New Data Questions Whether Extreme Fear Is a Buy Signal

The Crypto Fear & Greed Index stands at 9 today, up from 8 yesterday after hitting 5 last week, keeping the market in "Extreme Fear" territory. Google Trends shows searches for "Bitcoin going to zero" reached a peak score of 100, the highest on record. Some analysts treat such spikes in pessimism as buying opportunities.

Santiment noted that surges in negative sentiment often follow fast price drops, with talk of "down," "selling" or "going to $0" viewed as retail capitulation, and wrote, "And once you see the predictions of doom for cryptocurrency, it’s generally the best time to officially buy the dip." Others caution that extreme fear does not guarantee strong short-term returns.

Nic Puckrin of Coin Bureau found that when the Fear & Greed Index falls below 25, the average 90-day forward return has been about 2.4%, while periods of "Extreme Greed" saw average 90-day returns near 95%. He called the index "nothing but a backward-looking momentum indicator" and less useful for predicting returns.

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