The Bitcoin Fear & Greed Index has plummeted to 10, marking its lowest point since mid-2022 when the cryptocurrency was deep in a bear market.
This extreme fear reading comes after Bitcoin's price suffered a significant decline in recent days. Just last week, the index stood in neutral territory, indicating a dramatic shift in market sentiment.
"The Fear & Greed Index measures the average sentiment among Bitcoin and cryptocurrency traders," explains Alternative, the company behind the indicator. The metric uses a scale from zero to 100, with values below 25 indicating "extreme fear" in the market.
Bitcoin's price has tumbled to approximately $84,700, representing a nearly 14% drop over the past seven days. The sudden crash has severely impacted investor confidence following months of bullish momentum.
Market analysts note that historically, extreme fear readings have often coincided with price bottoms for the leading cryptocurrency. Similarly, periods of "extreme greed" — when the index reads above 76 — have frequently preceded market tops.
"Bitcoin typically moves in the direction opposite to what the majority expects," said one market observer. This counterintuitive pattern forms the basis of contrarian investing, a strategy employed by traders who purposely position themselves against prevailing market sentiment.
The approach echoes Warren Buffett's famous investment philosophy: "Be fearful when others are greedy, and greedy when others are fearful."
With the sentiment index now at extreme lows, contrarian investors may view this as a buying opportunity. However, questions remain about whether Bitcoin will establish a bottom at current levels or if market sentiment must deteriorate further before a recovery begins.
Disclaimer: The information provided in this article is for educational purposes only and should not be considered financial or legal advice. Always conduct your own research or consult a professional when dealing with cryptocurrency assets.