The Crypto Fear and Greed Index (CFGI) recently plummeted to its lowest value in months, signaling extreme levels of fear in the industry. The move comes after bitcoin dropped below $7,000, which brought out some of the most prominent crypto critics to spread fear, uncertainty, and doubt (FUD) around the market.
Peter Schiff, the CEO and chief global strategist of Euro Pacific Capital, entertained the idea that a head-and-shoulders pattern was developing on bitcoins chart, which could trigger a sell-off to $2,000. Meanwhile, Mark Dow, a former US Treasury and International Monetary Fund economist, affirmed that bitcoin was dying. And, Dr. Nouriel Roubini, a professor at New York Universitys Stern School of Business, called it the most useless and over-hyped technology ever.
Regardless of the pessimism, historical data shows that the current levels of fear could be a sign that the market will recover.
Over the last week, more than $56 billion were wiped off the cryptocurrency market cap. The massive downturn took many investors by surprise since the run-up to the bitcoin halving usually has a positive impact on the industry as a whole. But, this time around, BTC dropped nearly 23 percent to hit a low of $6,600 on Nov. 25.
The sudden nosedive turned the market sentiment into extreme fear, according to the Crypto Fear and Greed Index (CFGI).
This technical index evaluates the emotions and attitudes that investors have towards bitcoin. It takes into consideration several factors, including volatility, volume, social media, surveys, and market dominance. Then, the CFGI turns these viewpoints into a straightforward number. A value of 0 means extreme fear, while a value of 100 represents extreme greed.
At the moment, the CFGI is on a 21, which implies extreme levels of fear in the crypto market. This is the lowest value that this technical indicator had reached since Sept. 26, when it went into a 12.
Despite the current market sentiment, Warren Buffett, one of the top investors of all time, once said:
Be fearful when others are greedy, and greedy when others are fearful.
Based on historical data, this could be the case. Every time the CFGI goes into extreme fear, bitcoin tends to surge immediately after. On Oct. 24, for instance, this index was on a 20 indicating extreme fear, but the next day BTC skyrocketed over 40 percent to hit a high of $10,500.
According to the former senior market analyst at eToro, Mati Greenspan, the recent sell-off that the market went through triggered a massive amount of buy orders on Bitfinex, a cryptocurrency exchange headquartered in Hong Kong. He maintains that bitcoin buy positions hit their highest level since February.
It's very clear what the market thinks of this latest selloff!
Bitcoin buy positions (blue line) are at their highest level since February, while bitcoin sell positions (orange) are near their lowest level ever.
Data from @bitfinex displayed by @tradingview. pic.twitter.com/yaT0wQpGgs
Mati Greenspan (@MatiGreenspan) November 26, 2019
Along the same lines, the CEO of Three Arrows Capital, Su Zhu, believes that $6,775 was a key price point for bitcoin.
If this was bottom (6680~ish on normal venues, 6775 on bfx), then it has some similarities to the low 3k capitulation in that the low was fully absorbed by buy walls rather than culminating in a flash wick (as what happened in 2015)
Liquidity is a lot more efficient nowadays https://t.co/zSdiZU6mwe
Su Zhu (@zhusu) November 26, 2019
The economist Alex Kruger argued that the Crypto Fear and Greed Index is relatively accurate at pinpointing bottoms. Still, it does not take into consideration multiple factors that are crucial to determine the direction of the market. Therefore, time will tell whether the current state of extreme fear in the market could indeed estimate an upswing.
- US Deficit Will Be at Least 6 Times Bitcoin Market Cap Every Year - Cointelegraph - January 24th, 2020
- Bitcoin Puzzle Worth 2.1 BTC STILL Unsolved, Find New Clues Here - Bitcoinist - January 24th, 2020
- Five Years of Bitcoin Trendlines All Lead to This One Point; Fireworks Inbound - newsBTC - January 24th, 2020
- Coronavirus: Will Gold and Bitcoin Prices Rise as 2nd City in China... - Coinspeaker - January 24th, 2020
- Bitcoin Price Breaks Below $8,300, Is The Bull Rally Already Over? - newsBTC - January 24th, 2020
- Top 3 Price Prediction Bitcoin, Ethereum, XRP: Bears take over and draw a bloody moon - FXStreet - January 24th, 2020
- Bitcoin 'to increase 98% in value by end of year' - Netimperative - January 24th, 2020
- Top 3 Price Prediction Bitcoin, Ethereum, XRP: Set for a dive before the next big bull market - FXStreet - January 24th, 2020
- Interim proprietary injunction granted over bitcoin cyber extortion payment - Data Protection Report - January 24th, 2020
- 5 Major Bitcoin Trends To Watch In 2020 - Forbes - January 23rd, 2020
- The Evolution of Bitcoin's Technology Stack - Cointelegraph - January 23rd, 2020
- Bitcoin Has Begun Its Journey to Fresh All-Time Highs; Factors to Consider - newsBTC - January 23rd, 2020
- Bitcoin Indicator that Crashed Price to $3.1K Returns: The Dreaded Death Cross - newsBTC - January 23rd, 2020
- Largest Bitcoin (BTC) Investment Vehicle Now Registered As an SEC Reporting Company: Grayscale - The Daily Hodl - January 23rd, 2020
- Bitcoin Price Will Reach $400,000 after Halving If History Is to Be Taken into... - Coinspeaker - January 23rd, 2020
- Regulation will see Bitcoin go mainstream in the UK Coinfloor CEO - Yahoo Finance - January 23rd, 2020
- Tesla Vs Bitcoin: Which One You Should Hold by 2025? - Bitcoinist - January 23rd, 2020
- Instantaneous Bitcoin [BTC] Payment Will Soon be Enabled at Starbucks, Courtesy of Bakkt - Coingape - January 23rd, 2020
- How Much Influence Will China Have On The Future Of Bitcoin? - Bitcoinist - January 23rd, 2020
- Alleged bitcoin thieves arrested by Tokyo police over 78 million haul - The Japan Times - January 23rd, 2020
- An Analysis of Price Discovery in Bitcoin Spot Markets - Traders Magazine - January 23rd, 2020
- Billionaire Investor Sees Major Flaw In Bitcoin Investment Thesis - Forbes - January 22nd, 2020
- Bitcoin Price Indicator Eyes First Bullish Turn Since August - Coindesk - January 22nd, 2020
- Swiss Banks Enter the Age of Bitcoin - CoinDesk - January 22nd, 2020
- Bitcoin technology: Whats coming in 2020? - Yahoo Finance - January 22nd, 2020
- Heres Why Wall Street Veteran Thinks Bitcoin Isnt a Viable Money, Yet - newsBTC - January 22nd, 2020
- Will The Bitcoin Price Get Demolished By Central Bank-Issued Cryptos? - Forbes - January 22nd, 2020
- Now Reporting to the SEC, Grayscale Bitcoin Trust One Step Closer to Public Trading - Cointelegraph - January 22nd, 2020
- The Key Indicator That Led Massive Bitcoin Upsurge to $13.8K Just Blinked Again - newsBTC - January 22nd, 2020
- These Two Crypto Exchanges Greatly Increased Their Bitcoin (BTC) Reserves in 2019 - U.Today - January 22nd, 2020
- Why Bitcoin Is Driving Altcoins To The Moon - Forbes - January 22nd, 2020
- Bitcoin, Crypto Assets are not Banned in India: RBI - Bitcoinist - January 22nd, 2020
- Bitcoin is up 20% so far this year and one expert predicts it could hit $16,000 by year end - CNBC - January 22nd, 2020
- Institutional Money May Be Igniting the Current Bitcoin Rally - CCN.com - January 22nd, 2020
- New Analysis Finds That Mondays Are the Best Days to Buy Bitcoin - Cointelegraph - January 22nd, 2020
- Bitcoin Solves This: Billionaires Own More Than 4.6 Billion People Combined - Bitcoinist - January 22nd, 2020
- Heres Why Joe Rogan Is Not Convinced on Cryptocurrency and Bitcoin (BTC) - The Daily Hodl - January 22nd, 2020
- Bitcoin: The Biggest Opportunity Of 2020 - Seeking Alpha - January 22nd, 2020
- Bitcoin SV (BSV) Is Up 40% but Analysts Arent Convinced Bulls Are Back - newsBTC - January 22nd, 2020
- Bitcoin, ETH, XRP, And LTC Rally Gains Momentum: How Long Will It Last? - Forbes - January 22nd, 2020
- Bitcoin Just Saw A Key Technical Breakout: Big Reaction From Bulls Imminent - newsBTC - January 22nd, 2020
- Bitcoin Is Plunging, But Its Too Early To Say Bulls Have Given Up - newsBTC - January 22nd, 2020
- Is This Why Bitcoin SV Climbed Another 20% In the Last 24 Hours? - newsBTC - January 22nd, 2020
- How Bitcoin's On-chain Activity and the Iran Crisis Correlate? - Bitcoinist - January 22nd, 2020
- Crypto market overview: Bitcoin (BTC) bulls lose initiative; altcoins drive the market higher - FXStreet - January 22nd, 2020
- Is Bitcoin the Answer to Trump's 'Generosity' Towards Banks? - Bitcoinist - January 22nd, 2020
- Report: Bitcoin outperforms banks in settlement times and reliability - Micky News - January 22nd, 2020
- Bitcoin Reaches Its Highest In More Than 2 Months - Forbes - January 14th, 2020
- Resurgent Bitcoin Will Likely Shrug Off Long-Term Bear Cross - Coindesk - January 14th, 2020
- Bitcoin's price rose 87% in 2019 here's what happened in Q4 - The Next Web - January 14th, 2020
- Is Bitcoin in 2020 Really Like the Early Internet? - CoinDesk - January 14th, 2020
- Bitcoin SV Has Suddenly Soared, Pushing Bitcoin To A Fresh 2020 HighHeres Why - Forbes - January 14th, 2020
- Bitcoin: The Next Level - Forbes - January 14th, 2020
- Cryptocurrency Market Update: Bitcoin and major altcoins start the trip to the moon - FXStreet - January 14th, 2020
- US Judge Appoints Receiver To Oversee Butte Bitcoin Plant - MTPR - January 14th, 2020
- Adam Back: $10 Million Bitcoin Prediction Is Closer Than It Sounds - CCN.com - January 14th, 2020
- Teslas Elon Musk Teases Bitcoin Community With Tongue-In-Cheek Tweet - Forbes - January 14th, 2020
- Whale Alert: $1 Billion (0.7% Of Total Bitcoins) Just Transferred For $80 Fees - CryptoPotato - January 14th, 2020
- Former Coinbase VP: we moved billions of dollars into Bitcoin in large part because of Plaid - CryptoSlate - January 14th, 2020
- These Factors Suggest Bitcoin Cashs Recent Rally is Just Getting Started - newsBTC - January 14th, 2020
- 2019 Bitcoin Transaction Volume Moved Away From US in First Since 2013 - Cointelegraph - January 14th, 2020
- Top 3 Price Prediction Bitcoin, Ripple, Ethereum: Higher levels to watch after the bullish run - FXStreet - January 14th, 2020
- Bitcoin Trading Volumes More than Doubled in a Week Says Report - Cointelegraph - January 14th, 2020
- Bitcoin Equivalent of $4.7 Trillion Added to US Debt is $260k per BTC - Bitcoinist - January 14th, 2020
- Is Bitcoin Is About To Repeat Its 2019 Rally? - Bitcoinist - January 14th, 2020
- 2010s In Bitcoin: The Year 2019 - Forbes - January 1st, 2020
- Officials with Butte Bitcoin company suing major investor - KPAX-TV - January 1st, 2020
- Ethereums Price Action is Similar to Bitcoins at $3,000: An Insane Rally is Imminent - newsBTC - January 1st, 2020
- Bitcoin Price Yearly Candle Shows Failed Rally, Longest Wick on Record - newsBTC - January 1st, 2020
- Etoro CEO Yoni Assia on Reaching 12 Million Users and Why Cryptos Are a Gateway to Stocks - Bitcoin News - January 1st, 2020
- 2010s In Bitcoin: The Year 2016 - Forbes - December 31st, 2019
- Bitcoin Price Poised to Jump 40% Towards $10,000; Heres Why - newsBTC - December 31st, 2019
- The 2010s In Bitcoin: The Year 2015 - Forbes - December 31st, 2019
- Bitcoin, despite its ups and downs, had a monster decade of growth - American Banker - December 31st, 2019
- 2010s In Bitcoin: The Year 2017 - Forbes - December 31st, 2019
- Bitcoin Price On Verge of Long-Term Doom; Heres Why - Ethereum World News - December 31st, 2019
- Whats in Store for Bitcoin as the Year Draws to a Close - Market Realist - December 31st, 2019
- Why Bitcoin Price Is Likely to Gain Momentum After New Years - Ethereum World News - December 31st, 2019
- Bitcoin, Ethereum are most profitable investments of the decade - Decrypt - December 31st, 2019
- Bitcoin to Benefit More from Trade War in 2020 than Halving - newsBTC - December 31st, 2019