Bitcoin’s ‘Extreme Fear’ Sentiment Could Mark a Turning Point
Bitcoin experienced a brief rally earlier this week following President Trump’s announcement of a U.S. crypto strategic reserve. However, the initial enthusiasm faded as traders took profits, citing uncertainty over specific policy measures and a broader pullback in equity markets.
A sustained period of ‘extreme fear’ on a key sentiment index suggests that Bitcoin could be forming a strong support level, potentially priming it for a major rebound. Historically, similar market conditions have preceded significant price rallies, including a past instance where BTC surged 200%.
The Fear and Greed Index, which measures investor sentiment on a scale of 0 (extreme fear) to 100 (extreme greed), has lingered in ‘extreme fear’ territory for several days, coinciding with Bitcoin’s price fluctuations between $83,000 and $95,000. This index often serves as a contrarian indicator, identifying potential buying opportunities when fear is excessive and cautioning against overvaluation when greed is dominant. It considers multiple factors, including price volatility, momentum, social sentiment, Google search trends, and Bitcoin’s market share.
“Bitcoin’s dip into ‘Extreme Fear’ is its first since September 2024, when BTC was priced at $53,000,” said Vincent Liu, CIO of Kronos Research, in a statement to CoinDesk. “Back then, Bitcoin’s value doubled within three months, which could indicate a similar accumulation opportunity for long-term investors.”
Liu noted that despite ongoing market headwinds, including trade tariffs and macroeconomic uncertainty, Bitcoin could present a compelling investment opportunity if economic sentiment improves and geopolitical tensions subside.
Bitcoin and other major cryptocurrencies, including Cardano’s ADA, Solana’s SOL, and XRP, initially surged following Trump’s announcement. However, this momentum was short-lived as traders secured profits amid a lack of clear policy direction and a downturn in equity markets.
Adding to market jitters, Trump’s newly imposed tariffs on Canada, Mexico, and China weighed on global investor sentiment. Traders are now looking ahead to the upcoming White House Crypto Summit for insights into the administration’s long-term stance on digital assets and regulatory policy.
