As bitcoin struggles to maintain its position above $90,000, with market sentiment once more plunging into extreme fear.
In the past year, fear or extreme fear has represented over 30% of all readings on the Crypto Fear and Greed Index. Currently, the index is at 17, solidly within the extreme fear zone.
Following the significant liquidation crash in October, which saw bitcoin decline by 36% from its all-time high, fear has been the prevailing sentiment for more than two months. The cryptocurrency market has struggled to show substantial recovery, with bitcoin trading nearly 30% beneath its all-time peak, leading to heightened investor caution.
A similar trend is apparent in U.S. equities, where sentiment registers at 42—indicative of fear per the CNN Fear and Greed Index, despite the S&P 500 hovering around 6,827, just slightly below its historical highest point.
Fear persists as the overarching theme affecting investor psychology in both U.S. equities and cryptocurrencies.
In November, bitcoin encountered a death cross, a technical signal indicating that the 50-day moving average has dipped below the 200-day moving average. This particular death cross coincidentally aligned with a local bottom near $80,000 on November 21. Importantly, each death cross throughout the current market cycle from 2023 has indicated a notable local bottom, underscoring its significance as a contrarian signal in this phase.
