Crypto Market Panic: What History Says Happens Next

TLDR

• The Crypto Fear & Greed Index hit an “Extreme Fear” score of 10 on Saturday, the lowest since February 27, as Bitcoin dropped below $95,000
• Bitwise research suggests current market indicators show less bearish sentiment compared to previous downturns despite lower prices
• Santiment warns that crypto market bottoms rarely form when widespread consensus exists about a specific price bottom
• US spot Bitcoin ETFs saw $1.17 billion in outflows over three trading days, with Thursday marking the second-worst day on record at $866 million
• Some analysts note positive chart patterns emerging and view the lack of year-end surge as healthy for long-term market stability

The crypto market entered its most fearful period in over eight months this weekend. The Crypto Fear & Greed Index recorded an “Extreme Fear” score of 10 on Saturday.

This marks the lowest reading since February 27. Bitcoin fell below $95,000 on Friday and has not recovered above $96,000 since.

The February low occurred shortly after spot Bitcoin ETFs experienced record outflows. On that day, the funds saw $1.14 billion leave in a single session.

Bitcoin’s price during that period dropped from $102,000 at the start of February to $84,000. The recent decline has brought renewed attention to market sentiment indicators.

Andre Dragosh, Bitwise’s European head of research, offered a different perspective on the current situation. He said the market appears less bearish than during previous corrections.

Dragosh pointed to Bitwise’s internal sentiment index showing signs of potential reversal. He noted that despite lower prices, sentiment indicators suggest less fear than past downturns.

The recent US government shutdown added to market uncertainty. President Donald Trump signed a bill ending the longest shutdown in US history.

Questions about Federal Reserve interest rate decisions continue to affect crypto markets. These policy decisions often correlate with cryptocurrency price movements.

Chart Patterns Show Potential Reversal Signs

NorthmanTrader founder Sven Henrich identified technical patterns on Bitcoin’s price chart. He told his 503,400 followers on X that the chart shows “something potentially positive” for Bitcoin bulls.

Henrich specifically mentioned a falling wedge pattern and positive divergence. These technical indicators sometimes precede upward price movements.

A Messari research manager using the name “DRXL” described unusual market conditions. He stated that in eight years working in crypto, he has never seen “such dissonance between the headlines and the sentiment.”

Warning Signs About Bottom Calling

Santiment, a crypto sentiment platform, issued a warning about market bottom predictions. The platform said true bottoms often form when most people expect prices to fall further.

The platform reported that bottom-calling became a trending topic on social media after Bitcoin’s drop. This suggests many traders believe the worst is over.

Santiment said social media sentiment has turned “overwhelmingly negative.” The ratio of positive to negative comments about Bitcoin reached its lowest point in over a month.

Bitcoin’s social dominance surged above 40 percent as the price fell. The platform described this as evidence of “a very fearful conversation” centered on Bitcoin.

Social media mentions of Strategy chairman Michael Saylor increased during the price drop. Some traders blamed Saylor for the decline, suggesting he was selling Bitcoin.

Saylor denied these reports during a CNBC interview on Friday. He stated the company was not offloading Bitcoin during the price decline.

US spot Bitcoin ETFs recorded $1.17 billion in outflows over three trading days. Thursday alone saw $866 million in net outflows.

This marked the second-worst day on record for the funds. The worst day remains February 25 with $1.14 billion in outflows.

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