Crypto traders faced one of the most brutal resets on Thursday after Bitcoin’s free fall wiped out roughly $2.7 billion in leverage positions in the last 24 hours.
As the panic escalates, the Crypto Fear and Greed Index, which tracks investor sentiment using factors such as volatility, trading volume, and Bitcoin’s dominance, has fallen to 9, its lowest reading since June 2022.
Bitcoin is trading above $65,000, reflecting a roughly 10% decline in the past day. Bitcoin has trimmed some of its losses after briefly testing the $60,000 level, but analysts warn that capitulation risks are rising as most BTC supply is now underwater.
According to Gerry O’Shea, Head of Global Market Insights at global crypto asset manager Hashdex, Bitcoin has been pressured by global uncertainty linked to AI, geopolitics, and macroeconomic conditions, which has driven investors away from risk assets.
He said investors still favor gold as a store of value, but expects Bitcoin’s “digital gold” narrative to strengthen over time as adoption grows and regulation becomes clearer.
“We believe, however, that despite this recent drawdown, Bitcoin will continue to increase its appeal as ‘digital gold’ in portfolios as more institutions allow access to BTC and more individuals understand its thesis as a non-sovereign, immutable asset,” O’Shea said in a Thursday note.
“In the near term, we expect continued price volatility to track alongside important developments such as the integration of digital assets into financial infrastructure, increasing regulatory clarity, and traditional platforms giving their clients access to Bitcoin and other digital assets,” he stated.
The analyst believes that meaningful progress on the CLARITY Act could support a market recovery in the months ahead, voicing confidence in Senate efforts to pass the bill this year.