Bitcoin News Today: Crypto's Fear Index Plunge: Capitulation or Rally Catalyst?

The crypto market's fear and greed index has plummeted to its lowest level since February 2025, signaling extreme bearish sentiment amid a broader sell-off in Bitcoin and altcoins. The Crypto Fear & Greed Index hit 16 on Friday, with a weekly average of 24, reflecting widespread anxiety among investors. This sharp decline coincides with technical indicators painting a grim picture for Bitcoin, which has fallen below key moving averages and triggered bearish signals on tools like the Moving Average Convergence Divergence (MACD) and Relative Strength Index (RSI).

On-chain data amplifies concerns, revealing a deepening capitulation phase in the Bitcoin market.

Long-term holders (LTHs) have offloaded 815,000 BTC over the past 30 days-the highest level since early 2024-while spot demand has contracted, and stablecoin liquidity growth has stalled. CryptoQuant's Bull Score Index, which measures market optimism, has collapsed from 80 in early October to 20, underscoring the shift to bearish conditions. Analysts warn that the 365-day moving average ($102,000) is now a critical psychological support level; a breakdown could accelerate further declines.

Despite the bleak near-term outlook, some experts argue that extreme fear often precedes unexpected rallies. The current selloff may be weeding out speculative positions, creating opportunities for long-term holders to accumulate assets at discounted prices. Social media sentiment for Bitcoin and Ethereum, while subdued, shows less polarization than usual, with Ethereum's RSI nearing oversold territory. Joe Consorti of Horizon and Samson Mow of Jan3 note historical parallels to 2022, when similar fear indices bottomed before recovery phases began. "Weak hands capitulate, but conviction holders are stacking sats," Mow said, pointing to on-chain data showing reduced selling pressure from recent buyers.

Technical analysts have identified potential catalysts for a rebound. Bitcoin's 4-hour chart displays a falling wedge, a classic bullish formation that could propel prices toward $120,000 if resistance at $105,000 is breached. Similarly, a broader bullish wedge on the daily chart suggests a path to retest October's all-time high of $126,000, provided support at $100,000 holds. However, bears caution that a breakdown below $97,460 could extend the correction toward $94,253, with the 50-week EMA ($100,862) offering limited protection.

The market's dichotomy-extreme fear versus technical resilience-highlights the uncertainty surrounding Bitcoin's trajectory. While macroeconomic headwinds and profit-taking continue to weigh on prices, historical patterns suggest that periods of panic often set the stage for reversals. Investors are advised to monitor on-chain metrics, key support levels, and institutional activity for early signs of a bottoming process. For now, the crypto Fear & Greed Index remains a stark reminder of the market's emotional extremes, with the path forward hinging on whether capitulation gives way to accumulation-or further despair.