After 18 days at the bottom of a widely used crypto market sentiment index, the market appears to be showing early signs of improving sentiment.
The Crypto Fear & Greed Index, which measures overall crypto market sentiment, posted a “Fear” score of 28 on Saturday. This marks the first time since November 10 that it has not posted an “Extreme Fear” score. The prolonged stretch near the index’s most bearish level for the majority of November, historically Bitcoin’s (BTC) best-performing month on average, did not go unnoticed by the broader crypto community.
Historical Trends Suggest "Extreme Fear" Readings Can Signal Market Bottoms
Crypto analysts have previously noted the significance of sustained periods of extreme fear. On November 15, crypto analyst Matthew Hyland pointed out that the index was at the “most extreme fear level” of the entire cycle, suggesting a potential turning point. He commented at the time, "A path like this for BTC Dominance would now be max pain." Just days later, on November 23, crypto analyst Crypto Seth echoed this sentiment, stating, “Extreme Fear is an understatement.”
However, crypto trader Nicola Duke offered a more optimistic perspective based on historical data. She noted that every time extreme fear has been present on the index, it has marked a “local bottom” for Bitcoin, implying that such periods often precede a market recovery.
Other Indicators Point to Sentiment Recovery
Beyond the Fear & Greed Index, other indicators have also begun to suggest that sentiment may be recovering. The crypto sentiment platform Santiment reported on Wednesday that Bitcoin was exhibiting “generally bullish sentiment” following its climb back to nearly $92,000. This assessment was based on their social media bullish-to-bearish sentiment indicator.
Santiment further elaborated that market discussions surrounding Bitcoin on social media have predominantly focused on price volatility and institutional activity, including exchange-traded funds (ETFs) and treasury purchases.
Market Remains Cautious Amidst "Risk-Off" Environment
Despite these positive signs, crypto market participants still appear to be hesitant and operating in a “risk-off” mode. This is evidenced by CoinMarketCap’s Altcoin Season Index, which remains firmly in “Bitcoin Season” with a score of 22 out of 100. This metric fluctuates between readings indicating an altcoin season or a Bitcoin season.
On Friday, André Dragosch, Bitwise Europe's head of research, suggested that Bitcoin’s price movements might be misaligned due to a misinterpretation of the broader macroeconomic outlook, particularly the growing expectations of an upcoming recession. He drew a parallel to past market conditions, stating, “The last time I saw such an asymmetric risk-reward was during COVID.”