The recent crash in the Bitcoin and cryptocurrency markets has caused prices to plummet across the board. As a result, cryptocurrency investor sentiment has plummeted, causing the Fear and Greed Index to drop to extreme fear levels. This suggests that investors are less willing to put money into the market, but it could also bring some good news for the market.

Fear and Greed Index Remains at Extreme Greed Level

The Bitcoin Fear and Greed Index is one of the best indicators of how investors feel about the market at any given time. This index uses a scale of 1 to 100, representing sentiments ranging from Fear, Extreme Fear, Neutral, Greed, and Extreme Greed. Each of these can show how investors are feeling and can be a clue as to where the price of Bitcoin may be headed.

Usually, when the fear and greed index is at one of the extreme points, it can mean that the price is heading in the opposite direction. So, for example, the Bitcoin fear and greed index is at the extreme of greed, which can suggest that the price is heading down and vice versa.

This trend would currently be favorable for the bitcoin price as the fear and greed index fallen in Extreme Greed territory. On Friday, the Fear and Greed Index dropped to 22, which firmly placed it in Extreme Fear territory.

Given that Bitcoin price tends to recover when the index is in the red, this could be a sign that the price is hitting a bottom. An example of this is the Bitcoin Fear & Greed Index falling to 20 in August before the cryptocurrency market saw a quick rebound. If this happens, Bitcoin price could be on the verge of a recovery.

Bitcoin Rebound Unlikely in September

While the fear and greed index is in extreme fear territory and could be pointing to a bottom, a rebound may not happen for some time. This is because September has historically been very bearish and expectations are that this month will be no different.

Veteran analyst Benjamin Cowen outlined this in a post on X (formerly Twitter), revealing that this month is already in line with previous September months. Bitcoin’s price is down 8.16% so far, and “if BTC closes the month at this price, it will be a fairly typical September,” the analyst explains.

Average return #BTC in September it is -6.3%

This month, the BTC return rate was already -8.16%.

The only period in the last 5 years where the monthly return in September was worse than this was 2019 (-13.91%)

If BTC closes the month at this level, it will be a fairly typical September photo:twitter.com/bZ9cRIl9OU

— Benjamin Cowen (@intocryptoverse) September 6, 2024

However, October is typically a bullish month, so if this trend continues, September will likely end in the red. But once October arrives, prices will likely go up.

Featured image created with Dall.E, chart from Tradingview.com