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The cryptocurrency market is gradually transitioning from weeks of pervasive fear to cautious optimism as market sentiment begins to recover. For approximately 18 days, market sentiment hovered near its lowest levels, but it recently signaled a shift from the “extreme fear” zone. The Crypto Fear & Greed Index, a popular indicator for gauging investor psychology, rose to a level of 28 on Saturday, indicating “fear.” This marked the first time since November 10 that the index did not reflect “extreme fear.”
Is Extreme Fear a True Bottom Signal?
Historically, “extreme fear” levels often coincide with local market bottoms. In mid-November, many analysts noted that the index had plunged to its most pessimistic levels in this cycle. Some commentators described this scenario as a “maximum pain” situation in terms of Bitcoin 
$90,357.50 dominance. Shortly after, discussions suggested that even the term “extreme fear” understated the current market sentiment.
Another prominent perspective came from crypto trader Nicola Duke. According to Duke, each instance of “extreme fear” in the index tends to signal a local bottom for Bitcoin. This means that moments of peak pessimism often present significant buying opportunities for long-term investors. Current data suggests a reoccurrence of this historical pattern.
Other indicators also support this recent partial recovery in sentiment. Santiment, a provider of on-chain and social media analyses, reported a “largely bullish” sentiment on social media as Bitcoin approached the $92,000 mark. The data shows a noticeable increase in positive to negative posts ratio, indicating that small investors are showing renewed interest despite market volatility.
Limited Appetite for Risk: Bitcoin Season Continues
However, it is too soon to claim a strong risk-taking trend across the market. CoinMarketCap’s Altcoin Season Index, a valuable measure of the altcoin-Bitcoin balance, currently records a score of 22 out of 100, clearly indicating a “Bitcoin season.” This data suggests investors are still largely focused on Bitcoin and remain cautious toward altcoins.
Moreover, macroeconomic expectations play a critical role in this limited sentiment recovery. Rising global recession concerns directly affect investors’ approach to risky assets. Bitwise Europe Research Director Andre Dragosch argues Bitcoin’s price is “mispriced” due to global economic outlook expectations, believing that the potential for a recession is insufficiently factored in. Dragosch compares the current risk-reward balance to the extraordinary market conditions during the COVID period, highlighting its asymmetry.
In addition, recent small-scale entries into U.S.-based spot Bitcoin ETFs indicate a cautious return of confidence, interpreted as a sign of tentative confidence in the market. This development serves as another factor bolstering the sentiment recovery, demonstrating that institutional investors have not entirely lost their risk appetite.
