Bitcoin rallied earlier this week, but the initial enthusiasm around Trump's strategic reserve initiatives quickly faded as profit-taking amid a lack of concrete plans and investor reluctance to take risks in broader stock markets.
March 5, 2025 12:16 UTC
What is important to know:
- A prolonged period of “extreme fear” as measured by the Fear and Greed Index could signal a possible rise in Bitcoin prices, as this situation has led to a 200% increase in BTC in the past.
- The buying opportunity comes when Bitcoin's price drops to “extreme fear” levels, a situation that has previously caused its price to double in three months.
- Volatility and uncertainty in the Bitcoin market have led to profit taking and a wait-and-see attitude in anticipation of greater clarity at the upcoming White House cryptocurrency summit.
A sustained level of “extreme fear” in a popular sentiment index could indicate that Bitcoin prices have bottomed out and are set to rise soon – a similar situation previously preceded BTC’s 200% increase.
The Fear and Greed Index, which tracks investor emotions in markets like Bitcoin and ranges from 0 (low sentiment) to 100 (high sentiment), has shown sustained “extreme fear” in recent days as prices have fluctuated wildly between the $83,000 and $95,000 levels.
Bitcoin Fear and Greed Index: EXTREME FEAR!
For the first time since September 2024, when BTC was at $53,000, we are seeing sustained extreme fear in the market.
The last time this happened? $BTC doubled in value over the next 3 months.
Will history repeat itself? pic.twitter.com/Qtjrfn2j1N
— Kronos Research 🟠 (@KronosResearch) March 5, 2025
The index helps determine whether investors are too scared (which could represent a buying opportunity) or too greedy (which could foreshadow a market correction), and tends to be a contrarian indicator in the short term. It is based on price volatility and momentum, social media sentiment, Google Trends data, and overall bitcoin market share.
“Bitcoin’s fall to the ‘extreme fear’ level on the Fear and Greed Index for the first time since September 2024, when BTC was trading at $53,000, marks a key historical milestone,” Vincent Liu, CIO of trading firm Kronos Research, told CoinDesk in a Telegram post. “Bitcoin then doubled in value over the next three months, suggesting a potential buying opportunity for savvy investors.”
“Amid the current market volatility caused by trade tariffs and broader macroeconomic uncertainty, this could be a good time to enter if global trade tensions ease and overall economic sentiment improves,” Liu added.
Bitcoin and several key tokens, including Cardano's ADA, Solana's SOL, and XRP, surged on Sunday after President Trump announced the creation of a U.S. strategic cryptocurrency reserve.
However, the initial rally was short-lived due to profit-taking amid a lack of clear plans and investor reluctance to take risks in broader stock markets.
Trump's announcements of tariffs on Canada, Mexico and China have further impacted markets, with traders now looking to the upcoming White House crypto summit for more clarity on future positioning.
