Crypto crash nears its end? Fear and Greed Index flashes optimism

The crypto crash accelerated this week, with Bitcoin price tumbling to a 15-month low. Other top altcoins like Solana, Hyperliquid, Canton, and Zcash also retreated sharply. Altogether, this week’s crypto market crash has wiped out close to $500 billion in value. 

Crypto crash may continue as the US prepares to attack Iran

In theory, the geopolitical tensions between the US and Iran have eased in the past few days as the two sides prepare for talks in Turkey this week. 

In reality, however, these talks will likely not work because of Donald Trump’s demands to Iran. He wants Iran to abandon its nuclear weapons program, which Iran has agreed to for years. This is notable as Trump said that he had obliterated its program in June last year.

Trump wants Iran to limit the size of its ballistic missiles, which managed to penetrate Israel’s defenses last year. Additionally, he wants Iran to stop providing support to regional groups like Houthis, Hezbollah, and Hamas. 

Most analysts believe that Iran will not agree to these demands. For example, ending its ballistic missiles program would leave Iran without any defensive capabilities.

At the same time, Trump is under substantial pressure from Fox News hosts and guests who are cheerleading the war. Some of the loudest people on this are Senator Lindsey Graham, General Jack Keane, Mike Pompeo, Sean Hannity, and Mark Levin. Trump has always listened to these people.

Iran has warned that any attack, even a limited one, will lead to a regional war. The country may attack US bases in the region, use the experience of the 12-day war to attack Israel, and close the Strait of Hormuz.

A war in the Middle East would lead to higher crude oil prices and more volatility. At the same time, Bitcoin and the crypto market would crash as they are no longer safe havens. Bitcoin has always crashed whenever new geopolitical risks emerged.

For example, the coin crashed on October 10 when Trump warned of tariffs on China. It also dropped when Trump launched his reciprocal tariffs in April last year.

Falling Crypto Fear and Greed Index Points to a Bottom

On the positive side, a US attack on Iran may mark a bottom for the crypto market. One sign for this is that the Crypto Fear and Greed Index has slumped to the extreme fear zone of 12.

Historically, cryptocurrency prices always rebound when the index moves to the extreme fear zone. For example, the recent crypto bull run that pushed Bitcoin close to $100,000 happened after the Fear and Index tumbled to 10. In a statement, Michael Novogratz said:

“I do think we are at the lower end of the range. Anyone who has been in crypto for more than five years realizes that part of the ethos of this whole industry is pain. Often when things feel worse, it is time to be very focused and potentially accumulating, at least getting prepared to, because when the tide turns, it turns quick.”

The other potential catalyst is that the crypto market is getting closer to the oversold level of 30. That could be a sign that the shakeout is nearing its end. 

The post Crypto crash nears its end? Fear and Greed Index flashes optimism appeared first on Invezz