Bitcoin sentiment hits rock bottom matching COVID and FTX crashes

The Crypto Fear & Greed Index has simply printed 10 out of 100, which isn’t usually seen throughout a nasty week or a tough month, however solely at enormous stress moments, such because the March 2020 COVID crash, the post-FTX washout in late 2022, or the crash in February this 12 months.

At these ranges, the query stops being “how scared are folks?” and turns into “does excessive worry really predict something?”

The index, created initially by Alternative.me based mostly on CNN’s inventory market index, compresses six market inputs right into a single every day quantity. Volatility contributes 25% of the rating, evaluating present drawdowns towards 30- to 90-day baselines.

There at the moment are a number of variations of the index supplied by different knowledge firms, together with CoinMarketCap, CoinStats, and CoinGlass. All of which nonetheless present ‘Extreme Fear’ as the present state of play at press time.

Market momentum and quantity add one other 25%, capturing whether or not consumers are aggressive or exhausted. Social media exercise, Google Trends, Bitcoin dominance, and investor surveys present a complete image.

A rating of 10 sits close to absolutely the flooring of the size, within the “Extreme Fear” band that runs from 0 to 24.

Alternative.me pitches it as a contrarian device: excessive worry might imply buyers are overreacting and might mark a chance, whereas excessive greed typically precedes corrections. They cease in need of claiming onerous predictive energy.

The designers body it as a sentiment barometer, not buying and selling recommendation. That caveat issues as a result of historical past exhibits these readings cluster round main stress factors and medium-term worth zones, however they don’t time bottoms with precision.

Historical analogues

In March 2020, Bitcoin fell roughly 50% in two days in the course of the COVID panic, briefly touching $4,000 on Mar. 13. The subsequent day, the Fear Index printed 8, the bottom studying in over 4 years.

Kraken’s analysis desk highlighted that quantity as capitulation-level worry. From these lows, BTC finally climbed to $60,000 by early 2021. The sub-10 print landed inside days of a serious cycle bottom, however that bottom solely held as a result of the Federal Reserve lower charges to zero and launched limitless quantitative easing.

The sentiment sign aligned with the liquidity intervention, but it surely didn’t trigger the restoration.
November 2022 delivered one other excessive studying. The FTX collapse drove Bitcoin underneath $17,000, with lows close to $15,500. The Fear Index fell into the low teenagers, with some knowledge suppliers citing readings round 12.

AlphaPoint’s autopsy noted that the index languished in “excessive worry” for weeks whereas BTC chopped sideways close to cycle lows.

The sentiment bottom and the worth bottom weren’t on the identical day and even the identical week. From there, BTC finally surpassed $73,000 by March 2024 and broke $100,000 in December 2024.

This 12 months has produced only one excessive worry spike. In late February, the index reached 10 as Bitcoin fell under $86,000, marking the bottom sentiment studying for the reason that 2022 bear market.

However, in mid-October, a shock US tariff triggered the most important crypto liquidation occasion on report, with greater than $19 billion in leveraged positions liquidated in 24 hours, roughly 19 instances bigger than the liquidation volumes of the 2020 and 2022 crashes didn’t invoke an ‘Extreme Fear’ studying. It held simply above round 25 out of 100. 

Now, as Bitcoin tumbled again to the $93,000 worth stage, the index reached 10 once more as Bitcoin fell under $93,000, erasing year-to-date positive factors and triggering greater than $1.1 billion in pressured liquidations.

Volatility clusters and pressured promoting

The Fear Index doesn’t react to a single unhealthy day. It tends to bottom throughout volatility clusters, that are durations the place massive strikes bunch collectively moderately than arriving in isolation.

Academic work on Bitcoin confirms the traditional volatility clustering phenomenon: previous volatility predicts future volatility, and excessive sentiment readings correlate strongly with spikes in buying and selling exercise and realized volatility throughout main cryptocurrencies.

The current sell-offs match that sample. October’s tariff shock led to $19 billion in liquidations over 24 hours. November’s drop under $93,000 introduced $1.1 billion in pressured unwinds, with the RSI shifting into oversold territory for the primary time since FTX.

When the Fear Index prints 10, it captures the psychological expression of those volatility clusters: pressured unwinds, skinny order books, and macro shocks that feed into the identical sentiment studying.

This distinction issues for understanding what comes subsequent. Liquidity-driven bottoms kind when flows and stability sheets power the problem: liquidations exhaust sellers, central banks intervene, ETF flows flip optimistic, or funding charges normalize.

Sentiment bottoms mark the place psychology peaks, the place measured worry maxes out.

March 2020 marked a big low in liquidity. The crash began as a broad “every part should go” liquidation throughout all danger property. The Fear Index sank to eight, however the lasting bottom was solely established after the Fed flooded markets with liquidity via fee cuts and bond purchases.
Sentiment aligned with the bottom however didn’t trigger it.

The 2022 FTX episode blended each dynamics. The collapse triggered a traditional liquidity shock as one of many crypto trade’s largest exchanges failed. BTC fell to the mid-$15,000s, and the Fear Index dropped to round 12.

However, no central financial institution backstop arrived. Instead, the liquidity bottom got here from time: bancrupt leverage was flushed out over months, surviving venues rebuilt, and a brand new structural demand supply emerged via the approval of spot Bitcoin ETFs in early 2024.

The sentiment index spent a very long time in worry whereas the market was quiet.

In 2025, the image is strongly pushed by stream. BTC’s market depth has decreased from roughly $766 million in early October to round $535 million, making costs extra inclined to giant orders.

US spot Bitcoin ETFs experienced $866 million in internet outflows on Nov. 13, marking the second-largest every day redemption since their launch in January 2024. Over the previous three weeks, cumulative outflows have totaled greater than $2.3 billion.

The worry studying at 10 signifies merchants are scared. The liquidation and ETF knowledge recommend whether or not pressured promoting has really run its course. Historically, sturdy cycle lows have required each sentiment capitulation and liquidity stabilization.

Near-term Catalysts

Two forces dominate the near-term outlook: Federal Reserve coverage and ETF flows.

The Fed lower charges by 25 foundation factors at its October assembly, resuming the easing cycle that began in September. Economists extensively count on one other quarter-point discount on the December 9-10 FOMC assembly, with additional cuts doubtless in 2026 if inflation continues to cooperate.

Lower coverage charges usually assist duration-sensitive property, comparable to Bitcoin, however the present worry studying means that markets fear development is deteriorating sooner than cuts can assist.

ETF flows present the cleaner real-time sign. Binance’s analysis arm noted that ETF inflows and giant company buys from entities like Strategy had been the dominant demand engines for BTC in 2025, and each have softened just lately.

Weekly redemptions ran round $1.1 billion between November 10 and 14, pushed by a broader tech-led risk-asset selloff, falling on-exchange liquidity, and jitters over giant company holders.

That units up a easy pressure. If ETF outflows stabilize or reverse to internet shopping for across the December FOMC assembly, historical past means that excessive worry can mark a medium-term alternative window.

If outflows and liquidity erosion persist even after further fee cuts, then the present worry studying is the midpoint of an extended deleveraging part moderately than its finish.

Does excessive worry predict something?

The empirical reply reveals an important deal about stress, however much less concerning the actual timing.

Academic work is blended. A 2024 Finance Research Letters paper finds a U-shaped relationship between the Fear Index and worth synchronicity: each excessive worry and excessive greed result in extremely correlated, herd-driven strikes.

Other research discover that together with the index improves volatility forecasts, whereas at the very least one 2023 paper experiences little constant predictive energy for future returns.

What is powerful: excessive worry readings cluster close to the worst of volatility and pressured promoting and have, in 2020 and 2022, coincided with broad zones the place long-term buyers who purchased and held had been effectively rewarded.

However, the trail from these zones to a brand new uptrend can contain months of chop, false breaks, and extra ache.

At 10 out of 100, the Fear Index is screaming capitulation. History says that’s when long-horizon consumers begin paying consideration, not when short-term merchants immediately acquire clairvoyance.

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