Bitcoin’s Trapdoor Risk: Wall Street Warns of a Drop to $38,000 as ‘Extreme Fear’ Grips Crypto

Bitcoin’s uneasy slide may be far from over. According to U.S. investment bank Stifel Financial, the world’s largest cryptocurrency could be staring down a much deeper selloff—one that drags prices toward $38,000 as sentiment collapses and liquidity dries up.

The warning lands as crypto markets buckle under sustained selling pressure, pushing fear gauges into alarming territory and reigniting a question traders dread: Has Bitcoin really found a bottom, or is this just the calm before another leg down?

In a note shared by market commentator Walter Bloomberg, Stifel drew parallels between Bitcoin’s current weakness and previous downturns that unfolded during periods of tight U.S. monetary policy and fading speculative enthusiasm.

The bank pointed to a cluster of headwinds converging at once:

Together, Stifel warned, these forces could drag Bitcoin toward the $38,000 region—levels not seen since earlier stages of the last cycle.

It’s a sobering outlook at a time when many investors were hoping the worst was already priced in.

The mood across crypto has deteriorated rapidly.

The Crypto Fear & Greed Index has plunged from “Fear” into “Extreme Fear,” tumbling to a reading of 14, its lowest level in roughly six weeks. On a scale of 1 to 100, that number signals widespread anxiety, risk aversion, and a market dominated by defensive positioning.

Such conditions often coincide with heavy volatility—and not always the kind bulls hope for.

Technical stress is visible across the board. Relative Strength Index (RSI) readings for many major tokens have sunk deep into oversold territory, reflecting intense selling pressure and a lack of conviction from buyers stepping in.

Bitcoin was hovering near $71,000 at the time of reporting, while the total crypto market capitalization slid to its weakest level since April 2025.

Despite a brief bounce attempt, analysts say the broader structure remains fragile.

“The breakdown is clearly technical,” said Victor Olanrewaju, market analyst at CCN.

According to Olanrewaju, Bitcoin lost the 0.382 Fibonacci retracement near $93,300 and then failed to reclaim the 0.236 level around $85,500—a zone that has now flipped into firm resistance.

Momentum indicators offer little comfort. The 20-day exponential moving average, sitting near $84,400, continues to slope downward. Meanwhile, the Awesome Oscillator remains deeply negative, with expanding red bars—often a sign of accelerating downside momentum, not seller exhaustion.

Until Bitcoin can decisively reclaim resistance near $85,500, Olanrewaju warns, the asset is likely to remain stuck in a corrective phase.

With Wall Street warnings intensifying, sentiment sinking into extreme fear, and charts flashing red, Bitcoin finds itself at a precarious crossroads.

For contrarian investors, moments like these have historically marked long-term opportunities. For others, Stifel’s $38,000 target is a reminder that crypto cycles can still be brutally unforgiving.

As liquidity tightens and confidence erodes, the coming weeks may determine whether Bitcoin stabilizes—or whether the floor many are counting on gives way beneath their feet.