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A Multi-Day ‘Extreme Fear’ Reading in a Widely-Followed Sentiment Index
A multi-day ‘extreme fear’ reading in a widely-followed sentiment index could be indicative of bitcoin prices setting a bottom before moving higher in the coming weeks — with a previously similar setup preceding a 200% rise in BTC.
The Fear and Greed Index
The Fear and Greed Index, which measures investor emotions in markets like bitcoin, ranging from 0 (lowest sentiment) to 100 (highest sentiment), has shown an extended ‘extreme fear’ reading in the past several days as prices whipsawed between the $83,000 and $95,000 levels.
Tweet from Kronos Research
Bitcoin Fear & Greed Index: EXTREME FEAR!
For the first time since September 2024—when BTC was at $53K—we’re seeing sustained Extreme Fear in the market.
Last time this happened? $BTC 2x’d in the next 3 months.
Will history repeat itself? pic.twitter.com/Qtjrfn2j1N
— Kronos Research 🟠 (@KronosResearch) March 5, 2025
What is the Fear and Greed Index?
The index helps identify whether investors are too scared (potential buying opportunity) or too greedy (possible market correction), tending to act as a contrarian indicator in the short term. It is based on price volatility and momentum, social media sentiment, Google trends data and bitcoin’s overall market share.
Comment from Vincent Liu, CIO at Kronos Research
“Bitcoin’s plunge into ‘Extreme Fear’ on the Fear & Greed Index, its first since September 2024, when BTC traded at $53K, echoes a pivotal historical low,” Vincent Liu, CIO at trading firm Kronos Research, told CoinDesk in a Telegram message. “Back then, Bitcoin’s value doubled over the next three months, hinting at a potential buying opportunity for savvy investors.”
Amid Market Volatility
“Amid today’s market volatility, fueled by trade tariffs and broader macroeconomic uncertainties, this moment could emerge as a golden entry point, provided global trade tensions ease and overall economic sentiment strengthens,” Liu added.
Bitcoin and Other Cryptocurrencies
Bitcoin and several major tokens, including Cardano’s ADA, Solana’s SOL, and xrp (XRP), surged Sunday following President Trump’s announcement of a U.S. crypto strategic reserve.
Short-Lived Gains
But the initial excitement was short-lived due to profit-taking amid the lack of concrete plans and a risk-off mood in broader equity markets.
Trump’s Tariff Announcements
Trump’s tariff announcements on Canada, Mexico, and China further impacted markets, and traders are now awaiting more clarity from the upcoming White House Crypto Summit for cues on future positioning.
Conclusion
In conclusion, the current ‘extreme fear’ reading in the Fear and Greed Index may indicate a buying opportunity for bitcoin and other cryptocurrencies. With a similar setup preceding a 200% rise in BTC, investors may want to consider taking a long-term view and positioning themselves for potential gains.
FAQs
Q: What is the Fear and Greed Index?
A: The Fear and Greed Index measures investor emotions in markets like bitcoin, ranging from 0 (lowest sentiment) to 100 (highest sentiment).
Q: What is the current reading of the Fear and Greed Index?
A: The current reading is ‘extreme fear,’ indicating a high level of fear among investors.
Q: What is the potential impact of this reading on the price of bitcoin?
A: The reading may indicate a potential buying opportunity for bitcoin, with a similar setup preceding a 200% rise in BTC.
Q: What is the current market sentiment?
A: The current market sentiment is one of fear, with many investors exiting the market and seeking safe-haven assets.
Q: What is the impact of Trump’s tariff announcements on the market?
A: Trump’s tariff announcements have further impacted the market, with investors awaiting more clarity from the upcoming White House Crypto Summit for cues on future positioning.
