Sustained ‘Extreme Fear’ in Bitcoin Might Set the Stage for a Big Rally.

Bitcoin’s ‘Extreme Fear’ Phase May Signal Imminent Rebound

Bitcoin experienced a price jump earlier this week following President Trump’s announcement of a U.S. crypto strategic reserve. However, the initial enthusiasm faded as investors engaged in profit-taking, citing a lack of concrete policy details and a broader downturn in equity markets.

A persistent ‘extreme fear’ reading on a key sentiment index suggests that Bitcoin may be forming a price floor, potentially setting the stage for a significant recovery. Historically, similar conditions have preceded major rallies, with one such instance leading to a 200% surge in BTC’s value.

The Fear and Greed Index, which assesses market sentiment on a scale from 0 (extreme fear) to 100 (extreme greed), has remained in the ‘extreme fear’ range for several days as Bitcoin fluctuated between $83,000 and $95,000. This index often acts as a contrarian signal, indicating potential buying opportunities when fear dominates and warning of corrections when greed takes over. It takes into account price trends, social media sentiment, Google search interest, and Bitcoin’s overall market share.

“Bitcoin’s plunge into ‘Extreme Fear’ on the Fear & Greed Index is its first since September 2024, when BTC traded at $53,000,” explained Vincent Liu, CIO of Kronos Research, in a message to CoinDesk. “Following that, Bitcoin’s value doubled over the next three months, which could indicate a prime accumulation period for savvy investors.”

Liu added that although ongoing macroeconomic challenges—including trade tariffs—continue to rattle markets, Bitcoin could emerge as a strategic investment if global trade tensions ease and economic conditions improve.

Bitcoin, along with major tokens like Cardano’s ADA, Solana’s SOL, and XRP, rallied on Sunday following Trump’s announcement. However, traders quickly took profits amid uncertainty over the administration’s concrete plans and a weaker stock market.

Meanwhile, Trump’s tariff hikes on Canada, Mexico, and China further impacted financial sentiment. Market participants are now looking to the upcoming White House Crypto Summit for clarity on future policy directions and regulatory developments.