Bitcoin once again falls into ‘extreme fear’, a signal to ‘catch the bottom’?

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2021-12-26 15:50:07

The cryptocurrency’s “Fear and Greed” Index has dropped to “extreme fear” this week. Is this a signal of a “bottom fishing” opportunity?

On December 6, the Bitcoin (BTC) “Fear and Greed” index hit 16/100 for the first time in nearly 5 months. After that, the index bounced up a bit and stabilized at this extreme low.

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Since then, Bitcoin has been unable to leave the “Extreme Fear” zone for the past week. It took just 28 days for the index to plunge from an eight-month high, at 84/100.

On a short-term perspective, analysts point to Bitcoin’s “Fear and Greed” index dropping to extreme lows due to Bitcoin’s failure to hold above $50,000.

The last time Bitcoin’s “Fear and Greed” index was in this zone was when Bitcoin traded below $30,000 at the end of July 2021, following a massive drop in Q2 2021.

The net capitalization of the crypto market has fallen below $2.5 trillion for the first time since October 15. On November 9-10, total capitalization managed to stay above $3 trillion for two days, which is an unprecedented record.

Bitcoin (BTC.D) dominance is currently very close to a 7-month low.

Ethereum (ETH) performs slightly better than Bitcoin (BTC). The ETH/BTC ratio has drawn an impressive run towards a 44-month high.

Usually, a combination of these trends indicates an upcoming “altcoin season,” i.e. a period in which the major altcoins perform better than ever.

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