Investor confidence in the cryptocurrency market has hit its weakest point in nearly half a year, following President Donald Trump’s warning of steep new tariffs on China. On Saturday, the Crypto Fear & Greed Index slid to 27, a “Fear” reading, a sharp 37-point fall from the previous day’s “Greed” reading of 64.
Leading crypto trading platforms, such as Binance and Coinbase, among others, failed the crucial test, facing significant congestion during this correction. Most trading platforms faced widespread technical issues during the largest liquidation event in crypto history. Users reported frozen order books, app lag, and temporary lockouts during peak volatility as markets plunged.
The top cryptocurrency, Bitcoin, even momentarily dropped to $102,000 on Binance perpetual futures following Trump’s tariff announcement on Truth Social. Trump has vowed to impose new 100% tariffs on China next month, claiming Beijing is taking “very hostile” actions by limiting rare earth exports, which are crucial to American manufacturing.
The disruption demonstrated the toll on exchange infrastructure during wild price swings and essentially amounted to a real-world stress test for the entire crypto trading ecosystem.
Sentiment index hits an intraday low of -2.8
According to analysts, the tariff shock has shaken investor confidence worldwide, leading many traders to de-risk after weeks of optimism. Bitwise, European head of research, Andre Dragosch, stated that their company’s intraday Crypto Asset Sentiment Index has just flashed a strong contrarian buy signal.
He commented, “Our intraday Cryptoasset Sentiment Index just generated a strong contrarian buying signal! The index reached an intraday low of -2.8 standard deviations – its lowest level since the “Yen Carry Trade Unwind” in the summer of 2024. Stack accordingly.”
The last time sentiment was this weak was April 16, when Bitcoin fell to $77,000 as trade tensions escalated, before recovering more than 30% weeks later. Just days ago, the Index even reflected “Greed” as Bitcoin climbed to a record $125,100. Although analysts have observed that Bitcoin’s recent surge past $125,000 failed to generate the same excitement that typically accompanies its earlier peaks.
Santiment analyst Brian Quinlivan noted that social media engagement on the token was low. Speaking on the Thinking Crypto podcast published to YouTube on Thursday, he commented, “It was like a modest, run-of-the-mill reaction from the crypto audience.”
He added, “Really wasn’t much of anything. It’s not nearly as euphoric as some of these previous ones.”
Some analysts, however, have argued that the tempered mood might actually be a healthy sign, suggesting a firmer price base is forming amid subdued retail activity. Even so, escalating macroeconomic uncertainty and Trump’s tariff threats have left risk sentiment across all markets on edge as we move into October.
Wall Street has plummeted drastically after Trump’s announcement
On Friday, Wall Street also saw steep losses after President Trump’s renewed clash with China stoked worries of a fresh round of trade hostilities. The S&P 500 ended down 2.7%, marking its biggest single-day loss since April. Meanwhile, the Dow Jones Industrial Average dipped 1.9% and the Nasdaq Composite fell 3.6%.
The chipmaker Nvidia, valued at around $2.5 trillion and currently the world’s largest public company, also saw its stock sink by about 5%. Overseas markets weren’t spared either — the FTSE 100 in London fell 0.9%.
China still controls over 90% of global rare earth processing and magnet production, and this week, the country expanded its rare earth export controls to cover five more materials. The last expansion in April also caused supply shocks across global markets before diplomatic measures helped restore balance.
