Early signs of recovery as crypto sentiment improves out of 18-day extreme fear reading

After nearly three weeks of pervasive pessimism, the crypto market’s psychological climate is showing tentative signs of stabilization. The Crypto Fear & Greed Index, a widely followed gauge of investor sentiment, has climbed out of “Extreme Fear,” ending 18 days at rock-bottom levels. This is the first time since November 10 that the index has not illustrated an “Extreme Fear” score.

On Saturday, November 29, it indicated a “Fear” score of 28. This is the first time since November 10 that the index has not reported an “Extreme Fear” score.

As the market sentiment languished at the bottom of the index for 18 days during most of November, the situation drew the attention of individuals in the crypto community, igniting tension in the industry, contrasting with November being the best month for Bitcoin on average.

A decline in crypto market sentiment poses a threat to Bitcoin’s dominance

Analyst Matthew Hyland shared a report dated November 15, which noted that the Crypto Fear & Greed Index had recorded the “most extreme fear level” throughout this cycle. According to him, such a situation for Bitcoin dominance could be quite tough.

Just a few days after Hyland’s findings were made public, analyst Crypto Seth released a statement on November 23 highlighting that “Extreme Fear is an understatement.” Since then, other indicators have begun to spark hope in the industry, suggesting that market sentiment may be improving.

Regarding the progress in the Bitcoin market, Santiment, a comprehensive market intelligence platform for cryptocurrencies, reported on Wednesday, November 26, that the cryptocurrency demonstrated a generally positive attitude. At this time, its price had climbed to almost $92,000, based on their social media bullish-to-bearish sentiment indicator.

Following the release of this information, Santiment noted that discussions about BTC on social media are primarily centered around its price fluctuations and activities conducted by key investors, such as ETFs and treasury purchases. 

However, even with this assertion, investors participating in the crypto market appeared to practice caution in their spending and adapted moves that avoided risks.

This strategic move is reflected in CoinMarketCap’s Altcoin Season Index. Here, investors encountered a strong “Bitcoin Season” with a score of 22 out of 100. The score indicated a shift between the Altcoin and Bitcoin seasons. 

On the other hand, Bitwise Europe’s research leader, André Dragosch, mentioned on Friday, 28, that Bitcoin’s price appeared unusual because several individuals are misinterpreting the general economic conditions. This happens in the face of mounting concerns regarding a possible recession. “The last time I saw such an uneven risk-reward was during COVID,” Dragosch noted.

Scott Bessent assures Americans that a recession is unlikely to happen next year 

Dragosch earlier expressed his belief that Bitcoin will experience a significant rise in value, arguing that its current price does not align with what they expects for the economy in the future.

Regarding his claim of an uneven risk-reward during the COVID-19 pandemic, the head of research recalled that the fear of a global pandemic, which started in March 2020, sent Bitcoin’s price crashing. 

Therefore, according to Dragosch, Bitcoin’s current circumstances are similar to the extreme risk-reward situation encountered during the COVID crisis.

Bitcoin now appears to exhibit the most pessimistic global growth outlook since 2022, when it was significantly impacted by the harsh monetary policies of the US Federal Reserve and the collapse of the FTX crypto exchange, he said.

Dragosch further explained that Bitcoin is essentially adopting a slow-growth economy and has already taken into account a significant amount of the negative news. 

In the meantime, United States Secretary of the Treasury Scott Bessent assured Americans that there is no prospect of a recession coming in 2026.

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