TLDR
- Onchain data from Santiment shows experienced traders bought Bitcoin during four major panic events in 2025
- Trump tariff announcements triggered retail selloffs but smart money accumulated during the dips
- Crypto Fear & Greed Index hit 24 on Sunday, lowest since April, signaling extreme fear in markets
- Historical data shows 30-60% market corrections preceded major altcoin rallies in past cycles
- 81% of crypto investors admit fear drives their trading decisions according to Kraken survey
Cryptocurrency markets experienced another wave of panic selling last week when President Trump announced tariffs against China. While retail investors rushed to exit positions, onchain analytics platform Santiment reported that experienced traders used the opportunity to accumulate Bitcoin and altcoins.
Analyst Brian Q from Santiment identified a clear pattern emerging throughout 2025. Retail traders consistently sell during political news events while smart money buys the dip. This pattern has repeated four times this year alone.
The first panic event occurred in April when Trump announced the initial round of global tariffs. Markets experienced another selloff in June during escalating tensions between Iran, Israel and the United States. August brought more fear when traders worried the Federal Reserve might not cut interest rates.
Emotional Trading Dominates Crypto Markets
Brian Q noted that retail investors’ emotions often predict the opposite direction of price movement. When fear peaks among retail traders, prices typically reverse and move higher. Smart traders recognize this pattern and position themselves accordingly.
The latest selloff saw XRP drop 18%, Solana fall 22%, Dogecoin decline 28%, Cardano lose 25%, and Chainlink decrease 26% in a single day. However, markets recovered quickly after Treasury Secretary Scott Bessent clarified the tariff situation.
Bessent stated there had been a misunderstanding about the tariffs and they “don’t have to happen.” Trump subsequently modified his tariff plan. Retail investors then returned to markets after realizing the news was overblown.
A December 2024 Kraken survey of 1,248 crypto users confirms the emotional trading problem. The survey found 81% of respondents make investment decisions based on fear, uncertainty and doubt. Another 63% admitted emotional decisions damaged their portfolio performance.
Fear Index Shows Extreme Readings
The Crypto Fear & Greed Index measures market sentiment on a scale from 0 to 100. The index dropped to 24 on Sunday, marking its lowest reading since April. Tuesday’s reading of 38 remained in fear territory for the second consecutive day.
Last week the index averaged 70, firmly in greed territory. The rapid shift from greed to fear demonstrates how quickly sentiment changes during political news cycles.
Brian Q stated that emotional trading tied to political news dominates short-term market behavior more than any previous period in crypto’s 17-year history. Trump’s tariffs create instant market reversals whenever new developments emerge.
Historical Patterns Suggest Altcoin Rally Ahead
Crypto analyst Bull Theory pointed out that every major crypto expansion included sharp 30% to 60% corrections. The March 2020 pandemic crash wiped out almost 70% of market value. May 2021 saw losses exceed 50%.
The previous bull market cycle contained at least five separate 30% to 40% altcoin drops. Each correction was followed by strong rallies according to historical data.
Analyst Ash Crypto referenced the March 2020 flash crash that preceded an altseason where some altcoins gained 25x to 100x. Analyst Merlijn The Trader identified a monthly bullish MACD cross on the BTC/altcoins chart matching patterns from 2017 and 2021.
Bitcoin traded below $113,500 on Tuesday morning with a 1.4% daily decline. Bitcoin dominance fell below 59%, forming its first red weekly candle in five weeks. Total crypto market capitalization dropped below $4 trillion.
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