BTC Nearing Extreme Fear: Possible Local Bottom Setup

2 mins mins

Key Points

Fear Index hits 33, approaching extreme fear, historically linked to BTC local bottoms.
Bullish divergence forms on 4H chart, signaling weakening bearish momentum and potential bounce.
Analyst sees possible bottom at $106K–$102K if support breaks and STH losses increase sharply.

Bitcoin currently trades at $109,441, showing signs of a potential reversal as fear sentiment nears extreme levels. The Crypto Fear & Greed Index reads 33, approaching the critical 25 mark that previously aligned with local bottoms.

Crypto Fear And Greed | Source : Alphractal

Short-term holders still retain 36% of their supply in profit, but analysts expect further downside to shake them out. Historically, such flushes have coincided with strong accumulation zones and a reset in short-term holder profitability under 5%.

Short-Term Holder Percent Supply in Profit | Source : Checkonchain

Analyst Darkfost projects a bottom between $106,000 and $102,000 if sentiment weakens and losses among holders deepen. This range matches his wave C target and would likely require a break below the 200-day EMA.

Past correction phases show similar setups, including RSI resets and sharp declines below realized price levels. Bitcoin’s realized price currently stands at $111,500, and price remains slightly below that at press time.

Bullish Divergence Suggests Short-Term Relief Rally

Technical indicators now show a bullish divergence on the 4-hour chart despite the ongoing correction. Price continues to make lower lows, but momentum indicators show higher lows, suggesting declining selling pressure.

The divergence appears as momentum rises from -60 to -36.79 while price holds above a key descending support trendline. If momentum continues to shift, price could target the $112,000 to $114,000 resistance area.

Bulls must defend the support zone between $107,000 and $106,000 to avoid invalidating the bullish setup. A break below this range could push the market toward the projected $102,000 low.

However, a close above $110,500 may confirm renewed buying interest and open the door to a potential recovery. This move would also strengthen the divergence signal and could trigger a short-term relief rally.

Despite a minor 0.02% daily gain, Bitcoin has dropped 5.38% over the past seven days. Overall, sentiment, on-chain data, and technical structure now point to a possible local bottom in formation.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.