Extreme Fear Amongst Investors May Signal That a Trend Shift is Imminent


Bitcoin (BTC) has been firmly caught within the throes of immense volatility over the past several days and weeks, with its recent bout of sideways trading ultimately resulting in a massive movement that caused a maximum pain scenario for traders.

This volatility has come concurrently with “extreme fear” amongst investors, which may be a counter-trading signal that means a bullish shift in trend is imminent, and this may be perpetuated by a rise in volatility that is expected by analysts.

Bitcoin Dropped to $7,000 Before Bulls Propelled it to $7,800 

At the time of writing, Bitcoin is trading up just under 3% at its current price of $7,520, which marks a notable climb from its daily lows of just over $7,000 that were set in the midst of a major sell-off experienced by the cryptocurrency yesterday.

This sell-off – which had led many analysts and investors to believe further downside was imminent – ultimately resulted in a strong bounce that led the cryptocurrency to post an incredibly strong movement up to highs of $7,800.

From this point, Bitcoin has retraced slightly to its current price levels, and its inability to sustain the bounce has called into question the long-term significance of this rally.

Hsaka, a popular cryptocurrency analyst on Twitter, explained in a recent tweet that he believes that the crypto markets, and Bitcoin in particular, will soon see a large increase volatility.

“$BTC: Stopped on 7800 swing shorts at 7300. Reshorted 7680. Think I’m done with swing trading for a while, seems like volatility is going to start ramping up again,” he explained.

Investors Expressing Extreme Fear, Which Could be a Bullish Sign

One factor that should be noted alongside the imminent volatility that is expected by analysts is that investors are currently expressing extreme fear, which has historically been a factor that is counter-traded by investors.

Mr. Anderson, another popular cryptocurrency analyst on Twitter, spoke about this in a recent tweet, telling his followers that this low market sentiment could actually be a bullish sign for Bitcoin.

“$BTC Fear & Greed: The Directional bias is/has been down & this area has clear risk. However, Extreme Fear combined w/ Funding showing a week worth of Shorts willing to pay a premium to short is a setup conducive for disciplined CounterTrend trades. Inexperienced should stay out,” he noted.

If bulls are able to sustain the upwards momentum that was sparked earlier today when BTC surged to $7,800, then the crypto may be poised for further near-term gains.

Featured image from Shutterstock.

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