Following a true capitulation in the crypto market, the Fear and Greed Index has fallen to its lowest level since the Terra-Luna collapse in 2022. Today, the reading stands at 14 — a level classified as “extreme fear.” In the early morning hours, Bitcoin briefly fell to $82,000, once again testing levels last seen during the tariff panic in April.
Observers are highlighting the speed and intensity of the sell-off. In early October, Bitcoin was still trading at an all-time high of $126,000. Just a few weeks later, the leading cryptocurrency is down more than 30%, clearly in bear market territory. No meaningful rebound has occurred so far. While short-term holders remain under pressure, other investors are viewing the pullback as an opportunity to build long-term positions.
Chris Kuiper, Vice President of Research at Fidelity Digital Assets, believes a local bottom is possible, pointing to the Fear and Greed Index. According to him, the indicator tends to show “extreme readings” around local tops and bottoms. He adds: “This is not a forecast, but given the lack of negative fundamental news or major changes, these data, in my view, point to a normal and healthy pullback.”
Analyst Alex Krüger also puts the situation into historical context. He notes that after periods of extreme fear — for example, when the index was around 10 — Bitcoin’s average returns in the past ranged between 10% and 33% over timeframes of 30 to 180 days.
However, some experts warn against drawing overly confident conclusions. The anonymous analyst Aporia points to a wide dispersion in 30- and 60-day forward returns relative to the index level. This challenges the popular “mean reversion” hypothesis, which assumes that extreme fear is a buy signal and extreme greed a sell signal.
His conclusion: the sentiment index should be used as a reference point, not as an exact indicator of a market bottom. “When you trade based on overbought or oversold signals, you are essentially positioning against the prevailing trend. In practice, this means buying too early in a downtrend and selling too early in an uptrend,” he notes.