Bitcoin Crashes Below $70K as 'Extreme Fear' Grips Crypto Markets

11. That's where the crypto Fear and Greed Index sits today—a level of "extreme fear" reached only a handful of times in recent years. Bitcoin crashed below the psychological $70,000 threshold, dragging the entire digital asset ecosystem into what can only be described as a panic.

A Tale of Two Markets

Bitcoin hit a low of $69,917 according to CoinDesk data, breaking through a key support level that many traders had been watching. But here's what makes this selloff particularly intriguing: it's largely contained to digital assets and precious metals, while traditional equity markets are showing remarkable resilience.

Gold fell more than 1%, slipping below $4,900 per ounce, while silver took an even harder hit, dropping over 11% to under $79 per ounce. Meanwhile, U.S. equities are actually climbing in pre-market trading. The Invesco QQQ ETF, which tracks the Nasdaq 100, is up 0.22%—a stark contrast to the carnage in crypto land.

Bitcoin Proxies Bear the Brunt

MicroStrategy, the largest publicly traded holder of bitcoin, is down over 5% and sitting nearly 80% below its November 2024 all-time high. The company's upcoming fourth-quarter earnings report on Thursday adds another layer of uncertainty for investors already on edge.

Other bitcoin treasury companies aren't faring any better. Strive and Nakamoto are both down roughly 6%, while crypto exchange Coinbase dropped another 2%. The mining sector is also feeling the pain: IREN fell 3% and Cipher Mining dropped 2%, adding to yesterday's brutal 15% declines.

The Correlation Conundrum

What's particularly fascinating is the breakdown of historical correlations. The iShares Expanded Tech Software ETF, which bitcoin has traditionally tracked closely, is actually higher today. Even Google, despite beating fourth-quarter profit forecasts, fell 3% after announcing increased capital expenditures of $185 billion, up from $175 billion.

This divergence raises fundamental questions about bitcoin's role in modern portfolios. Is it behaving like a risk asset, a safe haven, or something entirely different?

Beyond the Numbers

The current selloff isn't just about price action—it's about investor psychology reaching a breaking point. When the Fear and Greed Index hits 11, it typically signals capitulation among retail investors and potential opportunity for contrarians. But with precious metals also under pressure, this feels less like crypto-specific weakness and more like a broader flight from alternative assets.