A multi-day reading of “extreme fear” displayed on the Fear and Greed Index, which tracks sentiment in the Bitcoin market, could indicate a potential price reversal. As analysts at Kronos Research wrote, the last time the index showed persistent “extreme fear,” the price of Bitcoin more than doubled over three months. However, there are also counterexamples in history that point to risks of further decline, writes RBC Crypto.
“For the first time since September 2024, when BTC was $53K, we are seeing sustained extreme fear in the market. When was the last time? BTC price doubled in the next 3 months. Will history repeat itself?” Kronos experts wrote in X.
Since February 24, Bitcoin (BTC) quotes have fallen by about 7%, to $89.8 thousand, according to Coinmarketcap as of March 5, 17:00 Moscow time. At the moment on February 28, the price of BTC fell below $79 thousand for the first time since November 2024. This coincided with a decline in the Fear and Greed Index, which since February 25 indicates “extreme fear”, with the exception of one day on March 2, when the index showed simply “fear”, according to the analytical panel Bitcoin Magazine Pro.
The Fear and Greed Index is a sentiment indicator that shows which of these emotions is dominant among market participants. It has a range from 0 to 100. A low score indicates fear, which leads to a sell-off in assets and a drop in cryptocurrency prices. High scores mean that people are inclined to buy cryptocurrency. According to the breakdown, a value of 0-24 means extreme fear, 25-46 means fear. Neutral is from 46 to 49. Greed is in the range of 50-74, and extreme greed is 75-100. The index is calculated using parameters such as volatility, market volume and dynamics, social media sentiment (mentions of Bitcoin and reactions to them), and search query analysis. The creators of the index are the developers of the alternative software. Other platforms, such as CoinMarketCap, have also started calculating the index using their own parameters. They do not disclose the methodology, and the figures from different sources often differ greatly.
“Bitcoin has fallen 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. This reflects a key historical low. Bitcoin then doubled in value over the next three months, suggesting a potential buying opportunity for savvy investors,” Vincent Liu, CIO of trading firm Kronos Research, told Coindesk.
Liu also added that amid market volatility caused by tariffs and broader macroeconomic uncertainty, this could be a sweet spot to enter the market. But that would require easing of global trade tensions and an overall improvement in economic sentiment.
However, it is worth noting that the Fear and Greed Index has not always worked as Kronos suggested. For example, in July and June 2022, the market was dominated by extreme fear for several weeks. After that, Bitcoin quotes moved on a downward trajectory, losing about 50% in price from $30,000 over the next 6 months.
Источник: cryptocurrency.tech
