. This tool shows how people feel about Bitcoin and other critical digital currencies. It scores from 0 (which means people are terrified) to 100 (which means people are very greedy). 

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• Due to Bitcoin’s recent drop, the Crypto Fear & Greed Index has hit a low not seen since early 2023, resulting in heightened fear in the crypto market.
• The German and U.S. governments’ sell-off of seized Bitcoin and the defunct Mt. Gox exchange’s commencement of refunds are the leading causes of this downturn.
• Despite the current market fear, Markus Thielen of 10x Research suggests a potential market rally if the Federal Reserve reduces interest rates in September.

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Fear Soars as Crypto Market Hits Lows Last Seen When Bitcoin Was at $17K in 2023

On Friday, this tool showed a score of 29. This is the lowest score since the start of 2023 when Bitcoin was worth around $17,000 after a tough time in 2022. Interestingly, this tool gave a warning in March when it showed a score of 90, which matched the highest point of the whole crypto market and Bitcoin’s highest-ever price of about $73,500 in 2024. Since then, prices of Bitcoin and Ether (another digital currency) have fallen by about 25%-30%, while other digital currencies have fallen by around 50% or more. 

While these high levels of fear could suggest a good time to buy, the timing is not simple and depends on many factors.

The main reasons for this drop were the selling of Bitcoin, which had been taken away by the German and U.S. governments, and “preemptive selling” as a Japanese company called Mt. Gox that had gone bankrupt started giving money back to its investors this month, according to Rachel Lin. She is the CEO and co-founder of a company called SynFutures. 

Lin thinks that this selling might continue for a while. Data from Arkham Intelligence shows that the German government still has about $2.2 billion in Bitcoin, the U.S. government over $12 billion, and Mt. Gox over $8 billion. She thinks that what happens with Bitcoin will be affected by how much the Mt. Gox users sell. 

Lin also said that people mostly expect Mt. Gox users to sell their tokens, but prices could go up again if they sell less than anticipated. However, she also warned that if a lot of selling pushes prices lower, Bitcoin could soon be worth $50,000. 

Markus Thielen, the founder of 10x Research, lowered his Bitcoin price prediction from $55,000 to $50,000. He thinks this might cause people who have ETFs (a type of investment) and miners (people who make Bitcoin) to sell more. He also said that August and September are usually hard months for Bitcoin but said, “If the Federal Reserve cuts interest rates in September, Bitcoin might go up again.”

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