Bitcoin Faces Profit-Taking as ‘Extreme Fear’ Signals Potential Upside
Bitcoin saw an early-week surge following President Trump’s announcement of a U.S. crypto strategic reserve. However, the initial optimism quickly faded as investors took profits amid the absence of concrete plans and a broader risk-off sentiment in equity markets.
A prolonged ‘extreme fear’ reading in a widely followed sentiment index suggests that Bitcoin may be nearing a bottom, potentially setting the stage for a significant move higher in the coming weeks. A similar pattern in the past preceded a 200% rally in BTC.
The Fear and Greed Index, which gauges market sentiment on a scale from 0 (extreme fear) to 100 (extreme greed), has remained in the ‘extreme fear’ zone for several days as Bitcoin’s price fluctuated between $83,000 and $95,000. Historically, this index serves as a contrarian indicator, signaling potential buying opportunities when fear dominates and warning of corrections when greed takes hold. The index factors in price volatility, momentum, social sentiment, Google search trends, and Bitcoin’s overall market share.
“Bitcoin’s dip into ‘Extreme Fear’ on the Fear & Greed Index marks its first such occurrence since September 2024, when BTC was at $53,000,” noted Vincent Liu, CIO of Kronos Research, in a message to CoinDesk. “Following that event, Bitcoin’s price doubled in the subsequent three months, suggesting a potential accumulation opportunity for strategic investors.”
Liu further emphasized that despite ongoing market volatility driven by trade tariffs and macroeconomic uncertainty, Bitcoin could present a compelling entry point—contingent on easing global trade tensions and improved economic sentiment.
Bitcoin and other major cryptocurrencies, including Cardano’s ADA, Solana’s SOL, and XRP, saw a strong rally on Sunday after Trump’s announcement. However, profit-taking quickly followed as traders remained cautious due to a lack of clear policy details and broader equity market weakness.
Additionally, Trump’s newly imposed tariffs on Canada, Mexico, and China added further pressure to financial markets. Investors are now looking ahead to the upcoming White House Crypto Summit for clearer direction on future regulatory and strategic developments.
