Bitcoin's Extreme Fear: A New Opportunity or Another Rollercoaster Ride?

Bitcoin's Fear & Greed Index has plummeted to 25, signaling a period of 'Extreme Fear' in the market as the cryptocurrency dipped below $90,000 for the first time since August 2024. This level of fear was last seen in November 2023, preceding a 78% surge to around $88,000. Just five months ago, Bitcoin investors felt greedy buying at $88,000, but now they appear to have an extreme fear of returning to such heights.

Bitcoin's meteoric rise over the past 18 months has been nothing short of remarkable. From the bullish sentiment generated by BlackRock's initial spot ETF filing to its acceptance and launch, and Donald Trump's victory in the 2024 election, which finally pushed Bitcoin above $100,000, the cryptocurrency has experienced a rollercoaster ride.

Historically, Bitcoin has not remained within an 'Extreme Fear' zone for long. It has typically taken less than two months to recover from Extreme Fear to Greed, and each time, it went on to set a new all-time high. However, during the 2022 bear market, it took over a year to recover similarly.

Jeff Park, Head of Alpha Strategies at Bitwise, commented on the current situation, "I've seen this movie too many times. People wish for lower prices. When they get them, they lose faith and find new reasons to doubt. Then it rips. By the time they convince themselves to buy, it's already at new ATHs. Losers wait for confirmation while winners act before it."