Crypto Fear & Greed Index Hits Panic Level As History Signals Bitcoin Buying Opportunity

The Crypto Fear & Greed Index has plunged into ‘’extreme fear,” signaling a potential Bitcoin buying opportunity after the recent selloff.

The index, a gauge of investor sentiment, briefly fell below 10 yesterday before recovering slightly to 11, still 23 points lower than a month ago as investors dive for cover.

Across historical cycles, instances where the Crypto Fear & Greed Index has fallen below 10 have been followed by strong returns for Bitcoin in the days that followed, according to an analysis shared by economist Alex Krüge on X.

On average, BTC has gained around 10% within a week after such a drop in the index.

Bitcoin has also maintained that strength in the 15-30 days that followed, before accelerating to gains of 23% by day 80 and 33% by six months. 

The economist also said that in all 11 capitulation events since 2018, where the index dropped to extreme levels, short-term weakness was common but a rebound occurred after almost every event. 

Bitcoin Price Nearing Support As Indicators Turn Less Bearish

The Bitcoin price has managed a slight uptick in the last 24 hours to trade at $91,645.02 as of 7:23 a.m. EST.

WBTC/USD daily chart (Source: GeckoTerminal)

The slight recovery comes as Bitcoin nears a support level at $89,735 and BTC continues to trade in a medium-term descending price channel. If this support level fails to hold, the crypto king could plummet towards the next technical support at $81,977.

On the other hand, a rebound from the current support may lead to a test of the $97K resistance level, which is also confluent with the 20-day Exponential Moving Average (EMA). As such, a break above this point could clear a path to $104K in the short term if the bullish pressure is sustained. 

Looking at technical indicators on the daily chart, momentum appears to be slowly shifting in favor of buyers, with the Moving Average Convergence Divergence (MACD) line rising towards the MACD Signal line. If the two lines cross soon, it could mark the first bullish shift in volume since Oct. 26. 

In addition to the improving momentum, the Relative Strength Index (RSI) is resting on 30, which is bordering oversold territory. This suggests that Bitcoin’s upside potential is greater than its downside potential. If this signal is validated, it could see a strength shift from sellers to buyers, which will further boost the improving momentum. 

Traders might start to act on the signals presented on the daily chart for BTC and Bitcoin analyst VICTOR on X said said that the recent drawdown in BTC’s price is “the close your eyes and bid type of range.”