Extreme Fear Back In Focus: Is It Time To Buy Bitcoin?

Keshav Verma

Last Updated: June 11, 2024 2:19 pm

3 mins read

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Data shows the Bitcoin market has again fallen back into a state of extreme fear as the price has plummeted down over the past week.

Bitcoin Fear And Greed Index Says Market Is Extremely Fearful

As per the latest weekly report from Arcane Research, extreme fear has returned to the BTC market, suggesting now may be the time to buy.

The “fear and greed index” is an indicator that tells us about the general sentiment among investors in the Bitcoin market.

The index uses a numeric scale that runs from one to hundred for representing the sentiment. All values above the “50” point signify greed, while those below the cutoff imply the market is fearful right now.

Values towards the end of the range of above 75 and below 25 indicate sentiments of extreme greed and extreme fear, respectively.

Historically, bottoms have tended to form during periods of extreme fear while tops have occurred when the market is extremely greedy.

Because of this, some investors believe that buying during extreme fear and selling during extreme greed in optimal.

Related Reading | Bitcoin Long-Term Holders Start Capitulating Amid Panic

“Contrarian investing” is a trading method that follows this idea. Warren Buffet’s famous quote best sums the philosophy up:

Be fearful when others are greedy, and greedy when others are fearful.

Now, here is a chart that shows the trend in the Bitcoin fear and greed index over the past year:

The value of the indicator seems to have plunged down in the last week | Source: Arcane Research's The Weekly Update - Week 18, 2022

As you can see in the above graph, the Bitcoin fear and greed index now has a value of 10, suggesting that the sentiment has declined to extreme greed.

The report notes that the value of the metric hasn’t been worse than this since the COVID crash back in March 2020.

As mentioned before, such a sentiment usually brings with it buying opportunities. However, even so it’s not a sure buy signal either.

The last time the index reached a similar value was back in January of this year. Then, the bottom didn’t actually form until two weeks after the sentiment turned extremely fearful and Bitcoin observed another drop of 20%.

So, it’s not certain if now is the time to buy. But nonetheless, such a deep extreme fear sentiment might just be a signal for investors to look out for bottoms forming in the near future.

BTC Price

At the time of writing, Bitcoin’s price floats around $29.5k, down 25% in the past week.

Looks like the price of the crypto has observed a sharp drop today | Source: BTCUSD on TradingView

Featured image from Unsplash.com, charts from TradingView.com, Arcane Research

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.