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Investor Sentiment Falls as Crypto Market Loses $100 Billion

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Investor Sentiment Falls as Crypto Market Loses $100 Billion

The crypto market now faces another challenge. Over the past day, bitcoin prices have fallen around $2,000, which has seen the crypto market lose a significant amount of value. As it stands, the crypto market cap is down over $100 billion and is now dangerously close to falling below $1 trillion again. This likely affected market sentiment, triggering more fear in the market.

The market turns to fear

The crypto market had seen some recovery with the anticipation around the Ethereum merger. But as the excitement wore off, the market began to see a drastic price correction. Bitcoin had reached $25,000 at its peak during this last recovery cycle. However, he has since lost the majority of those winnings.

With that, crypto market sentiment recovered for a while after bitcoin started its rally. At its peak, the Fear & Greed Index has a score of 42, the highest point in four months. This brought it closer to greed, but the market had other ideas.

The bitcoin price had moved back below $22,000, and with it, market sentiment had waned. He closed Thursday with a low score of 30, putting him firmly back in fear territory. The retracement is reflected in the crypto market, dropping from $1.1 trillion to around $1 trillion at the time of this writing.

Total Crypto Market Cap Chart from TradingView.com

Crypto market cap losses $100 billion | Source: Crypto Total Market Cap on TradingView.com

As fear has seeped into the market, investors are more cautious when it comes to investing in the crypto market. Perp traders had shown market fatigue last week, causing bitcoin funding rates to drop below neutral. Now the rest of the market is following suit.

Recovery in the crypto market?

With the market just beginning to retrace, it is likely that the correction is not over. Such corrections are expected as the market grows so much in such a short time. This helps prices adjust to values ​​that reflect their current market state.

This means that the bitcoin price may drop further. For now, it is assumed that the bottom has been established at a price of $17,600, so bears will want to try and test support at this point. The historic move also supports such moves as it has done with previous bear markets.

Moreover, the weekend is already here and it is a period known for its low liquidity. This means that bitcoin is likely to continue falling throughout the weekend. If the Bitcoin price falls below $21,000, then the crypto market will fall below $1 trillion.

Featured image from Coinmama, chart from TradingView.com

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