Bitcoin in "Extreme Fear": A Historic Signal for Investors?

Bitcoin (BTC) has experienced a week of intense selling pressure, with its price falling below the psychological threshold of 61,300 USD , reaching a low of 61,300 USD . This decline has been accompanied by the Crypto Fear & Greed Index sliding into the "extreme fear" zone for the first time since March 2023. According to Cryptoast, this situation recalls historical phases when the market reached accumulation levels before rebounding strongly, as in 2018 or 2022. The macroeconomic backdrop remains marked by fears of a recession in the United States and a restrictive monetary policy from the Federal Reserve, which weigh on risk assets such as Bitcoin. What happened this week The price of Bitcoin continued its decline, breaking a key level at 61,300 USD , after a week of massive liquidations. The Crypto Fear & Greed Index fell below the 20 mark, signaling a sentiment of "extreme fear" among investors. CoinGlass data indicates that liquidations over 24 hours reached 1.84 billion USD , including 1.2 billion USD on Bitcoin long positions. Despite comments from Michael Saylor pointing to a rotation toward AI, no significant rebound has been observed. Trading volume on BTC/USD pairs increased by 30% across major platforms, reflecting heightened trader activity. Meanwhile, Bitcoin ETFs continue to experience net outflows, with 4 billion USD in withdrawals since their launch, according to CoinShares. Standard Chartered recently estimated that Bitcoin could be close to a "floor," with a target of 100,000 USD by year-end, despite the current decline. Why this matters for investors The Crypto Fear & Greed Index, based on volatility, volume and social trends, is a key indicator of investor sentiment. A value in the "extreme fear" zone suggests the market is oversold, which may attract long-term buyers. Historically, these phases have preceded major rebounds, such as in 2018 or 2022. However, this indicator is not infallible: it can remain in the fear zone for weeks, or even months, before a reversal. A drop below 61,300 USD could also trigger automatic liquidations, amplifying volatility. From a sector perspective, a prolonged Bitcoin correction could affect altcoins, particularly those linked to DeFi or layer 2 solutions such as Arbitrum or Optimism, which often depend on BTC liquidity for their price movements. On the macroeconomic side, a possible interest rate cut by the Fed, expected for September 2026, could revive risk assets, including Bitcoin. Conversely, a prolonged restrictive monetary policy would maintain selling pressure. Risks and limitations to consider The Fear & Greed Index can remain in the fear zone for extended periods without an immediate rebound, as in 2019 or 2023. A further drop below 60,000 USD could trigger cascading liquidations, worsening the decline. The absence of bullish catalysts, such as approval of an Ethereum ETF or a positive geopolitical event, could keep the market range-bound for several weeks. What to watch in the coming days Several indicators could signal a trend reversal. A move of the Crypto Fear & Greed Index out of the "extreme fear" zone (value above 30) would be a first sign of recovery. Macroeconomic data, notably inflation figures (CPI) or Fed decisions, could also influence Bitcoin in the short term. Finally, a stabilization of trading volume and a reduction in massive liquidations would be encouraging signs for investors.