According to onchain analytics platform Santiment, “smart traders” bought up more Bitcoin and altcoins last week as retail investors reacted strongly to US President Trump’s 100% tariff against China.
“Retail’s emotions often lead to Bitcoin’s and altcoins’ prices moving in the opposite direction,” stated Santiment analyst Brian Q in a blog post on Monday.
The crypto markets plunged on Friday following Trump’s announcement of hefty tariffs against China. Brian Q highlighted this event as one of four key dates this year that triggered extreme crowd fear.
Other significant moments included one in April with the announcement of the first round of global tariffs, another in June amid Middle East tensions between Iran, Israel, and the US, and a surge in fear in August over concerns that the US Federal Reserve might refrain from cutting rates.
“Smart traders seized the opportunity to buy while the crowd panicked on these occasions,” he noted.
FUD pushes retail out, but they always return
However, Santiment observed that retail investors typically return swiftly once they realize the news was exaggerated, benefiting those who bought the dip.
During the latest wave of FUD, there was a notable increase in discussions about Trump’s trade stance, and retail showed its “highest negativity level all year,” according to Brian Q.
The significant market downturn last Friday resulted in widespread losses, but investors returned after Trump reversed his tariff stance, and US Treasury Secretary Scott Bessent indicated that the tariffs “don’t have to happen.”
“This pattern has become all too common in 2025. Retail gets shaken out by fear, then jumps back in after realizing the fear-inducing topic was overstated or irrelevant.”
“Since crypto is influenced by sentiment, traders collectively determine which news affects their confidence in the markets. Evidence indicates that Trump’s tariffs lead to immediate reversals whenever new developments arise,” explained Brian Q.
“Emotional trading driven by political news continues to dominate short-term market behavior, perhaps more than ever in crypto’s 17+ year existence.”
In December 2024, a survey of 1,248 crypto users by exchange Kraken revealed a similar trend.
It found that 81% of participants were driven by fear, uncertainty, and doubt (FUD) when investing, with 63% admitting that emotional decisions negatively impacted their portfolios.
Fear & Greed Index indicates fear
While Bitcoin (BTC) has shown signs of recovery, the Crypto Fear & Greed Index, measuring overall market sentiment on a scale of 0 to 100, has returned a “fear” rating of 38 for two consecutive days.
Related: XRP experiences highest ‘retail FUD’ since Trump tariffs: Is a major sell-off on the horizon?
On Sunday, the score plummeted to 24, its lowest reading since April, amidst market panic and sell-offs. Last week, the index averaged a score of 70, firmly within “Greed” territory.
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