Crypto Fear Index at 11, 'Extreme Fear' for 12th straight day…Market watches for Bitcoin bottom signals

As the Fear & Greed Index remains in the 'Extreme Fear' zone, speculation is growing that the Bitcoin (BTC) market may be forming a bottom.

According to Cointelegraph on the 31st (local time), the crypto Fear & Greed Index posted a reading of 11, staying in the 'Extreme Fear' zone for 12 consecutive days. The index gauges investor sentiment by combining factors such as volatility, trading volume, social trends and market momentum.

In general, the 'Extreme Fear' zone is interpreted as a buying opportunity from a contrarian perspective, but doubts are also being raised about the signal’s reliability amid the bearish trend that has persisted since January this year.

Still, internal market data are showing a different pattern. Crypto analyst MAC_D said that the share of short-term holders has fallen to 3.98%. This is a level similar to those seen near market bottoms in past cycles.

A declining share of short-term investors indicates that demand for short-term trading is easing and market volatility is moderating. At the same time, the share of long-term holders is rising, suggesting accumulation is underway.

The influence of large investors is also growing. Analyst CW8900 said the Bitcoin exchange whale ratio has climbed above 60%, marking the highest level in a decade.

He noted that market bottoms are typically formed when the whale ratio is at its peak, adding that retail participation is at its lowest level in the past 10 years.

A divergence between sentiment and price is also evident. Crypto analytics account LandGroup said that while investor sentiment has weakened due to geopolitical risks and rate concerns, actual Bitcoin selling pressure has not increased meaningfully.

Correlation with traditional finance is also weakening. Bitcoin researcher Axel Adler Jr. said the 13-week correlation coefficient between Bitcoin and the S&P 500 has fallen to zero or below.

This suggests Bitcoin is being viewed as a higher-risk asset than equities and is showing relative weakness. In fact, despite recent rebound attempts, Bitcoin has failed to establish a sustained uptrend.

On-chain data point to the possibility that the market is entering an accumulation phase. With selling pressure not rising materially and whale-led buying underway, analysts say a foundation for a future rebound could be forming.