The Crypto Fear & Greed Index measures how investors feel about the market at any given time, assessing their willingness to invest money in the market. Over the past year, the index has held relatively high, completely avoiding Extreme Fear territory. However, that impressive run came to an end when the Crypto Fear & Greed Index fell into Extreme Fear early Friday morning.
Cryptocurrency Fear and Greed Index Hits Lowest Level Since November 2022
The Crypto Fear & Greed Index officially returned to Extreme Fear on Friday morning. The index to introduce score of 25 after hovering in Fear territory for much of the past week. This decline is in stark contrast to last month, when the index was still firmly in Greed territory.
While the Crypto Fear & Greed Index flashing Extreme Fear is nothing recent, what makes this indicator stand out is how long it’s been since sentiment was this low. Looking at the chart, you can see that the last time the Crypto Fear & Greed Index was in Extreme Fear was during the FTX crash of 2022.
The market has since rebounded and has been in a bull market for about a year, eventually reaching Extreme Greed levels in 2024. However, a shift in investor sentiment suggests that the rally has worn off as sellers have now taken control of the market.
Currently, the Crypto Fear & Greed Index score of 25 means it is at the very top of Extreme Fear territory. This means it could easily revisit Fear levels. However, this gives bears the opportunity to continue pushing sentiment towards Extreme Fear.
Why this might be good for the price
The Crypto Fear & Greed Index falling to Extreme Fear is historically a good development for bulls, given that it gives enough time to enter cryptocurrencies at low prices before the market rebounds. The same thing was seen during the FTX crash in November 2022, when Bitcoin price bounced from $16,000 and crossed $40,000 in a single year.
By 2024, less than two years later, Bitcoin will hit $73,000, a recent all-time high. This suggests that buying when the market is spooked is the best time to get in on what could be an explosive rally.
There’s an ancient saying among seasoned investors: “Buy when there’s blood in the streets.” That simply means that buying when everyone is scared, like now, is usually the best time to get in. If the trend from 2022 repeats, the market could move sideways for a while before a rebound occurs that could send prices to recent record highs.
Featured image created with Dall.E, chart from Tradingview.com