Investor sentiment in the cryptocurrency market has taken a sharp downturn as Bitcoin slipped below the $106,000 mark, triggering widespread caution among traders and analysts. The Crypto Fear & Greed Index, a widely followed gauge of market emotion, plummeted to “Extreme Fear” levels for the first time in seven months.

According to data from Alternative.me, the index dropped by 21 points in a single day, reaching a score of 21 out of 100 on Tuesday. This marks a 50% decline from the previous day’s reading and underscores the growing unease in the market following Bitcoin’s continued struggle to hold above key psychological levels.

Bitcoin Price Slips to Three-Week Low

Bitcoin’s recent price action reflects mounting market anxiety. The leading cryptocurrency fell to a 24-hour low of $105,540 on Monday, slipping from an intraday high above $109,000. As of publication, Bitcoin has slightly recovered to trade around $106,500, according to CoinGecko data — still down roughly 2% on the day.

This decline marks Bitcoin’s lowest point in over three weeks and continues a pattern of volatility that has defined recent trading sessions. The last time the Crypto Fear & Greed Index fell this low was on April 9, when it hit 18 out of 100 amid a broader sell-off in global markets following the implementation of U.S. President Donald Trump’s global tariffs.

Market Mood Turns Bearish

The index, which ranges from 0 (“Extreme Fear”) to 100 (“Extreme Greed”), serves as a barometer of investor psychology. A reading of 21 indicates that fear is dominating the market, often leading to increased selling pressure and reduced risk appetite.

On Oct. 22, the index last reached “Extreme Fear” territory with a reading of 25 out of 100, coinciding with Bitcoin’s drop from over $110,000 to below $108,000. Since then, the index has fluctuated between “Neutral” and “Extreme Fear” as traders have struggled to find clear direction.

October’s sharp decline from Bitcoin’s early-month high of $126,000 to below $110,000 has set the tone for continued uncertainty. Before that crash, the index had reached 74, signaling “Greed” — a sentiment that has quickly evaporated in the wake of tightening financial conditions.

Institutional Outflows Deepen Bearish Outlook

Several factors have contributed to the recent dip in sentiment. Analysts point to reduced institutional demand, lower blockchain activity, and hawkish signals from the U.S. Federal Reserve as primary drivers.

Although the Fed cut interest rates for the second time this year, policymakers hinted that no further reductions are expected in 2025. This shift toward a more conservative monetary stance disappointed investors who had anticipated continued easing — leading to outflows from risk assets, including cryptocurrencies.

Data shows that Bitcoin-linked exchange-traded funds (ETFs) recorded nearly $800 million in net outflows last week, marking one of the steepest declines in recent months. Institutional inflows also fell below the daily mined Bitcoin supply for the first time in seven months, signaling weakening appetite among large investors.

Historical Patterns Offer Hope for a November Rebound

Despite the prevailing fear, some market participants are cautiously optimistic about Bitcoin’s performance in November. Historically, the month has been one of Bitcoin’s strongest, with average gains of over 42%, earning it the nickname “Moonvember” among traders.

Crypto bulls argue that Bitcoin’s pullback may present an opportunity for accumulation before a potential rebound later in the month. However, with macroeconomic uncertainties lingering and investor confidence fragile, the path to recovery remains uncertain.

Cautious Optimism Amid Market Volatility

Market analysts suggest that sentiment could recover quickly if Bitcoin stabilizes above $106,000 and institutional interest returns. On-chain metrics, such as exchange inflows and long-term holder activity, will be key indicators to watch in the coming weeks.

Until then, traders are bracing for more volatility as fear dominates market behavior. While historical trends favor a strong November for Bitcoin, the combination of ETF outflows, reduced liquidity, and macroeconomic headwinds could keep the crypto market under pressure in the near term.