The crypto Fear and Greed Index plunged hard on Friday as the Altcoin Season Index retreated to 37. This plunge happened as the crypto market crash accelerated, leading to over $19 billion in liquidations and over $500 billion in losses as the market cap dropped to $3.76 trillion.
Why the Crypto Fear and Greed Index Slumped
The Crypto Fear and Greed Index is a common gauge that measures the sentiment in the crypto industry. It looks at key gauges in the industry like the price momentum, volatility, and activity in the derivatives market. It moved to a low of 35, down from the greed area of 62 earlier this week.
At the same time, the broad Fear and Greed Index created by CNN Money plunged to 29 and is nearing the extreme fear zone. Its key gauges, like junk bond demand, safe-haven demand, and market volatility, have all plunged to the extreme fear zone.
As we wrote earlier, this performance happened because of the ongoing crypto market crash. The crash was triggered by the ongoing trade war between the United States and China.
Donald Trump announced major tariffs against China, ending the truce that has been going on since April. China will likely announce similar tariff measures against the US as well.
Trump cited the fact that China had stopped buying US soybeans and that Beijing had announced major measures targeting the US. Some of them were investigations into US companies, US ship fees, and export limits on rare earth metals.
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Altcoin Season Index Crash
Meanwhile, the ongoing crypto crash has also triggered a major sell-off in the altcoin market. The closely-watched Altcoin Season Index plunged to 37 from over 70 earlier this month.
The index crashed as most altcoins fell, with the most affected being tokens like Kava, Story, and MYX Finance, which fell by over 50% in the last 24 hours.
Other top laggards in the crypto market were tokens like Fartcoin, dYdX, Sonic, and Vine. Even blue-chip altcoins like Dogecoin and Shiba Inu were not left behind in the sell-off.
Looking ahead, history shows that cryptocurrencies often rebound after a major crash. For example, most of them bounced back after the Liberation Day tariffs in April this year, with Bitcoin hitting a record high in May.
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