Sunday, June 20

The Crypto Fear and Greed index is now at 12 (extreme fear). It has only dropped to this level five times in the past this cycle. So lets look at those dates, and look at the bitcoin price at that point and see whether each time presented a good buying opportunity.


For those you aren’t aware, the Crypto Fear and Greed index uses 5-6 measurements to assess the current sentiment of the market and then rates that level of emotion on a scale of 1 to 100. 1 is extreme fear and 100 is extreme greed.

Those measurements are objective of course – they look at volatility, social media, momentum, dominance, google trends and (now paused) surveys.

Here is the link to the site, you can look at the chart, click “max” and you will see a movement of the index since the start of 2018.

[https://alternative.me/crypto/fear-and-greed-index/](https://alternative.me/crypto/fear-and-greed-index/)

In theory, the idea should be that in cases of extreme fear, the market is terrified and panic selling, and it is a good buying opportunity. When the market is in a state of extreme greed, people are getting extreme fomo and buying regardless of the elevated prices. Hopefully you get the picture.

There is a lot of movement in the chart but it is the extreme fear and greed regions that interest me – specifically around the region of 80 plus or 20 below.

Today the fear and greed index is at 12 – not a record low but very close and certain the lowest for a very long time. And yet the price is at $37,500 – still historically extremely high.

Looking at the index to date, there are only five other times in the past where the index has plunged below 20. I thought it would be helpful to look at that regions, what was happening and the price at that point, and to think of those as historical buying points:

**6 February 2018 – Index Score: 8. BTC Price $6,852.**

This is probably the point at which there was a realization we truly were in a bear market, with bitcoin already down around 65% since its top. While buying at this point (the start of a 1 year bear market) is not exactly enticing, that price was more or less the average price for most of the year. Certainly not a bad entry point if you had resisted the temptation to buy in the entire bull market of 2017.

**1 April 2018 – Index Score 16. BTC Price $6,975**

Around March of 2018 was a bit of a “dead cat bounce” with the price recovering to nearly $12,000. Many people breathed a sigh of relief, portfolios turned green and it seemed like the bear market was over. Nope. Bitcoin immediately crashed right back down again to prices similar to February. Hence a moment of extreme fear.

Again, this wasn’t a particularly bad buying point historically, having just avoiding fomo of the surge in bitcoin up to that much higher price level.

**25 November 2018 – Index Score 9. BTC Price $3,895**

Now we’re talking. This was the time of the infamous “hash wars” when BCH forked and the markets plunged into absolute chaos. Bitcoin crashed through its $6,000 support level and halved in price.

This was an absolute buying opportunity – perhaps the opportunity of a lifetime, with an average price around this level for six months. Happy to say I bought right through but not enough. Each buy at the time seemed painful, and it was embarassing at times for people to even know you were in crypto.

Also recall that at $3,100 very few people were calling this the bottom (shout out to Smart Contractor from twitter here who picked it). Many had buy ladders down to $1.3k, and it seemed a fall to at least the mid $2,000s was obvious. A little bit like those all calling for $25k right now.

**22 August 2019 – Index Score 5. BTC $10,124**

This one might feel like a bit of an anomaly, but in some ways it feels quite similar to today. Bitcoin had just ripped from $4k to around $14k and the bull run was on. After a short period, bitcoin fell sharply and the price started to collapse downwards. I think “5” is a bit extreme for fear but this was the realization that the bull market might be over. For the next six months, the bitcoin price let out steam down to $6.5k (aside from one day when President Xi managed to pump us back to $10,300 – oh for the days when China would actually pump our prices).

So not a great buying spot, but better than FOMOing at $14k and historically still not bad.

**13 March 2020 – Index Score 10. BTC $5,142**

I don’t think this one needs much explanation. The corona effect was sharp and deadly, with the bitcoin price absolutely collapsing quickly. Again, I don’t think we have any debate that this was one hell of a buying opportunity. Even more if you had cash to deploy in the weekend. One person I know bought ETH at $85 or so at that point. And there are some people suggesting the charts today are quite similar to this. Hmmmm.

**Today. Index Score 12. BTC $37,753**

What can we say? I think the terror here is real. But at the same time a billion dollars of stable coins just flooded into binance and bifinex, and funding rates have switched negative. If we look to the panic in November 2018, this was the start of a six month period of hell – worst case scenario we might get something like that, but also recall that in November the worst was already nearly over.

To be continued!

(Reposted just before due to a typo in the headline – oops!)

EDIT: For those wondering what I am doing right now, not much. My yield farms are running at full capacity – I’m still harvesting them and sending all the crypto to binance to buy BTC. I’m keep doing that until we see a decent retrace or bitcoin dominance pump, and that I’ll use the BTC to expand my farms.

View Reddit by Cryptodragonnz – View Source

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36 Comments

  • moonbase9

    Be greedy when others are fearful and be fearful when others are greedy. That is a good rule for investing and really good in such volatile markets such as cryptos.

  • PM_ME_PLASTIC_BAGS

    Its insane how drastically sentiment changes in the area.

    There’s too much potentially huge news coming for us to be in a bear market

  • AlreadyLiberated

    Thanks for this great post. I’ve been saying it all the way down from $64k to when we hit $30k briefly a few days ago: I think this is a horrible crash in what will be a continuing bull market.

  • Robincapitalists

    November 2018 was already after a collapse in the price.

    Looks more like December 2017/January 2018.

  • KingXodows

    man, great post, for real.
    i don’t know yield farms and i think that i never saw hir talking about it, can you recomend me something to learn more?

  • jjohns91

    I love sentiment indicators! They work very well with stocks for finding bottoms. Hopefully crypto too. Good post.

  • AnUncreativeName10

    This was a top quality post. It’s nice to see folks contributing something like this. I honestly wish I had more then 200 to toss in right now. Was able to add onto.my vet with some very miniscule sell/buys but I restated them for now because I’m unsure what’s next, don’t wanna be caught with my pants down.

    Thanks for the write up.

  • BeGoodie

    This is why DCA is the ultimate strategy.

    Price goes down? Good, you’ve been buying at the lowest possible prices for the inevitable increase.

    Price goes up? Good, you’ve been steadily increasing your long position up until the peak (where you can take some profits)

    You’re accumulating an asset with long term value. In every other part of our lives a low price is a good thing, so see it as an opportunity.

  • guerroguapo

    We still have a ways to go down. Yeah the index is low but as seen in your research it can go quite a bit lower before we bottom out. Likely that bottom is closer to $20K.

  • Cool-Might7913

    Just a heads up to people, please don’t base your investment decisions exclusively on one indicator

  • boooomskii

    Tough convo

    How delusional are we all really? Like what the actual fuck?

    We do all the research, each coin is different, each coin solves a different problem, each coin has its own value…but does it really? No it fucking doesn’t!

    A $2 trillion market can lose half its value because some anonymous assholes are pissed off about some other guy that manipulated and bought the dip. And as always, we get reminded that our researched, independent, problem solving, world saving, made up digital shitcoin “currency” / “blockchain solution” doesn’t actually have the value we calculated it had, it just goes to shit because Bitcoin got sold.

    How is crypto ever gonna take over if we’re so reliant on bitcoin? How is crypto ever gonna replace anything when someone can just orchestrate a big sell and half our net worth is gone in an hour? How can this replace the dollar?

    Let’s say it did replace the dollar and all currency in 2008. What the fuck happens then when you have your house deposit sitting in your wallet because that’s where your wages were paid into and that’s where you saved and these guys decide to have a dick swinging contest and devalue bitcoin by 50%?? How do you buy/put down your deposit for the house that stays the same price? It’s fucking bullshit. No problems are really being solved by the etheriums, vechains, xrps, if they can became 10% of their value after a certain 4 year “cycle”. If they’re really worth that much, they should always be that much. You can’t just know the value is this but it’s only priced at 10% because of fucking bears in the wild (😅🤣)

    I’m not upset and ranting because my investment went down by 50%, I’m still up over 200%. I’m upset because I’m slowly realising that crypto will never really take over. I’m starting not to believe in the technology because it can’t just lose its value over night like that and only be valuable once every 4 years because some guy read a chart that went up because some whales decided to move their money into this asset once every 4 years.

    I personally cannot wait to have enough from crypto to start my own side gig and then eventually quit my job. I will still hold my vechain and xrp because of the potential that they could reach “once every 4 years”, but my goodness am I sick and tired of this bullshit whale action controlling and manipulating for fun. Crypto will never take over because of this (not financial advice, I’m not an expert in anything).

    Stocks are no better either. I’m very happy how so many of us have these asshole hedgefunds by the balls with GME and they get a taste of their own medicine. Unfortunately we can’t do that with crypto whales, we bow down to them and panic sell like little bitches.

    Anyway, rant over.

    TLDR – crypto is not going to take over if all cryptos are dependant on bitcoin, which in turn can be easily manipulated by a few anonymous whales for fun and lose 50% in a week! It’s just not right for something that was perceived to be worth $1.2 trillion becomes $700 billion because one guy placed a big sell order because some guy that created Tron pissed in the other guy’s cereal. It’s so stupid, that has nothing to do with the value of something!!! Am I crazy??

  • e_x_p

    It’s an informative index, but my beef with this website is that it only shows me the right score AFTER a big drop/surge has happened. It needs to be more frequently updated to be anything useful.

  • TommyTwoDicks

    This is getting to be r/wallstreetbets GME level of sad with the crazy analysis and predictions of price changes. Almost nobody can actually predict what’s going to happen. If you think crypto has a future then it will probably be going up at some point, it just may take some time and market fluctuations.

  • SwampPants

    This dip definitely taught me to keep some spare funds around for the next time something like this happens

  • Savvy_One

    Really good post, but isn’t this way of calculating an index reactive and not predictive? Fear and Greed are going to spike-based upon what already just happened in the market, not what is about to happen.

  • shugarhillbaby

    They say the fear phase is the best point to get in…
    “Be fearful when others are greedy, greedy when others are fearful.”
    -Steven Buffet
    Lead pianist, Metallica

  • exthanemesis

    Bull market means I buy. Bear market means I buy cheaper.

    Ten years from now I’m either still working my job or I’m retiring.

  • feel-T_ornado

    My penny cryptos have become almost non-existent. It’s interesting to pounder on wtf I thought they were good investment vehicles… I mean ElonMoon? Talk about greed. 😣😆

    Cardano and some others are barely managing, thankfully.

  • SaltLifeDPP

    I appreciate the breakdown. Especially notes such as the China pump to 11k. People forget about those euphoria rockets, but I think theyre important to judge the overall health of the market. We have now returned to pre-Tesla pump levels, but have not completely collapsed back towards the 2018 ATH. This, to me, is a very good sign of a continuing bull market.

  • OrganicDroid

    Are people really that concerned? I feel like BTC is still really insane rn. Think about it. We’re still well above $20k. That wasn’t too long ago. That’s amazing. Though I do realize people bought at the top. Hey, I did too a little. But I’m your average r/cc HODLing fuckface that says, just HODL. Because that’s what you do:)

  • BackgroundAd4640

    I’m not even flinching. My 1st foray into crypto these last few months. Not fussed if it goes to zero I am here for the ride back up.
    Let’s enjoy the ride together?

  • BashfulBeet

    I can’t help but think that the index is missing something. As long as people are calling out to buy the dip, it’s not fear. As long as people are clinging on to positive signs and rejecting FUD, it’s not fear. The mere fact that this generally hopeful post exists shows that it can’t be at extreme fear.

    Don’t get me wrong, I’m also DCAing down and buying the dips, so I sure hope that the worst is over. My point is just that as long as I still see people calling to buy the dip and saying that the worst is over, I doubt that the worst is really over.

    This is gonna get downvoted to hell but whatever…

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