As seen on CoinMarketCap, Solana, Avalanche and Algorand were hit, alongside other altcoins, in the Jan. 5 market sell-off that saw Bitcoin and the equities market tumbling. The Crypto Fear and Greed index has shifted into the ''extreme fear'' zone amid traders' panic selling as Bitcoin traded to fresh lows of $42,500.
Nearly all altcoins, especially those in the top 100 and excluding stablecoins, suffered significant losses. Solana (SOL, -11.33%), Avalanche (AVAX, -10%), Algorand (ALGO, -13.24%), Terra (LUNA, -10%) and others in the altcoin category posted double-digit losses.
The slide driven by fear-induced market selling comes after notes from the U.S. Federal Reserve's December meeting released on Wednesday indicated that the central bank could hike interest rates as soon as this March.
#Bitcoin briefly fell below $43k for the first time since September before showing a current, mildly encouraging bounce. Both the #SP500, along with #gold, have also tumbled and appear to be quite correlative currently. https://t.co/aiC2rEIZgZ pic.twitter.com/B9hyvwTSDC— Santiment (@santimentfeed) January 5, 2022
On-chain analytics firm Santiment reports that the S&P 500 and also the gold market fell sharply lower as the crypto market tumbled.
As U.Today reported, another headwind in the cryptocurrency mining sector was due to a wave of protests erupting in Kazakhstan, the second-largest Bitcoin mining country.
Kazakhstan's government imposed a nationwide internet shutdown to quell unrest, forcing local miners to switch off their equipment.
Market sentiment shifts into ''extreme fear''
The Crypto Fear and Greed Index, which indicates the market's sentiment, has shifted into "extreme fear" territory, suggesting traders are more fearful. The index presently sits at 15, levels not seen since Dec. 11. Though the index subsequently rebounded from this bottom in December, the recovery was not substantial enough.
In the near-to-medium term, analysts believe a move to shrink the balance sheet might put downward pressure on Bitcoin. Bitcoin has shed nearly $5,000, or 10%, since the start of 2022. An oversold RSI may prompt a relief rally or at least a dead cat bounce in the coming sessions.
Analysts pinpoint $40,000-$42,000 as the crucial area to hold for Bitcoin, with action above it matching "accumulation." The trend of altcoins following Bitcoin's lead remains unsquashed and may persist in the near term.