Author: Daii
Published by: Baihua Blockchain
The cryptocurrency market is currently enduring a significant “bloodletting.” On November 16th, the Crypto Fear & Greed Index plummeted to a staggering 9, marking its lowest point since the global market crash triggered by the COVID-19 pandemic in March 2020.
While the index saw a slight recovery to 12 by November 18th, it remains firmly entrenched in the “extreme fear” zone. Bitcoin, the industry’s bellwether, not only breached the crucial psychological threshold of $100,000 but also temporarily dipped below $90,000 on November 18th, precipitating a widespread collapse across altcoins.
Yet, a perplexing paradox emerges: Why is the market exhibiting a level of panic comparable to when Bitcoin was merely $5,000 in 2020, even though its price currently hovers above $90,000?
01. What’s Fueling This Extreme Fear?
To comprehend this profound fear, we must dissect the multifaceted factors converging to create this market storm.
Firstly, ominous clouds are gathering from the broader macroeconomic landscape. The cryptocurrency market is no longer an isolated island; it is intricately tethered to the pulse of the global economy.
- The Fed’s Tightening Noose: Market participants had widely anticipated a Federal Reserve rate cut in December, viewing it as the “last hope” for supporting risk assets. However, the Fed’s hawkish stance has decisively shattered this expectation. While rate cuts inject liquidity into the market, maintaining high interest rates effectively “turns off the faucet.” As liquidity is drained, investors are compelled to withdraw from high-risk assets like cryptocurrencies.
- Data Black Hole & Uncertainty: A prolonged 43-day shutdown of the U.S. government led to severe delays in the release of critical economic data, such as employment reports. This has left investors and the Fed “flying blind.” The market’s greatest adversary isn’t bad news, but rather the absence of any news. Such uncertainty forces fund managers to adopt a “risk-off” posture.
- AI Bubble Spillover Effect: Global technology stocks, particularly AI-related companies perceived as “market engines,” are experiencing significant pullbacks. For instance, SoftBank’s substantial sell-off of its Nvidia shares has ignited concerns that the AI bubble might be deflating. In the eyes of institutional investors, cryptocurrencies and tech stocks often reside in the same “high-risk” basket, leading to simultaneous sell-offs in both.
While macroeconomics provides the backdrop, the internal collapse within the crypto ecosystem serves as the direct catalyst for panic. This crisis transcends mere price movements; it is a crisis of “narrative.”
This bull run was built upon two foundational narratives:
- “Institutional Influx”: Symbolized by spot ETFs, representing the mainstream financial world’s comprehensive embrace of cryptocurrencies.
- “Long-Term HODLing”: Embodied by the unwavering conviction of “whales” and “diamond hands,” who were believed to resist selling during short-term volatility.
In this November 2025 storm, both of these foundational pillars have simultaneously shown cracks.
Narrative Collapse (I): The ETF “Betrayal”
Spot Bitcoin ETFs were once heralded as the “engine” of this bull market, but now this engine appears to be reversing. The market has witnessed record-breaking net outflows. Data reveals that in November alone, Bitcoin ETFs have experienced over $2.3 billion in net outflows. One single day (November 13th) saw net outflows ranging from $866 million to $870 million, marking one of the worst outflow records since their inception. On-chain data firm Glassnode has also confirmed that ETF flows have shifted to “moderately negative.”
Narrative Collapse (II): The Whales’ “Turnaround”
This represents one of the most unsettling internal signals. On-chain data indicates that in early November, long-term holders uncharacteristically engaged in a massive sell-off of approximately 815,000 BTC. Data platform Santiment further confirmed that “whale” wallets have divested roughly 32,500 Bitcoins since October 12th.
When the market discovers that “heroes meant to save the market” can also “betray” (ETF outflows) and that “believers” are also “cashing out” (whale selling), such profound fear is hardly surprising.
02. The Truth Behind the “Great Asset Transfer”
As “extreme fear” continues to worsen, the market enters a critical phase known as “Capitulation.”
We are currently witnessing clear signals of capitulation:
- Extreme Sentiment Readings: The Fear & Greed Index plunges into the 9-18 range.
- Massive “Realized Losses”: On-chain data reveals the market has just experienced “the largest realized loss day in the past six months.” This signifies that a vast amount of assets are being sold below their purchase price, with investors “cutting their losses” and exiting the market.
- Social Media “Anger and Blame”: Analysts often note that market bottoms are typically accompanied by anger and mutual recrimination. Data shows that the proportion of positive comments about BTC on social media has dropped to a monthly low.
- Retail Panic Exodus: The substantial ETF outflows are widely interpreted as a sign of “retail panic” and “capitulation.”
However, the truth of “capitulation” is not that “everyone is selling.” Beneath the surface of panic, a complex and intense “great asset transfer” is underway.
On-chain data clearly illustrates this divergence:
Who is Selling?
- Mid-Tier Whales: Data indicates that a key group of whales (holding 10-1000 BTC) turned into net sellers in November. Santiment’s data shows that wallets holding between 10 and 10,000 BTC have sold tens of thousands of Bitcoins in recent weeks. These are likely seasoned players who have accumulated significant profits and are choosing to cash out amidst macroeconomic uncertainty.
- Panicked Retail Investors: The massive ETF outflows and anxious discussions on social media suggest that retail investors who entered during the mid-to-late stages of the bull market may now be “cutting their losses” and exiting.
Who is Buying?
- Large Strategic Entities: Despite mid-tier whales selling, data shows that the largest strategic entities (holding >10,000 BTC) continued to accumulate in November, adding a net 10,700 BTC.
- Institutional Whales: CryptoQuant data indicates that during the market downturn, whales recorded their second-largest weekly accumulation in 2025, adding over 45,000 BTC net.
- “Diamond Hand” Retail: Other data suggests that while some retail investors are panicking, “small retail wallets” (up to 10 BTC) have continued to accumulate during the dip.
- Iconic Figures: Amidst the market panic, Michael Saylor’s company, one of Bitcoin’s most prominent evangelists, announced on November 10th another purchase of 487 Bitcoins worth $50 million, publicly refuting any rumors of his company selling.
The conclusion is clear: “Capitulation” is not a moment when everyone sells. It is a period of the most dramatic transfer of asset ownership. Assets are shifting from the hands of emotionally driven traders with weak convictions to rational, long-term investors with strong beliefs. When panicked sellers exhaust their ammunition and rational buyers fully take over the market – that’s when the true “market bottom” forms.
03. “Be Greedy When Others Are Fearful”
As the market experiences this “river of blood,” it’s imperative to invoke the wisdom of history’s most renowned contrarian investor, coupled with cold, hard historical data.
Warren Buffett famously advised: “Be fearful when others are greedy, and greedy when others are fearful.”
The essence of this maxim lies in a value-based psychological discipline.
- “Be fearful when others are greedy”: Implies that when the market is in a frenzy (the Fear & Greed Index is extremely high), asset prices may be irrationally overvalued.
- “Be greedy when others are fearful”: Suggests that when the market is gripped by panic (the Fear & Greed Index is extremely low, like the recent 9), asset prices may be irrationally undervalued. Panic creates an “excellent opportunity” for rational investors to acquire quality assets at a discount.
From this perspective, the Crypto Fear & Greed Index serves as a quantifiable metric for the “others'” emotions that Buffett described. A single-digit reading is loudly declaring with data: “Others are in extreme fear!”
So, does historical data support “being greedy” at such times?
We’ve reviewed some of the most notable “extreme fear” moments in crypto history and tracked Bitcoin’s subsequent price performance:
Historical data clearly demonstrates: “Extreme fear” is an excellent signal for medium-to-long-term accumulation, but it is not a precise short-term rebound timer.
The case of the 2022 FTX collapse shows that even after the index hit an all-time low of 6, the market lingered at the bottom for over 90 days. This indicates that “extreme fear” can persist for extended periods. However, in all historical instances, buying at an “extreme fear” point and holding for 180 days (six months) consistently yielded significant positive returns.
The lesson from history is unequivocal: choosing to sell when the Fear & Greed Index drops to single digits has historically proven to be the wrong decision. While requiring patience, opting to begin accumulating in batches at such times carries a very high probability of success.
04. Bottom Fishing or Catching a Falling Knife?
As rational cryptocurrency enthusiasts, how should one act amidst “extreme fear”?
The Fear Index is Not a Crystal Ball
We must emphasize the limitations of this index. It is not a predictive tool; it tells you how people feel now, not where the market will go tomorrow. It is a lagging indicator, reflecting panic that has already occurred. Never make trading decisions based solely on this one metric.
The Index’s True Value: Battling Your Own Inner Demons
Its genuine worth lies as a psychological counter-tool. Its purpose is to help you quantify market sentiment, enabling you to resist your own irrational impulses.
- Combating FOMO (Fear Of Missing Out): When the index reaches 90 (extreme greed), it warns you: “The market might be overheated; perhaps it’s time to take profits, not chase highs.”
- Combating FUD (Fear, Uncertainty, and Doubt): When the index plummets to 10 (extreme fear), it warns you: “The market might be irrationally cold; is this truly the time to sell, or is it a discount being offered by others?”
The financial market is a pendulum that swings violently between the two extremes of greed and fear. Today, this pendulum is firmly stuck at the “extreme fear” end. Your task is not to predict the precise turning point of the pendulum, but rather to use data and strategy to resist the immense gravitational pull it exerts on your emotions when it swings to either extreme.
05. Summary
Currently, the Crypto Fear & Greed Index has plunged to its lowest point since the COVID-19 pandemic, signaling that the market is engulfed in “extreme fear.” This panic stems from a dual assault: tightening macroeconomic liquidity (the Fed’s hawkish stance) and a collapse of internal narratives (record ETF outflows and rare “whale” selling).
However, on-chain data reveals that behind the panicked “capitulation,” a “great asset transfer” is unfolding: mid-tier whales and panicked retail investors are selling, while large strategic entities and steadfast retail investors are actively accumulating. Historical data strongly suggests that “extreme fear” phases are excellent medium-to-long-term buying signals. Therefore, for rational enthusiasts, the optimal strategy is not panic selling or blindly attempting to catch the bottom, but rather maintaining discipline through Dollar-Cost Averaging (DCA) amidst the irrational market noise.
(The above content is an authorized excerpt and reprint from our partner PANews, original link | Source: Baihua Blockchain )
Disclaimer: This article is for market information purposes only. All content and views are for reference only, do not constitute investment advice, and do not represent the views or positions of BlockTempo. Investors should make their own decisions and trades, and the author and BlockTempo will not be held responsible for any direct or indirect losses incurred by investors’ transactions.
