In the high drama of the crypto world, market sentiment can shift dramatically overnight. Last week, true to drama queen style, the Crypto Fear and Greed Index threw itself off the “greed” ledge into the lows of "Extreme Fear" territory. On October 17, 2025, the index sat at a chilling “22” on the dial. It’s this type of crypto soap opera that keeps the crypto kids coming back for more. As of 20th October, the Fear and Greed Index has got a hold of itself and now sits and plain old “fear”. 

But what caused particular faceplant to “extreme fear”? 

Why Did the Index Hit Extreme Fear?

Bitcoin (as of the 20th October 2025) is currently trading around US$108,718, down approximately 14% from its all-time high of $126,210 reached on October 6, 2025.

The dramatic plunge came about after President Donald Trump's announcement of 100% tariffs on Chinese imports in early October. This triggered over US$19 billion in liquidations.

Bitcoin briefly dropped below US$102,000 during the October 11 selloff, before rebounding. 

Ethereum had fallen to approximately US$3,900, from around US$4700 just weeks before, while major altcoins including Solana and Cardano have also experienced similar volatility.

These price jumps directly impact the index's fear component, as erratic swings shake investor confidence. The tariff shock and subsequent recovery have created whiplash conditions that push sentiment to extremes in both directions.

What Does This Mean for Crypto Investors?

Extreme Fear isn't necessarily catastrophic. Historically, moments of extreme fear have sometimes preceded strong market rebounds, as panicked selling creates opportunities for value investors. More or less, there’s people waiting for these specific moments to start buying at a “discount”.

But, that is assuming that prices will go back up. And we all know in crypto, there is no guarantee that will happen. Prices could fall further, so you still have to make good choices, unlike your decision to buy Fartcoin on the downward slide. 

Just keep in mind that “Extreme Fear” isn't all doom and gloom. 

What is the Fear and Greed Index?

For those new to the crypto space, the Crypto Fear and Greed Index is a popular tool developed by Alternative.me that measures the emotional pulse of the Bitcoin and broader cryptocurrency market. It aggregates data from various sources, including market volatility, trading volume, social media sentiment, Bitcoin dominance, and Google Trends for crypto-related searches. The index ranges from 0 to 100:

• 0-24: Extreme Fear (investors are thought to be terrified, may lead to oversold conditions)
• 25-49: Fear (assumptions are that caution dominates, prices may be undervalued)
• 50: Neutral (assumed balanced sentiment)
• 51-74: Greed (assumptions are that optimism grows, leading to potential overvaluation)
• 75-100: Extreme Greed (possibility of euphoria, risk of a bubble)

When the index hits Extreme Fear, some investors may see it as a buying opportunity for long-term holders. Others will be crying into their Bitcoin Maxi mugs and maybe even swapping it for a shot glass.

But, of course, this is one quality soap opera where we all do it for the plot. 

Climbing the Wall of Worry: A Good Sign?

Interestingly, the current market conditions may actually represent what traders call "climbing the wall of worry". It is a phenomenon where markets can rise despite everyone feeling spooked.

Bitcoin was trading within 20% of its all-time high while the Fear and Greed Index sat at extreme fear levels. When sentiment and price are far apart, this is often considered a bullish signal in traditional markets. The fact that Bitcoin held above US$108,000 despite extreme fear readings could indicate underlying strength rather than impending collapse.

Whether this applies to the crypto markets and to this particular situation is yet to be seen.

Is the Indicator Still Reliable?

There's a growing debate about whether the Fear and Greed Index remains as predictive as it once was. The cryptocurrency market has matured significantly since the indicator's creation, with institutional investors, ETFs, and sophisticated trading strategies now dominating trading volumes.

These professional participants may not react to market conditions in the same emotionally-driven ways that individual investors do. The index may just be reflecting noise rather than solid signals in today's more mature market structure.

The Endurance of Extreme Fear

It's also worth noting that extreme fear readings can persist far longer than many investors expect. During previous bear markets, the Fear and Greed Index has remained in extreme fear territory for weeks or even months at a time. 

The extreme fear might signal a buying opportunity, but timing the exact bottom is what investing dreams are made of, but not every investor gets this right!

Please remember past performance is not a reliable indicator of future results. Don’t invest unless you’re prepared to lose all the money you invest. Due to the nature, complexity and volatility of crypto, it may be perceived to be a high‑risk investment. There are no government or central bank guarantees in the event something goes wrong with your investment.

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