Crypto Fear and Greed Index Hits Multi-Month Low: Is a Recession-Led Crypto Crash Coming?

The post Crypto Fear and Greed Index Hits Multi-Month Low: Is a Recession-Led Crypto Crash Coming? appeared first on Coinpedia Fintech News

Following President Trump’s Tariff announcement that shook the markets across the world, the crypto market has plunged back into a state of “Extreme Fear,” reflecting a sharp drop in investor confidence. The Fear and Greed Index, a key measure of market sentiment, fell by 19 points to 25 on Tuesday, its lowest level in recent months.

This sudden decline in sentiment follows President Donald Trump’s sweeping new tariffs revealed on April 2nd, dubbed the “Liberation Day” plan. The aggressive trade measures, which targets key global partners, sparked fears of economic instability, pushing investors away from riskier assets like cryptocurrencies. 

The new policy adds a 10% tariff on all imports, with China hit hardest at 54%, followed by Vietnam (46%), Taiwan (32%), India (26%), Japan (24%), and the EU (20%). Canada and Mexico are temporarily exempt, but that could change if the current tariffs are withdrawn.

Stocks Decline Worldwide, Liquidation Hits $500M

The U.S. stock futures dropped over 1,000 points. Crypto followed suit, with the overall market cap down 4% to $2.7 trillion. Bitcoin briefly surged to $88,500 but fell to $83,073, a 2% drop. Ethereum dropped 4% to $1,816, and Solana fell over 5% to $119.

Markets across Asia plunged, with Japan’s Nikkei down nearly 3% and Hong Kong’s Hang Seng falling 1.5%. Gold spiked to a record $3,167.57 per ounce before dropping back. U.S. futures also point to a rough start, with the S&P 500 expected to drop 3% and the Dow 2.4% lower. 

Besides, $514 million in crypto liquidations occurred in 24 hours, mostly from long positions. The CMC Altcoin Season Index hit 14/100, showing Bitcoin dominance, while the Fear and Greed Index dropped to 25, signaling extreme fear. Investors are now shifting to Bitcoin, avoiding riskier altcoins amid uncertainty.

​Arthur Hayes, co-founder of BitMEX recently shared that the market isn’t reacting well to “Liberation Day.” He noted that Bitcoin’s ability to maintain a price above $76,500 until April 15, coinciding with U.S. tax day, would be a bullish sign. He cautioned investors to remain vigilant amid current market fluctuations. ​

US Recession Looming?

Moreover, fears of a U.S. recession are rising after President Trump’s tariff plan, with prediction platforms like Polymarket showing increased concerns over the economic impact. 

However, some experts believe the tariffs could have a short-term impact, as they may lead to Federal Reserve interest-rate cuts. Joseph Wang of fedguy.com explained that while tariffs can boost inflation, this effect is temporary and can be offset by currency shifts. He noted that the damage to the business sentiment could be long-lasting, leading to potential job losses, which the Fed aims to prevent.

The Need for New Catalysts

With Bitcoin now struggling to maintain upward momentum, experts believe that Bitcoin needs a new catalyst to reignite investor interest and drive prices higher. These events highlight how geopolitical events can swiftly impact digital asset markets, leading to increased volatility in the markets.