If you are a Bitcoin holder and feeling a bit uneasy about the current market conditions, you are certainly not alone.  Yesterday, the Crypto Fear and Greed Index (CFGI) hit a 21 out of 100, corresponding to “extreme fear.”  However, after looking at two years worth of data, this amount of fear in the market […] The post Retail Investors “Extremely Fearful,” But History Tells Us It Might Be A Good Time To Buy appeared first on CryptosRus.

Retail Investors “Extremely Fearful,” But History Tells Us It Might Be A Good Time To Buy

If you are a Bitcoin holder and feeling a bit uneasy about the current market conditions, you are certainly not alone.  Yesterday, the Crypto Fear and Greed Index (CFGI) hit a 21 out of 100, corresponding to “extreme fear.”  However, after looking at two years worth of data, this amount of fear in the market could make for a buying opportunity. 

Covered:

  • Be Greedy When Others Are Fearful
  • I Know What You Did Last Summer
  • March of 2020
  • Closing Thoughts

Be Greedy When Others Are Fearful

To quote Warren Buffet, it is wise for investors to be “fearful when others are greedy, and greedy when others are fearful.” Does this advice hold true for crypto?

The last time the CFGI fell to similar levels was back on September 30th of this year, when it hit 20.

Bitcoin opened at $49,519.11 USD that day.  Less than three weeks later, on October 20th, Bitcoin had rallied more than 60% to the upside, hitting a high of $66,999.00.  Hindsight being 20/20, turns out September 30th would have been a good time to get greedy.

CFGI: I Know What You Did Last Summer

If you were around last summer, then there’s no doubt you remember the prolonged pullback that lasted from May to July.  The markets were trapped in fear during that entire period, hitting a low of 10 on the Fear and Greed Index on July 21, 2021.

 

 

In retrospect, that too turned out to be a very good buying opportunity.  We then saw the Bitcoin price move up more than 130% in less than four months, bringing the price up to its current all-time high at $69,000.

 

 

CFGI: March of 2020

To find the next example of extreme fear on the Crypto Fear and Greed index, we have to go all the way back to March of 2020.  We all know where we were during the “black swan” event that crushed financial markets worldwide.  On March 14th of that year, the Fear and Greed index dropped all the way down to 8.

 

 

While the crypto markets were not spared during March of 2020, they were very quick to recover.  Just over one year later, the Bitcoin Price had climbed more than 1,110%.  Going from a low of $3,858 all the way up to $64,899.

 

 

Closing Thoughts

Historically speaking, some of the best times to buy Bitcoin and other cryptocurrencies are when the Fear and Greed Index are registering extreme fear.  That being said, there is no guarantee that the price will be going straight up from here.

In fact, it is quite possible that we will see even lower levels of extreme fear in the coming days and weeks.  So be safe out there, have a plan for whichever way things will go, and use your best judgment for your specific situation.

And remember that using historical data can be helpful, but it should not be considered financial advice.

 

Find my previous post here.

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