According to onchain analytics platform Santiment, “smart traders” accumulated more Bitcoin and altcoins last week as retail investors overreacted to President Trump’s announcement of a 100% tariff against China.
Santiment analyst Brian Q stated in a blog post on Monday, “Retail’s emotions often dictate that Bitcoin’s and altcoins’ prices are about to do the opposite.”
The crypto markets faced a downturn on Friday following Trump’s tariff announcement. Brian Q noted that this event was one of four key dates this year that sparked peak crowd fear.
Other instances included one in April when the first global tariffs were announced, as well as in June during escalating tensions in the Middle East involving Iran, Israel, and the US. Additionally, August saw FUD dominate discussions due to worries that the US Federal Reserve might not lower rates.
“Smart traders seized the opportunity to buy more while the crowd panicked on these occasions,” he remarked.
FUD drives retail away, but they almost always return
However, Santiment mentioned that in many instances, retail investors quickly come back once they realize the news was exaggerated, benefiting those who bought the dip.
During the recent wave of FUD, discussions around Trump’s trade stance increased, and retail displayed its “highest negativity level all year,” according to Brian Q.
The sharp sell-off last Friday caused significant losses across the market, but investors returned after Trump mitigated the tariff plan and US Treasury Secretary Scott Bessent indicated that the tariffs “don’t have to happen.”
“This has become a repetitive pattern in 2025. Retail investors get shaken by fear, then re-enter after realizing the scare was exaggerated or unfounded.”
“Since crypto is sentiment-driven, traders collectively determine what news influences their faith in the market. There is ample evidence showing that Trump’s tariffs lead to immediate reversals whenever a new development occurs,” Brian Q remarked.
“Emotional trading linked to political news continues to significantly influence short-term market behavior, perhaps more than ever in crypto’s 17+ year history.”
A survey of 1,248 crypto users conducted by Kraken in December 2024 supports this narrative.
It showed that 81% of respondents were driven by fear, uncertainty, and doubt (FUD) while investing, with 63% admitting that emotional choices had negatively impacted their portfolios.
The Fear and Greed Index reports a state of fear
Although Bitcoin (BTC) has exhibited signs of recovery, the Crypto Fear & Greed Index—measuring market sentiment on a scale from 0 to 100—has returned to another “fear” rating, scoring 38 for the second consecutive day.
Related: XRP experiences highest ‘retail FUD’ since Trump’s tariffs: Is a major sell-off on the horizon?
On Sunday, the score dipped to 24, its lowest since April, during the market panic and sell-off. Last week, the index averaged a rating of 70, firmly in “Greed” territory.
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