The crypto Fear & Greed index plunged to 11, marking one of the most pessimistic readings of the past year as the total market capitalization lost about 530 billion $ in seven days.
What happened: a collapse of sentiment
The CMC Fear & Greed index, which condenses the overall sentiment of the crypto market on a scale from 0 to 100, registered a value of 11 on Thursday, with the label 'Extreme Fear'. The day before, it was at 14.
A week ago, the index was at 38, classified as 'Fear'. A month ago, it was at 42, placing it in neutral territory.
This rapid deterioration coincided with substantial losses across the entire market. The total market capitalization of crypto fell by approximately 18.08% over seven days, from $2.97 trillion to $2.44 trillion.
Bitcoin (BTC) dominance has remained relatively stable at 58.69%, indicating that both Bitcoin and altcoins have absorbed selling pressure rather than a rotation into a single segment.
Over the past twelve months, the index peaked at 76 and hit a low of 10. The current reading is just one point above this floor.
Also read: Analysts Eye $730 As BNB's Last Stand Before Mid-$600s
Why it matters: a capitulation signal
Traders often interpret extreme fear readings as contrarian indicators. Very low sentiment may suggest that the crowd is capitulating and the long-term return potential could improve.
However, these conditions also generally coincide with strained liquidity, high liquidations, and wider spreads. These factors can amplify the decline if a new shock occurs.
The key indicators to watch now include whether the total market capitalization stabilizes, a potential rise in Bitcoin dominance as a defensive refuge, and the easing of daily volatility. An index at 11 may mark either the end of capitulation or the middle of a deleveraging phase, making stabilization signals more useful than attempts to identify an exact bottom.
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