SKN | Crypto Markets Stagnate in ‘Extreme Fear’ as Bitcoin Tests Critical Levels

Sentiment Remains Fragile While Altcoins Lag Under Liquidity Stress

Crypto markets held steady on Monday after a turbulent week that drove major tokens to multi-month lows, but sentiment remains severely depressed as traders brace for further volatility. The Fear and Greed Index sits at 12/100, deep in the “extreme fear” zone. Historically, levels below 20 have preceded market rebounds, but the current setup reflects unresolved structural pressures across both bitcoin and altcoins.

Bitcoin traded near $86,200, while ether hovered around $2,806. XRP and solana also stabilized but remain well below recent trading ranges. The broader market continues to struggle with fading liquidity, cautious investor positioning and heightened derivatives-driven volatility.

Bitcoin at a Crossroads After Series of Lower Highs

Bitcoin now faces what analysts consider a crucial technical juncture. Any rejection before reclaiming the $95,000 area would mark a fourth consecutive lower high, reinforcing the downtrend that has defined price action since early October.

A drop toward the $81,000 zone—the prior weekly low—would risk triggering fresh forced selling across leveraged positions, potentially accelerating market-wide losses.

Implied volatility is rising again as traders reposition for downside protection. Volmex’s BVIV index rebounded toward 60% after dipping to 57.55%, maintaining the inverse relationship between price weakness and implied volatility.

Demand for BTC put options continues to build, with the $80,000 strike now holding more than $2 billion in open interest. Meanwhile, call-writing activity has thinned, removing a key suppressor of volatility earlier this year. Both BTC and ETH skew remain decisively defensive.

Block flow data shows traders favoring structures suited for range-bound or downward-leaning markets, including BTC call-condors and put-calendar spreads. In futures, open interest rose for XRP, DOGE and HYPE, while BCH saw a notable decline.

Altcoins Struggle as Liquidity Dries Up

Altcoins continue to trail bitcoin across most trading pairs, with liquidity emerging as a defining challenge. Market depth for several major names remains alarmingly thin, amplifying volatility and liquidation risk.

Tokens such as TON and DOT show 2% market depth between just $500,000 and $800,000—levels low enough that modest trade sizes can move markets by several percentage points. Liquidity conditions deteriorate further among mid-caps and smaller tokens, driving exaggerated sell-offs during volatility spikes.

The CoinDesk Memecoin Index has fallen 30% in the past month, underperforming the broader CoinDesk 5 Index, which is down 23%. CoinMarketCap’s Altcoin Season indicator dropped to 23/100, signaling a strong preference for bitcoin and stablecoins over speculative altcoins.

Despite fearful sentiment, most tokens sit in a technical “neutral” zone—neither oversold nor overbought—suggesting the market’s next move will likely hinge on bitcoin’s ability to reclaim higher levels.

What to Watch Next

The near-term direction for crypto hinges squarely on bitcoin’s next move. A recovery into the $90,000 range would likely stabilize sentiment and attract renewed spot demand across majors. However, a return to last week’s $81,000 low risks triggering another wave of panic-driven liquidations—one that would disproportionately impact altcoins due to their deteriorating liquidity conditions.

Until macro conditions improve and institutional flows return, traders remain defensive as extreme fear continues to dictate positioning across the digital asset market.