Bitcoin Fear Index drops below 20! Renowned trader: History proves that after every extreme fear, prices soar

Cryptocurrency Fear and Greed Index drops below 20 again, reaching an extreme panic zone, which is consistent with market sentiment before several major rebounds in Bitcoin’s history. Renowned trader Quinten François made a brief but powerful statement: after excessive panic, regret will follow. On-chain data shows long-term holders are increasing their positions against the trend, and supply is gradually tightening.

Historical Lessons from the Fear Index Falling Below 20

(Source: Alternative.me)

The Cryptocurrency Fear and Greed Index is a core tool for measuring market sentiment, considering volatility, trading volume, social sentiment, and price momentum. When the index drops below 20 into the extreme fear zone, it often signals an imminent market bottom. Bitcoin has experienced multiple instances of extreme panic followed by strong and rapid rebounds, with prices recovering much faster than market expectations.

Historical data reveal clear patterns. At the end of 2018, Bitcoin fell to $3,200, and the fear index hit very low levels. Within a year, prices rebounded over 300%. In March 2020, the COVID-19 pandemic triggered a market crash, Bitcoin dropped to $3,800, and the fear index also fell below 20. Yet, within 18 months, prices surged to a historic high of $69,000. After the extreme panic caused by Luna’s collapse and FTX’s bankruptcy in June 2022, Bitcoin started a new bull cycle in early 2023.

These cycles reveal a core principle: extreme panic often presents the best buying opportunities. When retail investor confidence collapses, media are filled with doomsday narratives, and social media is permeated with despair, asset prices have already been excessively sold off. Leverage forces weaker investors out, and forced liquidations accelerate declines, but this emotion-driven selling also creates mispricing opportunities. Quinten François’s charts clearly show that after all extreme fear indices, strong rebounds follow, confirming the core principle of contrarian investing.

The Panic Trap Revealed by Behavioral Finance

Human psychology plays a decisive role in market panic. Nobel laureate Daniel Kahneman and Amos Tversky’s research points out that investors fear losses much more than they desire gains—this “loss aversion” is especially evident at market bottoms. When Bitcoin’s price declines, investors not only suffer actual losses but also fear further losses. This dual fear prompts irrational panic selling decisions.

Behavioral finance’s “herd effect” further amplifies panic. When the market is broadly bearish, individual investors tend to follow the crowd, even if it defies rational judgment. The echo chamber effect of social media exacerbates this, with negative emotions spreading rapidly online and reinforcing each other. During periods of uncertainty, panic selling becomes more common because “selling” provides a false sense of control, even though this control is built on losses.

Three Types of Investors During Extreme Fear

Emotion-driven: Panic sell, then chase the market at higher prices, repeatedly losing money

Hesitant and cautious: Wait for confirmation signals before buying, but miss the optimal entry point as the market has already reversed

Contrarian: Increase holdings during extreme panic, leveraging mispricing to build long-term wealth

Pricing errors caused by extreme fear are an inevitable result of market mechanics. When sellers rush to liquidate, asset prices are driven well below their intrinsic value. This mispricing creates opportunities for calm and prepared investors. Warren Buffett’s famous saying, “Be fearful when others are greedy,” embodies this logic. However, remaining calm and taking action during widespread panic is difficult, requiring strong psychological resilience and a deep understanding of historical patterns.

On-Chain Data Shows Smart Money’s Contrarian Moves

Currently, Bitcoin market sentiment and data show a clear divergence. On the surface, negative sentiment is high, news cycles are filled with pessimism, and macroeconomic uncertainty adds pressure. However, on-chain data tells a completely different story. Long-term holders (addresses holding Bitcoin over 155 days) continue to accumulate, indicating that seasoned investors who have experienced multiple cycles are not swayed by panic.

Supply concentration data is even more revealing. Bitcoin holdings on exchanges are continuously decreasing, meaning investors are transferring Bitcoin from exchanges to cold wallets for long-term holding. This “exit from circulation” reduces supply and has historically foreshadowed future supply-demand imbalances and price increases. The accumulation activity of whale wallets (addresses holding over 1,000 BTC) is also rising, showing institutional investors are strategically building positions amid market panic.

Volatility spikes during extreme panic periods, forcing weak-handed and high-leverage speculators out of the market. This “shakeout” clears the weak players, laying the foundation for subsequent healthy rallies. Historical data suggests that when retail panic selling coincides with continued institutional accumulation, market bottoms are often already formed or close to forming. Quinten François’s posts serve as a reminder of this emotional and real disconnect.

The Cost of Regret and the Rewards of Patience

Prices often rebound accompanied by deep regret. Investors panic-sell near lows and then wait for “confirmation signals” to re-enter. But market reversals tend to happen faster than expected, and by the time bullish signals are clear, prices have already surged significantly. Re-entry feels risky, and the psychological pressure to chase prices is immense, causing many to miss the entire rebound. This “buy low, sell high” pattern repeats, leading to long-term losses.

The cost of emotional decisions is evident throughout Bitcoin’s history. At the end of 2018, investors who panicked at $3,000 watched prices rise to $13,000 within a year. Those who cut losses at $4,000 in March 2020 missed the epic bull run to $60,000. These regrets are not hindsight; they are the inevitable consequence of failing to understand market sentiment cycles.

Extreme fear tests investors’ conviction and preparedness. Only those who have established a clear investment framework, understand historical laws, and possess strong psychological resilience can act decisively during the darkest market moments. Quinten’s message is brief but profound: regret always follows panic. This is not a prediction of the future but a statement of historical regularity. When the fear index drops below 20 again, the question is not whether the market will rebound, but whether you have the courage to stay calm when others are panicking.