“Why is crypto going down or crashing” was trending on Thursday as Bitcoin (BTC) and altcoins like Ethereum (ETH), Solana (SOL), and Cardano (ADA) sunk. Bitcoin’s price dropped to $82,000, and the market cap of all crypto coins fell by over 4% to $2.65 trillion.
Crashing Crypto Fear and Greed Index
The main reason why Bitcoin and other altcoins plunged is that the financial market embraced a risk-off sentiment following Donald Trump’s decision to start the biggest trade war in over nine decades. He added double-digit tariffs on goods from countries such as China and the European Union.
This black swan event could trigger a recession or even a great depression as consumer spending slows. Indeed, recent economic data showed that consumer confidence has dropped by 17 points in the last three months.
Therefore, the crypto fear and greed index has moved to the fear zone 20. Most notably, the broader index tracked by CNN Money has plummeted to the extreme fear zone of 8.
It also explains why the stock market has lost almost $2 trillion in value in the past few days. The Dow Jones, Nasdaq 100, and S&P 500 indices plunged by over 3% and formed a death cross, pointing to more downside.
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Is it Safe to Buy the BTC, ETH, SOL, ADA, and Altcoins Dip?
The ongoing crypto crash has been painful. Investors have lost over $1 trillion in value since Donald Trump’s inauguration.
As such, some dip buyers might see this as an opportunity to buy stocks and crypto. In a statement, billionaire Bill Gross warned that buying the dip may be risky, noting:
“Investors should not try to ‘catch a falling knife.’ This is an epic economic and market event similar to 1971 and the end of the gold standard except with immediate negative consequences.”
However, a few positives make buying the dip or dollar-cost averaging (DCA) an appealing option for now. First, the Bitcoin price has remained above $80,000 even as the fear index fell. That is a sign that short sellers are afraid of going short at the current levels.
Historically, bull markets often start when there is fear in the market. A good example occurred in March 2020, when the Ethereum price fell to $80 and Bitcoin plunged to $4,000. They all embarked on a strong rally that pushed them to record highs.
Third, Trump, who watches the stock market closely, is likely to undo some of his tariffs. In a statement, he said he was ready to reduce some tariffs if other countries offer something “phenomenal,” noting that the tariffs would give the US power to negotiate. Such statements will likely lead to a strong comeback.
Most importantly, the Federal Reserve might intervene as it has done in past crises. If this happens, stocks, Bitcoin, and altcoins like ETH, SOL, and ADA may bounce back.
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