Crypto market sentiment sank to its bleakest level since the FTX collapse after bitcoin’s sharp drop this week dragged prices across the board and forced a wave of deleveraging.

The widely followed Crypto Fear and Greed Index fell to 9 on Friday, a reading categorized as “extreme fear” and one that has historically only appeared during major breakdowns in market confidence.

The index stood at 12 a day earlier, 16 last week and 42 last month, suggestive of how quickly traders have shifted from cautious to outright defensive.

The fear gauge is built primarily around bitcoin, combining several indicators that attempt to quantify investor mood rather than price direction. It includes volatility and drawdowns, market momentum and trading volume, social media engagement, bitcoin dominance and Google Trends data tied to bitcoin-related searches.

A sharp rise in volatility, a spike in defensive positioning and an increase in fear-driven search interest typically push the index lower.

The collapse in sentiment comes as bitcoin briefly traded near $60,000 in late U.S. hours Thursday before bouncing back toward $65,000, a whipsaw move that reflected both forced liquidations and opportunistic dip-buying.

While the rebound suggests some buyers are willing to step in near major psychological levels, the sentiment reading implies the broader market remains in “sell first, ask questions later” mode.

In past cycles, extreme fear has often coincided with local bottoms, largely because panic conditions tend to flush out leveraged traders and short-term holders. But that is not a rule, and the index is better read as a snapshot of stress rather than a timing tool.

The index does not predict where bitcoin goes next, however. But it does show that the market has returned to the kind of fear typically reserved for systemic events.