The sentiment in the cryptocurrency market has reached the area of 'Extreme Fear', while the prices of crypto-assets continue to decline due to increasing macroeconomic and geopolitical pressure.
Some investors see such periods as an opportunity to enter cheaply, but according to an analyst, being extremely cautious does not always mean that this is the best buying moment.
'Bitcoin goes to zero' searches hit all-time high amid extreme market fear
According to the latest data, the Crypto Fear & Greed Index, a widely used indicator that measures market sentiment on a scale of 0–100, is currently at 9. This is a slight increase from yesterday's 8 and a very low reading of 5 from last week.
Despite this slight increase, the current state shows that the market clearly remains in the 'Extreme Fear' zone.
Meanwhile, investors' concerns are also noticeable in their search behavior. Data from Google Trends shows that the number of searches for 'Bitcoin going to zero' is at an all-time high and even surpasses previous declines.
Search interest reached a score of 100, showing that curiosity and concern among retail participants are peaking.
Still, various market analysts state that periods of extreme pessimism can often be buying opportunities.
Earlier, Santiment indicated that negative spikes in sentiment typically occur when prices are falling rapidly. According to this analysis company, broad expectations of a downturn and stories about 'falling', 'selling', or 'going to zero' are often seen as signs of capitulation by retail, with weaker hands leaving the market due to uncertainty.
'And once you see the doomsday predictions for crypto, that is often the best time to officially buy the dip,' said Santiment.
Bitcoin's best returns came during extreme greed, not fear, according to data.
Still, Nic Puckrin, investment analyst and co-founder of Coin Bureau, questions the well-known story of buying Bitcoin during extreme fear.
'Buying BTC in 'Extreme Fear' is NOT the best choice,' he said.
Puckrin states that the data complicates the popular idea that extreme fear automatically means a good entry point. His analysis shows that when the Fear & Greed Index drops below 25, the average 90-day return historically is only 2.4%.
In comparison: buying during periods of 'Extreme Greed' yielded much better results, with an average 90-day return of up to 95%. The results show that especially momentum and sustained bullish situations, rather than extreme pessimism, are often associated with higher future returns.
'The F&G Index is actually just a backward-looking momentum indicator. It's less important to predict future returns,' he added.
However, other analysts immediately criticized his chosen timeframe. Critics argue that 90 days is too short to measure. A market expert noted that the return after three months may seem low after an extreme fear state, but the result turns out very differently in the long run.
'You see that Bitcoin averages more than 300% profit 12 months after extreme fear, historically. The F&G Index is not a 90-day signal, but a 12-month accumulation alert. You shouldn't feel rich immediately after buying during extreme fear,' a user responded.
Ultimately, it depends on whether this moment is an opportunity or a risk, which has less to do with sentiment and more with the investor's time horizon and strategy.