Prolonged Market Fear Could Be the Spark Bitcoin Needs to Climb Higher.

Bitcoin’s ‘Extreme Fear’ Reading May Signal a Major Upside Move

Bitcoin surged earlier this week following President Trump’s announcement of a U.S. crypto strategic reserve, but the rally was short-lived as investors locked in profits amid uncertainty over concrete policy details and a broader risk-off sentiment in financial markets.

A prolonged period of ‘extreme fear’ in a widely followed sentiment index suggests that Bitcoin may be forming a price floor, potentially setting the stage for a strong recovery. Similar market conditions in the past have preceded massive price gains, with one instance leading to a 200% BTC rally.

The Fear and Greed Index, which measures investor sentiment on a scale from 0 (extreme fear) to 100 (extreme greed), has remained in the ‘extreme fear’ zone for several days as Bitcoin’s price fluctuated between $83,000 and $95,000. This index is often viewed as a contrarian indicator, signaling potential buying opportunities when fear is high and warning of corrections when greed dominates. It considers factors such as price volatility, momentum, social sentiment, Google search trends, and Bitcoin’s market dominance.

“Bitcoin’s latest dip into ‘Extreme Fear’ is its first since September 2024, when BTC was trading at $53,000,” noted Vincent Liu, CIO of Kronos Research, in a statement to CoinDesk. “Following that event, Bitcoin’s price doubled in the following three months, which could suggest a potential accumulation phase for investors.”

Liu added that while ongoing economic uncertainty—including trade tariffs—continues to impact market sentiment, Bitcoin could become an attractive asset should global trade conditions improve and investor confidence return.

Bitcoin and major altcoins, including Cardano’s ADA, Solana’s SOL, and XRP, experienced a sharp rally on Sunday in response to Trump’s announcement. However, profit-taking quickly followed as traders remained cautious about the lack of policy clarity and broader equity market weakness.

Additionally, Trump’s new tariff measures on Canada, Mexico, and China have added further pressure on global financial markets. Investors are now turning their attention to the upcoming White House Crypto Summit, hoping for insights into the administration’s long-term plans for the crypto industry.

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