Blood in the Streets

Key Takeaways

• A 35% BTC pullback has pushed sentiment to historic lows
• Unrealized profits, measured by MVRV, have reset to 1.0
• JPMC account closures of a crypto business has revived fears of OC 2.0

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Digital Asset Commentary

After a 35% pullback from recent all-time highs, sentiment continues to deteriorate, as reflected in the Fear and Greed Index from alternative.me. The index, in operation since February 2018, draws on volatility, momentum, volume, social media sentiment, BTC dominance, and Google Trends. Despite Bitcoin holding in the mid-$80k range, sentiment is now comparable to, or worse than, levels seen during several major stress events: the 2018 bear-market lows, COVID, the 2022 mass deleveraging and FTX collapse, and the volatility around the Liberation Day tariffs. While sentiment alone doesn’t dictate a reversal, prolonged periods of extreme fear have historically preceded renewed buying.

Drawdowns of this size are not unusual for Bitcoin and were seen in both the 2015–2018 and 2020–2022 rallies. A deeper decline from here, however, would likely mark the end of the current multi-year uptrend and could require a multi-month recovery for market participation to stabilize. On-chain BTC metrics and ETF cost-basis data show profits sitting near break-even, reflected in a market capitalization versus realized value (MVRV) ratio of 1.0, measured using the last transacted price of each coin or aggregate trading at a given price level. Historically, on-chain readings above 6.0 have aligned with market tops, while readings below 0.0 have marked cycle bottoms.

Adding to the recent negative sentiment, JPMorgan Chase closed the bank accounts of Strike CEO Jack Mallers in September, echoing past instances of crypto executives losing access to banking services. On Monday, Senator Cynthia Lummis, one of crypto’s strongest supporters in Congress, posted on X that “Operation Chokepoint 2.0 regrettably lives on,” referring to what she argues is an ongoing federal effort to restrict crypto companies’ access to the US banking system.