Bitcoin Plunge: Market Enters Extreme Fear as Key Support Levels Tested

The cryptocurrency landscape is facing a severe downturn, with Bitcoin leading a broad market retreat. In a matter of weeks, the digital asset has shed more than a quarter of its value, decisively breaking below the psychologically significant $90,000 threshold for the first time in seven months. This collapse has completely erased all gains accumulated throughout 2025. As market sentiment plummets into "extreme fear," investors are grappling with a critical question: is this the start of a prolonged bearish phase or merely a short-lived panic sell-off?

Bitcoin's sharp decline has pulled the entire digital asset sector lower. Major altcoins followed suit, with Ethereum dropping 5.6 percent. Other significant tokens, including XRP, Binance Coin, and Solana, recorded losses ranging from three to four percent. The Crypto Fear & Greed Index, a key barometer for investor sentiment, has experienced a dramatic collapse and now firmly indicates a state of "extreme fear" across the market.

This severe price correction stems from a confluence of negative factors. Lingering uncertainty regarding the trajectory of further interest rate cuts in the United States has placed substantial pressure on risk-sensitive assets like cryptocurrencies. Compounding this issue, data indicates that both new market entrants and large-scale institutional investors have significantly scaled back their holdings. The result has been a cascade of liquidations exceeding one billion US dollars, with leveraged long positions being particularly hard hit.

Should investors sell immediately? Or is it worth buying Bitcoin?

ETF Outflows and the Looming Mt. Gox Overhang

Adding to the bearish pressure, Bitcoin Exchange-Traded Funds (ETFs) are witnessing massive capital withdrawals. A crucial source of demand has evaporated, with a staggering $2.8 billion exiting these investment vehicles in the last month alone. Spot Bitcoin ETFs, once hailed as a major catalyst for price appreciation, have now become a source of selling pressure.

Further potential downside risk emerges from the defunct crypto exchange Mt. Gox. The platform recently moved substantial quantities of Bitcoin, an action widely interpreted as preparation for creditor repayments. Market observers are concerned that recipients of these long-frozen assets may choose to liquidate their holdings immediately upon receipt, creating a fresh wave of selling.

From a technical analysis perspective, a concerning pattern has emerged. A "Death Cross" has materialized on the daily chart, where the 50-day moving average crosses below the 200-day moving average. This technical formation is traditionally viewed by chartists as a harbinger of continued downward momentum. Critical support levels are now established at $89,500 and $85,000. A failure for Bitcoin to find a foothold at these prices could trigger a further slide toward the $80,000 mark. For any meaningful recovery to take hold, targeting a range of $93,000 to $95,000, a significant return of buying power would be essential.