Bitcoin and the cryptocurrency market crash have completely eroded positive sentiment, as bears now control the entire market. Over the past month, the Fear and Greed Index has steadily declined, reaching a new annual low. With Bitcoin’s price dropping to $53,000 last week, the crypto fear and greed index has plummeted to its highest level since the November 2022 FTX crypto exchange crash.
Crypto fear and greed index drops to 28
After several months of greed in 2024, the crypto fear and greed index continues to roll in the fear territory, scoring 28 out of 100. This decline indicates that investors are unwilling to put their funds into the market, as people anticipate further price drops.
Source: alternative.me
From the perspective of the current market sentiment, the last time the crypto fear and greed index dropped to 28 was in November 2022. This occurred after the notorious FTX crash, which caused Bitcoin’s price to plummet to $16,000.
Since then, the index has remained above 30, deflecting trends of extreme fear. However, the market seems to have fully succumbed to bearish pressure, potentially pushing it into extreme fear territory for the first time in two years.
Bitcoin’s recovery may be imminent
Although the crypto fear and greed index has plummeted to 28, firmly residing in the fear zone and keeping investors at bay, history suggests this may be a positive development. One thing remains consistent: when the index drops to “extreme fear,” it typically signals the bottom of a decline.
For example, back in November 2022, when Bitcoin’s price plummeted to $16,000 and pushed the crypto fear and greed index below 28, it marked the market’s bottom. There was a period of sideways movement for a while. However, in the following months, the market started to recover and initiated another bull run.
Starting from the bottom in November 2022, the price rose over 250% and reached a historical high in 2024. Now, if this trend continues, once accumulation is complete, Bitcoin’s price could rebound again, potentially triggering another all-time high.
At the time of writing, Bitcoin’s price has rebounded from its low point to $57,200. Despite an 8.8% decline over the past seven days, this is still a welcome recovery considering the low point below $54,000 over the weekend.
BTC struggles with sentiment decline | Source: BTCUSD on Tradingview.com