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Bitcoin rose earlier this week, but initial excitement from Trump’s strategic reserve plans was short-lived due to profit-taking amid the lack of concrete plans and a risk-off mood in broader equity markets.
By Shaurya Malwa|Edited by Aoyon Ashraf
Mar 5, 2025, 12:16 p.m. UTC
What to know:
- A prolonged ‘extreme fear’ reading on the Fear and Greed Index could suggest a potential rise in Bitcoin prices, with a similar pattern previously leading to a 200% increase in BTC.
- The buying opportunity comes as Bitcoin’s value dips into ‘Extreme Fear,’ a situation that previously resulted in a value doubling over three months.
- Bitcoin’s market volatility and uncertainty have led to profit-taking and a wait-and-see approach pending further clarity from the upcoming White House Crypto Summit.
A multi-day ‘extreme fear’ reading in a widely-followed sentiment index could be indicative of bitcoin prices setting a bottom before moving higher in the coming weeks — with a previously similar setup preceding a 200% rise in BTC.
STORY CONTINUES BELOW
The Fear and Greed Index, which measures investor emotions in markets like bitcoin, ranging from 0 (lowest sentiment) to 100 (highest sentiment), has shown an extended ‘extreme fear’ reading in the past several days as prices whipsawed between the $83,000 and $95,000 levels.
The index helps identify whether investors are too scared (potential buying opportunity) or too greedy (possible market correction), tending to act as a contrarian indicator in the short term. It is based on price volatility and momentum, social media sentiment, Google trends data and bitcoin’s overall market share.
“Bitcoin’s plunge into ‘Extreme Fear’ on the Fear & Greed Index, its first since September 2024, when BTC traded at $53K, echoes a pivotal historical low,” Vincent Liu, CIO at trading firm Kronos Research, told CoinDesk in a Telegram message. “Back then, Bitcoin’s value doubled over the next three months, hinting at a potential buying opportunity for savvy investors.”
“Amid today’s market volatility, fueled by trade tariffs and broader macroeconomic uncertainties, this moment could emerge as a golden entry point, provided global trade tensions ease and overall economic sentiment strengthens,” Liu added.
Bitcoin and several major tokens, including Cardano’s ADA, Solana’s SOL and xrp (XRP), surged Sunday following President Trump’s announcement of a U.S. crypto strategic reserve.
But the initial excitement was short-lived due to profit-taking amid the lack of concrete plans and a risk-off mood in broader equity markets.
Trump’s tariff announcements on Canada, Mexico, and China further impacted markets, and traders are now awaiting more clarity from the upcoming White House Crypto Summit for cues on future positioning.
Shaurya is the Co-Leader of the CoinDesk tokens and data team in Asia with a focus on crypto derivatives, DeFi, market microstructure, and protocol analysis.
Shaurya holds over $1,000 in BTC, ETH, SOL, AVAX, SUSHI, CRV, NEAR, YFI, YFII, SHIB, DOGE, USDT, USDC, BNB, MANA, MLN, LINK, XMR, ALGO, VET, CAKE, AAVE, COMP, ROOK, TRX, SNX, RUNE, FTM, ZIL, KSM, ENJ, CKB, JOE, GHST, PERP, BTRFLY, OHM, BANANA, ROME, BURGER, SPIRIT, and ORCA.
He provides over $1,000 to liquidity pools on Compound, Curve, SushiSwap, PancakeSwap, BurgerSwap, Orca, AnySwap, SpiritSwap, Rook Protocol, Yearn Finance, Synthetix, Harvest, Redacted Cartel, OlympusDAO, Rome, Trader Joe, and SUN.
