After BTC corrects to the $86K level and the Timeline sentiment hit an all time low it got me thinking, is there any correlation between sentiment around pivotal price levels of the market? To find out I studied the "Fear and Greed Index", an indicator that uses a range of sources such as volatility, volume, sentiment, dominance and trends to give a score out of 100. 1 being peak fear and 100 being peak greed.
The results were interesting, currently the FGI is 21/100 (extreme fear) and if you've spent much time on crypto twitter is does feel that way too. However, during this bull market there are two key price areas where BTC had the same score:
Bear market bottom -
When the bear market ended after a full year of brutal selling BTCs price was around $16K with the same FGI score as today with 21. This signaled the end to the selling and began the bull market we have now.
Q2-23 '24 bottom -
For me, the most relevant time to compare FGI with todays score is with the bottom of the bearish trend channel we suffered through in 2024. Although price did wick below this $53,923 level to hit
49K, the daily didn't close below it and so the September 6th low is the trend channel bottom. FGI score of 22 provided the springboard for the next leg up.
So with his information the real question is this: Are we still in a bull market? If the answer is yes, then history tells us once FGI reaches these levels the bottom is in and the next leg up is around the corner.
If the answer is no then the printing of a new lower high after yesterdays lower low will be confirmation of bitcoin rolling over.
I am not sure which is true but having a plan for both will be very important.
The results were interesting, currently the FGI is 21/100 (extreme fear) and if you've spent much time on crypto twitter is does feel that way too. However, during this bull market there are two key price areas where BTC had the same score:
Bear market bottom -
When the bear market ended after a full year of brutal selling BTCs price was around $16K with the same FGI score as today with 21. This signaled the end to the selling and began the bull market we have now.
Q2-23 '24 bottom -
For me, the most relevant time to compare FGI with todays score is with the bottom of the bearish trend channel we suffered through in 2024. Although price did wick below this $53,923 level to hit
49K, the daily didn't close below it and so the September 6th low is the trend channel bottom. FGI score of 22 provided the springboard for the next leg up. So with his information the real question is this: Are we still in a bull market? If the answer is yes, then history tells us once FGI reaches these levels the bottom is in and the next leg up is around the corner.
If the answer is no then the printing of a new lower high after yesterdays lower low will be confirmation of bitcoin rolling over.
I am not sure which is true but having a plan for both will be very important.
Note
FEAR & GREED: 10This new daily FGI number has only ever been lower on the COVID 19 black swan event when the score was 9. The other time was towards the end of the '22 bear market at 6.
I will admit the length of time bitcoin is spending at the mid $80k's is worrying me, if the weekly closes at these levels it's going to get ugly IMO. However, historically longing a fear and greed index score of 10 is high R:R
Note
BTC up 20% from the bottom after the US Gov announce the "Crypto strategic reserve" that will include BTC, ETH, SOL, XRP & ADA with more on the way.The timing of this is a masterstroke IMO, on a sunday with minimal volume and maximum fear, the result is a huge move that takes BTC from below $80 to back above $94K and the weekly low. Incredible move! Now the 4H 200 EMA is being tested and is next point of resistance going into next week.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.