Crypto markets opened Friday in a darker mood as the Crypto Fear and Greed Index slid to 16, back in “Extreme Fear” territory and down from 26 a day earlier.
The gauge last printed 16 on Dec. 19, 2025, suggesting sentiment has slipped to a one-month low.
Bitcoin dropped about 7% to around $82,000 as traders digested fresh US political noise, including reports that President Donald Trump will nominate former Federal Reserve Board member Kevin Warsh to replace current Fed Chair Jerome Powell.
Trump said late Thursday he would name his nominee on Friday morning, a day after lambasting Powell and the Fed for not choosing to reduce rates.
Long Liquidations Surge As Leverage Unwinds Across Crypto
The sell-off also forced a broad unwind in leveraged positions. CoinGlass data showed $1.80B of liquidations over the past 24 hours, dominated by longs at $1.68B versus $117.30M in shorts, with 280,430 traders wiped out in total.
Linh Tran, senior market analyst at XS.com, said Bitcoin is facing direct competition from traditional defensive assets, most notably gold.
“As geopolitical uncertainty and policy-related risks intensify, markets tend to favor assets with a long-established role in risk hedging,” she said.
“This precious metal has recorded a series of strong consecutive gains and has recently set a new all-time high around 5,600 USD/oz. Meanwhile, Bitcoin is still largely classified as a high-risk asset within the asset allocation frameworks of most institutional investors.”
Liquidity Conditions Keep Bitcoin Trailing Gold
Meanwhile, the CoinSwitch markets desk said the leverage flush could steady the near-term tape if spot demand follows through.
“However, a decisive break below $82K could expose $79K–$80K, while sustained upside requires acceptance above $88,500, supported by improving spot demand and ETF flows,” they said.
Kraken’s global economist, Thomas Perfumo, said Bitcoin’s lag versus precious metals has tested investor patience.
“At first look, the macro backdrop is supportive: falling interest rates and rising geopolitical uncertainty historically favor an asset viewed as a hedge against currency debasement and political instability,” he said.
“Yet despite rate cuts, global liquidity, the factor with the greatest influence on crypto market performance remains tight, underscoring that interest rates are only one component of overall liquidity conditions. By contrast, gold historically benefits from a weakening US dollar.”
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