Thursday, September 16

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.

[ad_1]

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!

[ad_2]

View Reddit by Cryptodragonnz – View Source

24 Comments

  • fontinuos

    Cool, thanks for sharing. The fact that we are so high in price today comparing to the last extreme fear dates makes me think we are going lower.

  • Get_dat_bread69

    Excellent info!! I am was telling my buddy yesterday that this time around I’m ready! I told myself when it was around $5000 I should be buying and I never did… this time I’m going to buy the bear market all the way through and the next ATH I will be rich af!! Lol

  • slammy_salami_mommy

    Do you have any other sentiment trackers for cryptos that you like to use? Just curious, super solid post and great information!

  • eqleriq

    This is an amazing example of how not to measure anything.

    Are you seriously trying to determine market sentiment by … assessing what previous sentiment was?

    Are you going to add the impact of having bullshitty “fear and greed indices” on your fear and greed index, or would that cause an infinite loop that turns into the face of the architect from the matrix telling you to invest in KFC

    I’d love to see your keywording for social media analysis. How many points does a tweet get if it has “bitcoin” and “i just shit my pants because of how low my portfolio just dropped?” What about +”bitcoin” and +”fetal position in an empty bathtub?” Is that greed or fear?

  • searchingmanythings

    Be fearful when others are greedy.
    Be greedy when others are fearful.

    I invested a lot of money on stocks and crypto during March 2020 when everyone was panic selling. Turned out to be the best decision I’ve ever made.

    My crystal ball tells me this is another one of those once in a lifetime opportunity.

  • JeremyLinForever

    Thanks for the detailed post. People need to learn this and continue buying the dip.

  • backcountry90320

    Thank you. Great analysis.

    But what were the numbers during the 2017 crash, 2013 crash?

  • J-Lannister

    What is this fear and greed index? Can we see their analysis?

    Why should we pay any attention to it? Looks like astrological horse-shit, to be honest.

Comments are closed.