What is happening when the market is in extreme fear?

Investors are panic selling, especially retail investors.

Liquidations are occurring frequently, causing prices to drop faster.

Defensive sentiment prevails: most are staying on the sidelines or switching to stablecoins.

The Crypto Fear & Greed Index (if measured) often falls to a level of 0–20 → confirming extreme fear.

🔥 2. Why does this situation occur?

Common causes:

The sharp decline of BTC/ETH → dragging the entire market into red.

Bad macro news (interest rates, legal issues, ETF withdrawals…).

Chain liquidations.

The market was previously overheating → deep correction.

💡 3. Is this a good or bad signal?

Depending on perspective:

Bad (short-term):

Prices may continue to drop due to panic sentiment.

Risk of breaking strong support.

Good (long-term):

“Extreme fear” is often an ideal accumulation zone in major cycles.

Smart money (whales, institutions) often buys in when retail panics.

In many previous instances, when the extreme fear index appears → that is the bottom or near the bottom.$ETH