- A massive $5.5 trillion sell-off rattled both stocks and cryptocurrencies into a state of freefall.
- Crypto Fear & Greed Index, which sat at a lofty 94 in November, collapsed to just 10 by February 27.
A massive $5.5 trillion sell-off rattled stocks and cryptocurrencies, which are in freefall. Over the past two months, the S&P 500 has experienced a $4.5 trillion decline in value, while the crypto market has plunged about 19%. Fear and uncertainty, rather than actual financial data, seem to be pushing investors to pull out.
At the beginning of the year, confidence was high. On January 10, the total value of the crypto market was $3.23 trillion, and the S&P 500 stood at 5,827.03. Since then, crypto has plunged 18.90%, while the S&P 500 has fallen 3.66%. The steepest decline started after February 20, when the downward slide sped up.
Hedge Funds Pull Back in 2 Years, While Crypto Sentiment Crashes to 10
The Kobeissi Letter, a financial analysis platform, highlights a key shift in investor sentiment. The Crypto Fear & Greed Index, which sat at a lofty 94 in November, collapsed to just 10 by February 27.
The REAL reason markets are crashing:
Over the last 2 months, the S&P 500 and crypto have erased a combined -$5.5 TRILLION of market cap.
We have just witnessed one of the most SUDDEN shifts in sentiment since 2020.
What's happening? Let us explain.
(a thread) pic.twitter.com/uPh9qGWfa5
— The Kobeissi Letter (@KobeissiLetter) March 10, 2025
Currently, it hovers at 15, far below its year-ago reading of 82, according to CoinStates. That drastic swing from euphoria to fear has played a critical role in the market downturn.
Source: Coinstats
Peter Orszag, CEO of Lazard, shed light on the broader uncertainty gripping markets, stating:
The amount of uncertainty that has been created by the tariff wars with regard to Canada, Mexico and Europe, is causing boards and C-suites to reconsider the pathway forward.
While some point to tariffs imposed by President Donald Trump as a catalyst, others argue that fear itself has become the dominant driver behind the sell-off.
Hedge funds have also been quick to react. A Goldman Sachs report reveals that institutional investors pulled back from stocks at the fastest pace in over two years. Exposure to tech stocks had already hit a 22-month low before the sell-off, indicating a growing aversion to risk.
Tech Stocks Lead the Market Collapse
Major tech stocks, once dominant forces in the market, have faced significant losses. Since the beginning of the year, several industry leaders have experienced sharp declines. Apple (AAPL) dropped 9.06%, while Microsoft (MSFT) declined 9.63%. Nvidia (NVDA) fell 20.34%, and Broadcom (AVGO) recorded a 20.44% loss. Oracle (ORCL) also saw a 10.49% decrease.
Signs of market stress continue to mount. The VIX index, which tracks market volatility, has surged by 70% over the past month. That signals extreme uncertainty, with traders bracing for further turbulence.
The S&P 500’s fall has wiped out all gains recorded since Trump’s November 5 election victory. Now, investors are concerned about the long-term outlook. Initially, optimism around Trump’s economic policies, including tax cuts and deregulation, fueled bullish sentiment.
However, growing concerns over tariffs and potential federal workforce reductions have weighed heavily on investor confidence.
