According to on-chain analytics platform Santiment, “smart traders” picked up more Bitcoin and altcoins last week as retail investors overreacted to President Donald Trump’s 100% tariffs on China.
“Retailer sentiment often causes Bitcoin and altcoin prices to move in opposite directions,” Santiment analyst Brian Q said in a blog post on Monday.
Cryptocurrency markets tumbled on Friday after US President Donald Trump announced tougher tariffs on China. Brian Q said the event was one of four dates this year that peaked crowd fear.
Other moments include April, when the first round of global tariffs were announced, and June, amid tensions in the Middle East between Iran, Israel and the United States. FUD continued to dominate in August as concerns arose that the US Federal Reserve would not cut interest rates.
“While crowds panicked on any given day, smart traders raised even more money,” he said.
FUD will drive out retail, but retail will always come back.
However, Santiment noted that in many of these cases, retail investors would quickly turn back once they realized the news was exaggerated, and the bulls would benefit.
During the recent bout of FUD, Brian Q said there was an “increase in the proportion of crypto discussions centered around President Trump’s trade stance,” and the retail industry had its “highest negative level of the year.”
Last Friday’s plunge bled across the market, but investors returned after President Trump withdrew his plans for tariffs and Treasury Secretary Scott Bessent said there was a misunderstanding and the tariffs “don’t need to be imposed.”
“This will be an all-too-common pattern in 2025. The retail industry succumbs to fear, then jumps back in when the fear-inducing stories are confirmed to have been overblown or for nothing.”
“Cryptocurrencies are sentiment-driven, so traders jointly decide what news should impact confidence in the market. And there is ample evidence that President Trump’s tariffs will have an immediate impact on reversal as new developments unfold,” said Brian Q.
“Emotional trading tied to political news continues to dominate short-term market behavior, perhaps on a scale never seen before in the 17-year history of cryptocurrencies.”
A survey conducted by the exchange Kraken in December 2024 among 1,248 virtual currency users shows the same thing.
It found that 81% of respondents were motivated by fear, uncertainty and doubt (FUD) when investing, and 63% also admitted that emotional decisions were having a negative impact on their portfolio.
Fear and Greed Index are sitting in fear
Bitcoin (BTC) may be showing signs of recovery, but the Crypto Fear & Greed Index, which measures overall market sentiment on a scale of 0 to 100, returned a “fear” rating for the second day in a row with a score of 38.
Related: XRP Sees the Best ‘Retail FUD’ Since Trump Tariffs: Will Big Drops Be Next?
Amid market panic and selling, the score fell to 24 on Sunday, its lowest level since April. The index’s average rating last week was 70, well within “greed” territory.
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