Key Highlights
- Bitcoin’s fear and greed index is indicating Extreme Fear
- Despite this, Bitcoin has witnessed a small rebound with 2.2% surge in 24 hours, soaring its price over $87,000
- According to a popular analyst, BTC price movement depends on a “cost-basis returns cycle.”
On December 16, Bitcoin’s Fear and Greed Index dropped to a new low, indicating Extreme Fear, which sparked fear in the cryptocurrency community.
Bitcoin Soars 2.2% On a Daily Chart Despite Extreme Fear
While the Fear and Greed Index is showing Extreme Fear, BTC has shown a minor rebound of 2.2% on a daily chart after slipping below $87,000. At the time of writing this, BTC is trading at around $87,628 with a market capitalization of $1.74 trillion. However, its daily trading volume has decreased by 2.5%, falling to $44.34 billion.
According to some experts, today’s spike in the cryptocurrency’s price provided a hope that BTC’s recent decline may be finding a temporary floor. BTC is showing a sign of stabilising after falling from last week’s peak above $94,000.
However, some analysts are raising an alarm over this price movement. Market experts are warning investors against interpreting the early-week stability as a true reversal.
Samer Hasn, senior market analyst at broker XS.com, said, “Traders are either stepping aside ahead of the data or being forced out, reinforcing downside momentum. Without a positive macro catalyst to reset sentiment, bitcoin remains exposed to a deeper flush, with sub-80,000 levels increasingly part of the near-term conversation rather than a tail risk.”
David Hernandez, crypto investment specialist at 21shares, stated that “The market now faces a short-term battle between the delay in monetary easing and the long-term attractiveness of BTC as a store of value. Immediate selling pressure may emerge as traders re-evaluate the risk landscape, forcing BTC to defend key support zones,” he continued. “Yet, the underlying economic tension reinforces the bullish argument for smart money accumulation: where the Fed struggles to tame inflation without crashing the economy, bitcoin’s finite supply becomes an essential asset.”
Some analysts reacted to the sell-off in the current movement by saying that the current movement is not likely to spark panic selling. Instead, it appears to be a calculated distribution by large holders. This approach has the effect of shaking out short-term traders from the cryptocurrency market while new liquidity appears to be building at lower price levels.
(Source: CoinMarketCap Community)
The market is now closely monitoring a major price range between $82,000 and $85,000. This zone is seen as a major technical and psychological factor for Bitcoin’s near-term direction. However, whales are actively buying Bitcoin.
BTC Follows the Cost-Basis Returns Cycle
According to the analysis from Copper, a digital asset firm, the main price mover for Bitcoin has changed. Analysis suggests that the classic 4-year halving cycle has been replaced by a new pattern since the launch of U.S. spot Bitcoin ETFs in January 2024.
Now, the BTC price movement depends on a “cost-basis returns cycle,” which is influenced by the behavior of large institutional ETF investors.
Copper’s data reveals a repeating pattern that has occurred 3 separate times across 2024 and 2025. The cycle starts with BTC rallying to a new record high. This is followed by a sharp price correction. The decline then finds a strong floor at the average purchase price of the ETF holders.
After forming support at this level, the price starts its next rally in the upward direction, with each of these cycles generating gains of more than 60%.
According to Cooper’s analysis, BTC is currently trading near this critical ETF cost basis support level, which implies the market is resetting and could be preparing for the next phase of upward movement.
Also Read: HYPE Plunges Over 9% Amid Liquidations and ETF Delays
