Like Bitcoin struggling to hold above $90,000, market sentiment has once again descended into extreme fear.
Over the past year, fear or extreme fear has accounted for over 30% of all readings on the Crypto Fear and Greed Index. The index currently stands at 17, firmly in the extreme fear section.
Fear has dominated sentiment since the October liquidation crash more than two months ago, with bitcoin falling 36% from its October all-time high. While the cryptocurrency market has not yet seen a significant recovery. With bitcoin currently trading nearly 30% below its all-time high, investor caution remains high.
A similar disconnect is happening in U.S. stocks. Sentiment currently sits at 42, which signals fear, according to the CNN Fear and Greed Index, even though the S&P 500 is trading around 6,827, a few percentage points below its all-time high.
Whether it’s US stocks or cryptocurrencies, fear continues to dominate investor psychology.
Bitcoin entered a death cross in November, a technical pattern in which the 50-day moving average falls below the 200-day moving average. In this case, the death cross coincided with a local bottom near $80,000 on November 21. Notably, each death crossover during the current market cycle since 2023 has marked an important local bottom, reinforcing its relevance as a contrarian indicator in this cycle.
