The Bitcoin Fear & Greed Index shows that average investor sentiment has been in the “extreme fear” zone for 13 consecutive days. This indicator, created by Alternative, measures overall trader sentiment in the Bitcoin and broader cryptocurrency markets by analyzing five factors: market cap dominance, trading volume, Google Trends, social sentiment, and volatility. The index uses a scale from 0 to 100.
Values above 53 indicate greed, while those below 47 point to fear. Readings between 47 and 53 suggest a neutral mindset. The index also defines two extreme zones: “extreme fear” at or below 25, and “extreme greed” above 75.
Currently, the index sits at 23, reflecting widespread extreme fear. This sentiment has persisted for nearly two weeks. Historically, such extreme fear has not necessarily been a negative signal for Bitcoin and other cryptocurrencies, as markets often move contrary to prevailing crowd sentiment. Major market tops and bottoms have frequently coincided with the index being in these extreme zones.
For example, Bitcoin’s price low in November, which has so far acted as a market bottom, also occurred during a prolonged period of extreme fear. However, that earlier streak of fear did not lead to sustained bullish momentum, as Bitcoin has largely traded sideways since then.
It remains to be seen whether the current extended period of extreme fear will mark a turning point or if the market bottom for this cycle is still ahead.
As of now, Bitcoin is trading around $87,500, showing little change over the past week.
Frequently Asked Questions
FAQs Bitcoins Extreme Fear Sentiment Persisting Through Christmas
BeginnerLevel Questions
1 What does extreme fear mean in Bitcoin
Its a reading from a popular sentiment index that tries to measure the overall mood of the cryptocurrency market Extreme Fear suggests most investors are currently anxious pessimistic or selling often due to falling prices or bad news
2 Why is this a big deal that it lasted through Christmas
Market sentiment often quiets down during holidays The fact that this negative mood persisted strongly through a major holiday suggests the underlying worry in the market is deep and not just a temporary reaction
3 Is extreme fear a bad sign for Bitcoin
Not necessarily in the long run While it indicates current stress and often correlates with lower prices periods of extreme fear have historically sometimes preceded price bottoms and buying opportunities for longterm investors
4 What causes this kind of market fear
Common triggers include sharp price drops negative regulatory news highprofile failures broader economic problems or just prolonged periods of declining prices
5 As a beginner what should I do when I see extreme fear
First dont panic Use it as a learning signal Its a time for caution not impulsive selling Focus on understanding why the fear exists review your investment strategy and consider it a period to research carefully if youre thinking about buying
Advanced Practical Questions
6 How is the Fear Greed Index calculated
It compiles data from five main sources volatility market momentumvolume social media sentiment surveys and Bitcoins dominance relative to other cryptos Extreme Fear is the lowest possible score on its scale
7 Can this sentiment be a contrarian indicator
Yes many experienced traders view prolonged extreme fear as a potential contrarian buy signal The logic is that when fear is maxed out and everyone who wants to sell has sold the market may be primed for a rebound However its not a perfect timing tool
8 Whats the difference between extreme fear in a bull market vs a bear market
In a