Crypto Fear-and-Greed Index Drops to Record Low as Post-10/10 Liquidations Continue to Weigh

The crypto market sentiment gauge fell to an all-time low of 5, reflecting widespread retail risk aversion in the aftermath of a rapid deleveraging episode on Oct. 10, 2025. That event forced automated unwind programs and margin calls that, by several on-chain and venue-level tallies, eliminated roughly $19 billion of leveraged exposure and impacted about 1.6 million accounts, while spot Bitcoin suffered an immediate drawdown of roughly 14%.

The cascade was amplified by a set of structural frictions underscored in contemporaneous post-mortems: thin weekend order books, concentrated open interest in bitcoin derivatives, compressed on-exchange stablecoin pools and cross-border funding reversals (including FX‑funded carry unwind dynamics). These conditions allowed comparatively small net flows to produce outsized price moves, contract liquidations and cascading rebalances across venues.

Mechanical stresses were visible across the ecosystem: U.S.-listed spot ETFs recorded notable same‑day outflows on peak days (roughly $818 million from BTC products and about $156 million from ETH products in the largest windows), and combined major dollar‑pegged stablecoins contracted to around $258 billion, reducing an on-exchange dollar buffer that often absorbs rapid dip-buying.

Exchanges and large intermediaries took visible, tactical steps to blunt tail risk: several firms converted portions of user-protection reserves into bitcoin and pledged buy-programs to restore buffers, while at least one major venue disclosed internal transfer slowdowns and index deviations during peak stress and has since compensated affected users (public remediation tallies exceeded $328 million in reported cases) and announced index and operational fixes.

On-chain flows show retail addresses exiting positions while very large holders and some institutional players accumulated, producing an inventory transfer that has supported bids intermittently but not yet restored confidence. Meanwhile, major institutions continue advancing on‑chain settlement rails, tokenization of real‑world assets and DeFi integrations—efforts that increase long‑term market capacity but offer limited immediate relief to frantic margining dynamics.

The episode also highlighted cross-asset spillovers: tokenized commodity contracts (notably tokenized precious‑metals) experienced concentrated leveraged squeezes that, in some intraday windows, generated liquidation volumes comparable to major crypto venues, illustrating how tokenization links crypto rails with traditional funding and margin cycles.

For market operators and risk teams, the lessons are operational and structural: strengthen intraday margin frameworks, broaden cross‑venue liquidity provisioning, harden index governance and expand circuit breakers and stress testing for correlated deleveraging scenarios. Practically, traders should prefer venues with demonstrated stress resilience, monitor funding‑rate behavior and cross‑margin exposures closely, and treat funding dislocations as an early warning signal rather than noise.

In sum, the record-low index reading is a symptom of tight liquidity and leverage concentrations that can quickly turn headline shocks into market-wide cascades. Tactical liquidity interventions by large players have lowered immediate tail risk, but durable stabilization depends on deeper, cross‑venue liquidity, clearer margin practices and robust settlement plumbing as tokenization and institutional participation scale.