The Fear and Greed Index is currently in the fear zone (around 20 points), but conditions associated with a market bottom, such as capitulation and new cash flow, have not yet appeared, so the buy signal is not reliable.
In previous cycles, extreme fear often coincided with a 'buying the dip' opportunity. However, the current picture shows a controlled decrease in risk, weak liquidity, and a lack of returning capital, making this fear zone potentially reflect hesitation rather than a reversal point.
MAIN CONTENT
The Fear and Greed Index returns to the fear zone, but there are no signs of 'capitulation' like previous typical bottoms.
Weak altcoins and the Altcoin Season Index heavily leaning towards 'Bitcoin season' reflect a risk-averse sentiment.
Liquidity and new cash flows are still lacking, making the decline potentially more vulnerable than a buying opportunity.
Current fear is not accompanied by capitulation.
The Fear and Greed Index is in the fear zone around the final level of 20 points, but there are no usual signs of capitulation such as volatility spikes, panic sell-offs, and forced liquidations on a large scale.
The Fear and Greed Index from CoinMarketCap records the market at 27 points (fear). As of December 23, the index is at 29 points, still in the fear zone.
In previous cycles, notable 'buy the dip' moments often appeared after strong volatility spikes, mass liquidations, and a clear capitulation event. The current context is different: prices are weakening but lacking a volume explosion, and the chaotic state often marks supply exhaustion.
The market seems to be reducing risk in a 'slow and controlled' manner rather than panic selling. Fear due to uncertainty about positions and expectations often creates oscillating behavior, not necessarily leading to quick reversals like fear due to capitulation.
Weak altcoins indicate that investors are avoiding risk.
The weakness of altcoins and the 'Bitcoin season' state is a typical signal of a defensive market, where capital is not ready to return to higher-risk assets.
A clear sign is that the Altcoin Season Index remains firmly in the 'Bitcoin season' zone, indicating that capital is focused on relatively defensive positions rather than rotating into altcoins. At the time mentioned, the index is at 18.
At the same time, the total cryptocurrency market capitalization, excluding Bitcoin and Ethereum, tends to decline, reinforcing the view that speculative appetite is still weak. Historically, significant recoveries have often been led by market breadth improvements (many coins strengthening together), a factor that has not yet appeared.
Liquidity continues to be the missing piece.
When trading volume is low and new capital has not entered strongly, the sentiment of 'fear' alone is often not enough to support a sustainable recovery.
Liquidity conditions are creating resistance: trading volume is quiet, institutional participation is unstable, and there is no evidence of fresh capital flowing into the market on a large scale. This is a key difference between 'fear creating a bottom' and 'fear due to uncertainty.'
In previous cycles, fear only transitioned to a more reliable bullish signal when market participation levels began to return clearly. If liquidity does not improve sustainably, prices may have a short rebound and then weaken, rather than forming a new upward trend.
This level of fear mainly reflects hesitation, not panic.
The current level of fear tends to reflect hesitation and uncertainty of positions, making prices likely to fluctuate sideways rather than spike immediately.
Instead of signaling an impending reversal, the current fear zone shows that investors are cautious but not yet 'forced' to exit their positions. When forced selling pressure has not occurred, the market often lacks the strong shakeout needed to cleanse leverage, leading to a sideways state that is vulnerable if bad news appears.
Until there are clearer signals such as capitulation, expanding volume, or capital rotation back into riskier assets (altcoins), the dips may still be more risky than opportunistic.
Conclusion
Fear can be an opportunity, but it is often only reliable when accompanied by capitulation and the return of liquidity.
In the current context, patience and waiting for confirmation signals from the cash flow may be more important than relying solely on sentiment indicators.
Frequently Asked Questions
Is the Fear and Greed Index at 27–29 a 'buy the dip' signal?
Not necessarily. The final level of 20 points indicates fear, but 'buying the dip' is often more reliable when capitulation occurs, volatility spikes, and cash flow/volume returns clearly.
Why is weak altcoin a risk signal?
When altcoins weaken and the market is in 'Bitcoin season', it often reflects a capital flow prioritizing defense and avoiding risk, indicating that speculative appetite has not yet returned.
Why is liquidity more important than sentiment at this stage?
Sentiment may improve in the short term, but if trading volume is low and lacking new capital, the recovery momentum is often weak and easily reversed. In many cycles, improved liquidity is a condition for sustained recovery.
Source: https://tintucbitcoin.com/so-hai-chua-han-la-co-hoi-bat-day/
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