With the Fear and Greed indicator at 10 today and many worried about the future of crypto, its time for an updated repost of the post that I did 8 months ago analysing the fear measurement and what it has usually meant for price. Now updated with more dat

For those you aren't aware, the Crypto Fear and Greed index uses 5-6 measurements to assess the current sentiment of the market and then rates that level of emotion on a scale of 1 to 100. 1 is extreme fear and 100 is extreme greed.

Those measurements are objective of course - they look at volatility, social media, momentum, dominance, google trends and (now paused) surveys.

Here is the link to the site, you can look at the chart, click "max" and you will see a movement of the index since the start of 2018.

https://alternative.me/crypto/fear-and-greed-index/

In theory, the idea should be that in cases of extreme fear, the market is terrified and panic selling, and it is a good buying opportunity. When the market is in a state of extreme greed, people are getting extreme fomo and buying regardless of the elevated prices. Hopefully you get the picture.

There is a lot of movement in the chart but it is the extreme fear and greed regions that interest me - specifically around the region of 80 plus or 20 below.

Today the fear and greed index is at 10 - almost a record low.

Looking at the index to date, there are only six other times in the past where the index has plunged below 20. I thought it would be helpful to look at that regions, what was happening and the price at that point, and to think of those as historical buying points (note that during the "China Ban" crash in September, we got to 20, but never went below that).

6 February 2018 - Index Score: 8. BTC Price $6,852.

This is probably the point at which there was a realization we truly were in a bear market, with bitcoin already down around 65% since its top. While buying at this point (the start of a 1 year bear market) is not exactly enticing, that price was more or less the average price for most of the year. Certainly not a bad entry point if you had resisted the temptation to buy in the entire bull market of 2017.

1 April 2018 - Index Score 16. BTC Price $6,975

Around March of 2018 was a bit of a "dead cat bounce" with the price recovering to nearly $12,000. Many people breathed a sigh of relief, portfolios turned green and it seemed like the bear market was over. Nope. Bitcoin immediately crashed right back down again to prices similar to February. Hence a moment of extreme fear.

Again, this wasn't a particularly bad buying point historically, having just avoiding fomo of the surge in bitcoin up to that much higher price level.

25 November 2018 - Index Score 9. BTC Price $3,895

Now we're talking. This was the time of the infamous "hash wars" when BCH forked and the markets plunged into absolute chaos. Bitcoin crashed through its $6,000 support level and halved in price.

This was an absolute buying opportunity - perhaps the opportunity of a lifetime, with an average price around this level for six months. Happy to say I bought right through but not enough. Each buy at the time seemed painful, and it was embarassing at times for people to even know you were in crypto.

Also recall that at $3,100 very few people were calling this the bottom (shout out to Smart Contractor from twitter here who picked it). Many had buy ladders down to $1.3k, and it seemed a fall to at least the mid $2,000s was obvious. A little bit like those all calling for $25k right now.

22 August 2019 - Index Score 5. BTC $10,124

This one might feel like a bit of an anomaly, but in some ways it feels quite similar to today. Bitcoin had just ripped from $4k to around $14k and the bull run was on. After a short period, bitcoin fell sharply and the price started to collapse downwards. I think "5" is a bit extreme for fear but this was the realization that the bull market might be over. For the next six months, the bitcoin price let out steam down to $6.5k (aside from one day when President Xi managed to pump us back to $10,300 - oh for the days when China would actually pump our prices).

So not a great buying spot, but better than FOMOing at $14k and historically still not bad.

13 March 2020 - Index Score 10. BTC $5,142

I don't think this one needs much explanation. The corona effect was sharp and deadly, with the bitcoin price absolutely collapsing quickly. Again, I don't think we have any debate that this was one hell of a buying opportunity. Even more if you had cash to deploy in the weekend. One person I know bought ETH at $85 or so at that point. And there are some people suggesting the charts today are quite similar to this. Hmmmm.

20 May / 22 June / 21 July = Index Score 11, 10 and 10. BTC around the $30,000 mark.

Each of these points marked a point in time where Bitcoin was teetering on the edge of the $30k mark (or slightly below) and many were calling for a massive break and plunge to $20k. We all know what happened, and we now can say that indeed these were great buying points.

I believe I posted my original post when the Fear index was around 15 and the BTC price was $37k. Not a perfect time to buy, but hardly that bad. Now at that last fear point (21 July) - the absolute worst time to sell, I saw on youtube a person who was so convinced BTC was about to plunge he converted his 3 year BTC savings $20k into a leveraged short, then when that was nearly margin called on the super pump, he used his credit card to borrow $21k more to short, and lost it all. That is what fear does to you.

Today - Index Score 10. BTC = $41,900

And here we are. What I think is interesting is that this is by FAR the highest the price has ever been with fear at this range. Which is kind of amusing in some ways, as I feel the realistic worst case crash might take us back down to $30k or so, the same price at which we were just as scared last time. And I think the fear is fairly real here, with at least one person I know in real life "cashing out" at 41k.

Put another way, if BTC had jumped $12k from $30k to $42k in that mid-year bear period, I imagine people would be calling for extreme greed.