Bitcoin hits "max fear" below $67K as analysis eyes BTC price rebound

Bitcoin (BTC) is due a "relief bounce" next as crypto market sentiment slips to two-month lows — the market's preferred signal that everyone has finally noticed it has been bleeding.

Key points: The Crypto Fear & Greed Index hit "extreme fear" with its lowest score since early April. Analysis flags "max fear" accompanying Bitcoin's drop toward $65,000. A game of "catch-up" is expected to ensue later, with BTC price action eyeing stock market records.

Analysis: Crypto Fear & Greed Index crash "a good sign"

In X analysis on Wednesday, commentary account Cryptic Trades flagged a collapse in the Crypto Fear & Greed Index. "A relief rally on $BTC IS COMING," it wrote. "We've reached max fear, which is a good sign."

Crypto Fear & Greed Index (screenshot). Source: Alternative.me

Fear & Greed uses a basket of indicators to produce a normalized sentiment gauge for crypto between one and a hundred. Readings below 25 are classed as reflecting "extreme fear" among investors.

On Wednesday, the Index stood at 11/100 — its lowest level since April 5. Since Monday, its score has more than halved, with Monday measuring 29/100, already within the "fear" bracket. The Index's last local highs came on May 12, when BTC/USD traded above $80,000. A week prior, Fear & Greed had returned to "neutral" territory for the first time since January.

Cryptic Trades acknowledged that "remaining cautious" is now the best approach. "Engagement is low, the sentiment is terrible, the social media interest has collapsed, and bearishness is everywhere. Ironically, that is exactly why I continue to remain bullish on the high timeframes," a previous X post read.

Bitcoin to rotate to "catch-up asset" amid stock records

As Cointelegraph reported, Bitcoin has stood out as an underperformer in recent weeks, losing ground while US stocks hit new all-time highs.

Related: Trump says Iran will 'work out well': Five things to know in Bitcoin this week

The S&P 500 finished Tuesday's trading session on yet another record, per data from TradingView.

S&P 500 one-day chart. Source: Cointelegraph/TradingView

The grim divergence has not been lost on crypto market participants, but Cryptic Trades sees cause for optimism as a result. "At some point, once the macro and geopolitical backdrop becomes more stable and the AI narrative softens, I expect liquidity to begin rotating toward assets that have lagged behind," it argued. "When that happens, I believe crypto has the potential to become one of the main catch-up assets."

BTC/USD one-day chart. Source: Cointelegraph/TradingView