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Bitcoin Struggles as Market Sentiment Dips Into Extreme Fear

Bitcoin's price continues to face downward pressure, now hovering near $90,000. The latest price drop comes amid a broader crypto market slump, with Ethereum and XRP also seeing significant losses. Bitcoin has now fallen 15% in the last month alone, following a sharp drop to $89,300, down from its record high of $126,198 in early October.

The Crypto Fear & Greed Index, which tracks market sentiment, indicates that the market is currently in a state of “extreme fear,” reflecting growing concerns among traders. This marks the fourth consecutive day that the index has stayed in this zone, signaling that investors are highly cautious.

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Is This the Start of a Prolonged Bear Market?

Bitcoin’s decline below key support levels has fueled speculation about a potential bear market. Glassnode’s analysis pointed out that Bitcoin’s price has fallen below the 0.75 cost-basis quantile, a traditional bear market signal. The recent surge in realized losses for short-term holders also raises concerns about the market’s overall health.

However, some market analysts suggest that the situation isn’t as dire as it seems. While the market faces volatility, there’s no consensus yet on whether this marks the beginning of a long-term bear market or a temporary dip.

Institutional Inflows and ETF Trends: A Mixed Picture

On the institutional side, Bitcoin and Ethereum ETFs have faced significant outflows. Data shows that spot Ethereum ETFs experienced a net outflow of $74.2 million, while Bitcoin ETFs saw a much larger $372.8 million in outflows. Despite this, institutional interest in digital assets remains strong, with ongoing product innovations and regulatory developments continuing to draw attention to the sector.

Market analysts note that while the broader market is experiencing a correction, the underlying demand for crypto remains intact, suggesting that this downturn may be more of a correction rather than the start of a full-blown bear market.

Big Moves and Liquidations: What’s Next for the Crypto Market?

The current market downturn has led to significant liquidations, with $276 million in assets being liquidated over the past 24 hours. The majority of these liquidations came from Bitcoin and Ethereum, which continue to dominate the market. Despite this, some altcoins, like Starknet (STRK), have shown resilience, posting gains even as the broader market struggles.

As the market remains uncertain, traders are keeping a close watch on upcoming data releases from the U.S. government, which could provide further insight into the Federal Reserve’s monetary policy and its potential impact on the crypto market.

Simonas Brazionis

Blockchain Expert

Simonas is a crypto and blockchain expert with 6 years of experience. Passionate about the industry he educates others on blockchain technology, and continuously expands his knowledge. He has helped many newcomers understand crypto, navigate investments, and stay informed about trends like DeFi and NFTs.