Sentiment is now scraping historic lows in the crypto and stock markets, with trillions now wiped across the board.
Bitcoin has now formed a death cross on the daily chart, with the 50-day simple moving average now crossing below the 200-day SMA.
So far, the markets continue to expect the Consumer Price Index (CPI) and Producer Price Index (PPI) on 10 and 11 April, respectively.
Anthony Pompliano says that “Inflation has fallen to the lowest levels since 2020. If this continues, it will be a BIG problem.”
For now, traders will have to keep their emotions in check, manage risk and prepare for more volatility in the market.
Bitcoin has started the week on a harsh note, with a massive crash between Sunday and Monday.
Interestingly, it isn’t just the crypto market in chaos at this point. The global financial market is feeling the pressure as the US’ trade tariffs threaten to drag risk assets (including Bitcoin) further downwards.
So far, things are starting to resemble a repeat of past crashes like Black Monday in 1987 or the COVID-19 meltdown.
Sentiment is now scraping historic lows and a fresh death-cross is flashing on the charts.
What’s really going on, and how bad could it get?
Investor sentiment in the traditional finance space has hit rock bottom at this point.
According to the Trad-Fi fear and greed index (which is similar to the crypto fear and greed index), sentiment has dropped to an all-time low of around 4 out of 100.
This means that the market is now in more turmoil than levels last seen since the COVID-19 crash or the FTX collapse.
The crypto market is in trouble. | Source: Twitter
Crypto itself, which often dances to its own tune is in the middle of all this fear, with the crypto fear and greed index now slipping towards 23 in a firm “extreme fear” scenario.
Analysts are now warning that this widespread panic could force a large-scale exit across risk assets.
Stocks and crypto could suffer immensely in the days to come.
According to recent insights from The Kobeissi Letter, circuit breakers (emergency measures to prevent massive losses) were triggered in Asia for the first time since 2020.
This move shows the volatility of the market , with investors scrambling to take capital off the market and move into safer assets.
The technical picture for Bitcoin also doesn’t look very good at present.
The cryptocurrency has now formed a death-cross on the daily chart, with the 50-day simple moving average now crossing below the 200-day SMA.
From a traditional perspective, this is often seen as a bearish signal and has historically come before further crashes.
The Bitcoin death cross | Source: TradingView
After losing critical support around $75,000, Bitcoin is now eyeing the widely-watched $69,000 level, which served as the high from the 2021 bull market.
Analysts have so far warned that if the buyers do not step in soon, a break of this price level could set the stage for a return to previous macro lows.
According to analyst Kevin Svenson in a recent X post, Bitcoin is now trading at a make-or-break moment.
“This is BTC’s last chance to maintain its macro uptrend structure,” he wrote.
The analyst believes that if support levels continue to crumble like this, prices as low as $70,000 could come into play.
One of the clearest signs of investor stress comes from short-term Bitcoin holders.
This cohort of investors includes buyers who came in within the last six months and effectively bought at the market top.
These investors are typically the first to sell during periods of fear, and on-chain data shows that they are already underwater.
According to CryptoQuant, the Spent Output Profit Ratio (SOPR) for short-term holders is now below 1.0.
Short-term holders selling | Source: Twitter
This means that they are now selling at a loss. Interestingly, the same pattern was observed during sharp corrections in May, July and August of last year.
The average cost basis for this group broke when Bitcoin crossed below the $80,000 zone, and if prices stay underneath this threshold, the market could be in for more losses.
While inflation data typically dominates the headlines during CPI week, this has not been the case this time around.
Instead, the spotlight has been on the US government and its aggressive trade tariffs.
Over the next few weeks, these so called “sweeping tariffs” could send even harsher shockwaves across the defi and trad-fi markets.
Commerce Secretary Howard Lutnick confirmed over the weekend that these tariffs would be implemented without delay.
The markets responded almost immediately, with stock prices dipping and crypto following closely behind.
The tariffs could also muddy the waters when it comes to interpreting inflation.
According to FED Chair Jerome Powell, the inflationary pressure from these new policies will be hard to measure until their effects play out over time.
More pain could be incoming for the market | Source: Twitter
So far, the markets continue to expect the Consumer Price Index (CPI) and Producer Price Index (PPI) on 10 and 11 April, respectively.
These reports will be important to determine wiether the FED will intervene sooner than expected.
Inflation is cooling and markets are in distress. This combination has stoked the momentum with talks of an emergency Federal Reserve rate cut.
While most of the earlier predictions point towards a cut in June, traders are betting on a possible move as early as May.
According to professional Capital Management founder Anthony Pompliano, “Inflation has fallen to the lowest levels since 2020. If this continues, it will be a BIG problem.”
This means that the FED might have to step in soon, to avoid broader market damage.
The FED might have to step in soon | Source: Twitter
Prediction platforms like Polymarket have also seen more bets for early rate cuts.
The market is now leaning towards a 0.25% rate cut in the FED’s upcoming meeting according to the CME Group’s FedWatch Tool.
As it stands, such a move could provide some relief for Bitcoin, at least on the short to medium terms.
However, it may not be enough to reverse the larger downtrend, especially if panic continues to rule the day.
For now, traders will have to keep their emotions in check, manage risk and prepare for more volatility in the market.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.