en.cryptonomist.ch
The CMC Fear & Greed Index measures the fear or greed/enthusiasm present at any given moment in the crypto markets.
Generally, it is primarily influenced by Bitcoin’s price movements, but also by other parameters that allow it to be used as a sort of thermometer for sentiment in the crypto markets.
The index represents a daily value ranging from zero to one hundred, where zero is the maximum level of fear possible, and one hundred is the maximum level of greed (or enthusiasm) possible.
The neutral value is 50, and by convention, there is extreme fear below 20 points, and extreme greed above 80.
Summary
The Decline of the Fear & Greed Index
The current level is extremely low, well below 20 points, but above 10.
Since it was launched two and a half years ago, the current level is at an all-time low, although there are similar indices that have existed long before and have previously dropped below 10 points.
Until October 28, it was in a neutral range, then it started to decline.
From October 29 to November 14, it has consistently remained in the fear zone, but above 20 points.
The real problem began on November 15, after the price of Bitcoin broke below the psychological threshold of $100,000, dropping to $94,000.
It should be noted that this index measures the sentiment of the previous day, so for example, the value displayed today refers to yesterday.
Until November 20, it had nevertheless remained around 15 points, which is the same level it had in April after the burst of the mini-bubble at the end of 2024 and before returning to all-time highs in May.
All of this seemed relatively normal, especially since it had already happened a few months ago without affecting the medium-term trend.
The Collapse
The real issue is that at that point a rebound was expected, but instead starting from Friday the 21st, there was a significant crash.
The lowest point was reached the day before yesterday at a level of 10, and it remained at this level yesterday as well. Since this index measures the sentiment of the previous day, Saturday’s lowest point referred to Friday’s price crash, while Sunday’s referred to Saturday’s market activity.
Today it climbed back to 12, thus measuring the slight rebound in sentiment from yesterday.
The current level is still very low, but in theory, at least the worst seems to be over.
The Dynamics of the Crash
On Wednesday the 19th, the price of Bitcoin recorded a daily low at $88,500.
The following day it attempted to rebound, but something abruptly interrupted the small bounce, causing it to plummet further.
Just on Wednesday the 19th, the odds that the Fed would cut rates in December suddenly plummeted from 56% to 33% on Polymarket, thus triggering a sharp correction in the US stock markets.
To be honest, even the main U.S. stock index, the S&P500, initially attempted a rebound on Thursday, but ended up losing 1.5% over the course of the day.
On that same day, the $88,500 level for Bitcoin did not hold, and an additional drop began, lasting until the following day.
On Friday the 21st, the price of BTC recorded a local low of even $80,500, before closing the day at $85,000.
The day after, the Fear & Greed index recorded its lowest point.
On Saturday, with traditional markets closed, the crash ended, and yesterday there was even an initial attempt, which ultimately failed, to return to $88,500.
The Reasons for the Crash
What happened on Polymarket has a somewhat suspicious air.
In just five hours, the probability of a Fed rate cut in December plummeted from 56% to 33%, only to suddenly rebound above 60% just two days later with a spike that lasted only three hours.
It seems rather unlikely that the markets could change their mind so quickly, and especially with such intensity.
If a drop from 56% to 49% might seem normal even if it occurs within a few hours, a drop from 56% to 33% does not seem normal at all.
If we then add to this a surge in just three hours, and only two days later, from 33% to 68%, the oddities increase.
There are speculations that it might have been a manipulation. The likely objective was precisely to trigger a short-term correction on the US stock exchanges, which then cascaded into panic in the crypto markets.
Now all of this has ended, although at this point it cannot be completely ruled out that there may be other similar manipulations.
The US stock markets have not yet reopened after the weekend, but if today, after their reopening, no similar anomalies occur, and the price of Bitcoin returns above $88,500, then the CMC Fear & Greed index could also rise above 15 points, or perhaps even above 20 points if there are no further crashes.