Name: Crypto market gripped by fear, dip buying not kicking in
Uploaded: 2025-12-02T08:02:19.485Z
Duration: 3 min 39 s
Description: Almost $1 billion of leveraged crypto positions were liquidated during another sharp drop in prices on Monday that brought fresh momentum to a wide-ranging selloff. The market is on shaky ground after a weeks-long rout.

Almost $1 billion of leveraged crypto positions were liquidated during another sharp drop in prices on Monday that brought fresh momentum to a wide-ranging selloff. The market is on shaky ground after a weeks-long rout.

Washington

The cryptocurrency market is experiencing sustained bearish sentiment following a sharp sell-off, with the Fear and Greed Index indicating extreme fear and traders largely remaining on the sidelines. Unlike previous downturns, the current sell-off is notable for the way risks are spreading from crypto-specific assets to the broader financial system, particularly through vehicles like digital asset treasuries and crypto-linked ETFs, which have also seen poor performance and slow inflows.

Regulatory developments are also influencing market sentiment, as the Federal Reserve considers new rules for banks and stablecoins. While these regulations have not yet taken effect, significant crypto-related legislation is anticipated in the United States by March of the following year, which could potentially shift the market outlook. For now, traders remain cautious, awaiting clearer triggers or policy changes.

Crypto market gripped by fear, dip buying not kicking in

The sentiment is quite bearish. Even after seeing a slight bounce back from the sharp sell-off that we saw in the last 24 hours, the bounce back has not been very convincing. We have not seen big buyers yet in the market. The so-called dip buys or the value buying has not kicked in yet. There is an index called Fear and Greed Index in crypto which is at 23 which still shows extreme fear reflecting the kind of mood that market sentiment market is at. Traders are still sitting on the sidelines. As you mentioned, Paul, the levered bets have been unwound and traders are sitting on liquid positions, cash positions, really waiting for some triggers. But as of now, the sentiment looks kind of bearish to cautious in the market. So is the sell-off this time different from previous times or is it we've seen this movie before? The reasons for the sell-off and the way it is panning out is quite different this time around. And it's an interesting question. You know, the way crypto has been shown to be institutionalized in this recent few months is that there are vehicles that have been spun off from crypto like the digital asset treasuries. And what is happening is the risk is transmitting from the crypto world to the broader markets through these kind of vehicles. That is a key difference. The digital asset treasuries which have been formed to raise funds on the back of the cryptocurrencies, basically they're buying cryptocurrencies by raising those funds. And those underlying assets, the cryptocurrencies have seen a sharp sell-off. And therefore, these digital asset treasury companies are also in the water. Most of them are. So the way this risk is spanning off is basically transmitting to a wider system. We have seen also that the single stock ETF, especially linked to its strategy, how it's become the worst performer among all cryptos. And then we have the inflows into Bitcoin ETFs also kind of being very slow and sluggish. All this together paint a picture of how this time the sell-off is slightly different from before, where the risks are transmitting to a broader system than just staying within crypto, Paul. We've also got the Fed proposing some new rules for banks and stablecoins as well. What's being discussed here? So as of now, the rules have not come into effect. That's a big, you know, that could be a potentially a big game changer for crypto. But maybe next year, people are waiting for, you know, the March when this kind of all the crypto-related, most of the crypto-related acts can be kind of, you know, will be implemented next year in the US. And as we know, President Donald Trump has been a big advocate of crypto. And if that happens, which is expected by March next year, that could be a kind of a, you know, optimistic situation for crypto markets. But nothing as of now really kind of changes the needle much a lot. Even the Fed rate cut is expected and priced in into cryptos. Now you can expect, now you see how the bearish the sentiment is. But yes, if those legislations come through early next year, things can move.

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