Written by: Daii

The market is experiencing a "massive bloodletting." On November 16, the "Cryptocurrency Fear and Greed Index" briefly fell to 9, marking the lowest point since the global market crash triggered by the COVID-19 pandemic in March 2020.

As of November 18, the index has slightly rebounded to 12 but remains in the "extreme fear" zone. Bitcoin, as the industry leader, not only lost the significant psychological threshold of $100,000 but also hit a six-month low of $90,940 on the morning of November 18, triggering a widespread crash in altcoins.

However, a perplexing paradox presents itself: why is the level of panic in the market comparable to that of 2020 when Bitcoin's price was only $5,000, even though it is currently above $90,000?

Why is the market so fearful?

To understand this extreme fear, we must dissect the multiple factors that led to this storm.

First, there are ominous clouds from the external macro world. The crypto market is no longer an island; it is closely tied to the pulse of the global macro economy.

• "The Federal Reserve's tightening grip": The market had previously anticipated that the Federal Reserve would cut interest rates in December, seen as the "last hope" for supporting risk assets. However, the Fed's hawkish stance completely shattered this expectation. Lowering interest rates equates to "injecting liquidity" into the market, while maintaining high rates means "tightening the faucet." Liquidity is being withdrawn, forcing investors to pull out of high-risk assets like cryptocurrencies.
• "Data black hole" and uncertainty: Due to a 43-day shutdown of the U.S. government, key economic data (such as employment reports) has been severely delayed. This has left both investors and the Federal Reserve "flying blind." The market despises not bad news, but the absence of news. This uncertainty has compelled fund managers to choose "risk aversion."
• "The spillover effect of the AI bubble": Global tech stocks, especially those related to AI, which are seen as the "engine of the market," are undergoing significant corrections. For example, SoftBank's massive sell-off of its Nvidia shares has raised concerns that the AI bubble may be bursting. In the eyes of institutional investors, cryptocurrencies and tech stocks belong to the same "high-risk" basket, leading to simultaneous sell-offs of both.

If the macro environment is the backdrop, then the collapse within the crypto ecosystem is the direct trigger of the panic. This crisis is not just about prices; it is also about "narratives."

This bull market was built on two major narrative cornerstones:

• "Institutional entry": Represented by spot ETFs, symbolizing the full acceptance of cryptocurrencies by traditional finance.
• "Long-term holding": Represented by the HODL belief of "whales" and "diamond hands," who are thought to not sell during short-term fluctuations.

In this storm of November 2025, both of these cornerstones have shown cracks.

Narrative Collapse (1): The "Betrayal" of ETFs

Spot Bitcoin ETFs were once seen as the "engine" of this bull market, but now this "engine" is reversing. The market has witnessed record net outflows of funds. Data shows that since November, the total net outflow from Bitcoin ETFs has exceeded $2.3 billion. On one day (November 13), the net outflow reached as high as $866 million to $870 million, marking one of the worst outflow records since their inception. On-chain data company Glassnode has also confirmed that ETF flows have turned to "moderate negative values."

Narrative Collapse (2): The "Turnaround" of Whales

This is one of the most unsettling internal signals. On-chain data shows that at the beginning of November, long-term holders rarely sold off approximately 815,000 BTC en masse. Data platform Santiment also confirmed that since October 12, "whale" wallets holding between 10 to 10,000 BTC have sold about 32,500 Bitcoins.

When the market discovers that the "heroes saving the market" can also "betray" (ETF outflows) and that "believers" are "cashing out" (whale sell-offs), it is not surprising that such fear arises.

The Truth of the "Great Asset Transfer"

As "extreme fear" persists and worsens, the market enters a critical phase—"capitulation."

We are witnessing clear signals of "capitulation":

• Extreme emotional readings: The fear index has dropped to the range of 9-18.
• Huge "realized losses": On-chain data shows that the market has just experienced "the largest realized loss day in the past six months." This means that a massive amount of assets has been sold below their purchase price, with people "cutting losses" to exit.
• "Anger and blame" on social media: Analysts point out that market bottoms are usually accompanied by anger and mutual blame. Data shows that the proportion of positive comments about BTC on social media has dropped to a monthly low.
• Panic selling by retail investors: The massive outflows from ETFs are seen as signs 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 occurring.

On-chain data clearly illustrates this division:

Who is selling?

• Medium-sized whales: Data shows that a key group of whales (holding 10-1,000 BTC) has turned into net sellers in November. Santiment's data indicates that wallets holding 10 to 10,000 BTC have sold tens of thousands of Bitcoins in recent weeks. They are likely seasoned players cashing out amid macro uncertainty.
• Panicked retail investors: The massive outflows from ETFs and anxious discussions on social media suggest that retail investors who entered late in the bull market may be "cutting losses" to exit.

Who is buying?

• Large strategic entities: Data shows that while medium-sized whales are selling, the largest strategic entities (holding >10,000 BTC) have continued to accumulate, net increasing by 10,700 BTC in November.
• Institutional whales: CryptoQuant's data shows that during the market downturn, whales set a record for the second-largest weekly accumulation in 2025, net increasing by over 45,000 BTC.
• "Diamond hands" retail investors: Other data shows that while some retail investors are panicking, "small retail wallets" (holding up to 10 BTC) continue to accumulate during the downturn.
• Iconic figures: Just as market panic set in, one of Bitcoin's most famous evangelists, Michael Saylor, announced on November 10 that his company had purchased 487 Bitcoins worth $50 million and publicly refuted any rumors about his company selling.

The conclusion is clear: "Capitulation" is not a moment when everyone is selling. It is a moment of the most intense transfer of asset ownership. Assets are shifting from weak-handed, emotional traders to strong-handed, rational long-term investors. When the panicked sellers exhaust their ammunition and the rational buyers fully take over the market—this is when the true "market bottom" forms.

"Be greedy when others are fearful"

As the market is "bleeding profusely," we must invoke the wisdom of the most famous contrarian investors in history, along with cold historical data.

Warren Buffett has a classic saying: "Be fearful when others are greedy, and be greedy when others are fearful."

The essence of this saying is a psychological discipline based on value.

• "Be fearful when others are greedy": This means that when the market is euphoric (fear index extremely high), asset prices may be irrationally overvalued.
• "Be greedy when others are fearful": This means that when the market is in panic (fear index extremely low, like the recent 9), asset prices may be irrationally undervalued. Panic creates a "great opportunity" for rational investors to buy quality assets at a discount.

From this perspective, the "Cryptocurrency Fear and Greed Index" serves as a quantitative measure of the emotions of "others" as described by Buffett. A "single-digit" reading loudly proclaims with data: "Others are in extreme fear!"

So, does historical data support being "greedy" at this time?

We reviewed some of the most famous "extreme fear" moments in crypto history and tracked Bitcoin's price performance afterward:

Note: Historical performance data is based on approximate analysis of public price charts and does not represent future returns.

Historical data clearly indicates that "extreme fear" is an excellent signal for medium to long-term accumulation, but it is not a precise timer for short-term rebounds.

The case of the FTX collapse in 2022 shows that even after the index hit a historical low of 6, the market lingered at the bottom for over 90 days. This indicates that "extreme fear" can persist for a long time. However, in all historical cases, buying at "extreme fear" levels and holding for 180 days (six months) has yielded significant positive returns.

The lesson from history is clear: choosing to sell when the fear index drops into single digits has historically been the wrong choice. Conversely, choosing to start accumulating in batches at this time, while requiring patience, has a very high success rate.

Bottom Fishing or "Catching Falling Knives"?

As a rational crypto enthusiast, how should one act in "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 right now, not where the market will go tomorrow. It is a lagging indicator that reflects panic that has already occurred. Never make trading decisions based solely on this one indicator.

The True Value of the Index: Battling Your Own "Inner Demons"

Its true value lies as a psychological countermeasure. Its purpose is to help you quantify market sentiment, allowing you to combat your own irrational impulses.

• Battling FOMO (Fear of Missing Out): When the index reaches 90 (extreme greed), it warns you: "The market may be overheated; perhaps it's time to take profits rather than chase higher."
• Battling FUD (Fear, Uncertainty, and Doubt): When the index drops to 10 (extreme fear), it warns you: "The market may be irrationally cold; is this really the time to sell, or is it a discount being offered by others?"

Financial markets are a pendulum swinging violently between the 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 to use data and strategy to resist the immense gravitational pull it exerts on your emotions whenever it swings to either extreme.

Summary

Currently, the Cryptocurrency Fear and Greed Index has dropped to its lowest point since the COVID-19 pandemic, with the market trapped in "extreme fear." This panic stems from a dual blow of tightening macro liquidity (the Fed's hawkish stance) and the collapse of internal narratives (record ETF outflows and rare whale sell-offs).

However, on-chain data shows that behind the panic-driven "capitulation," a "great asset transfer" is occurring: medium-sized whales and panicked retail investors are selling, while large strategic entities and steadfast retail investors are actively accumulating. Historical data indicates that "extreme fear" is a fairly good medium to long-term buying signal. Therefore, for rational enthusiasts, the best strategy now is not to panic sell or blindly bottom fish, but to maintain discipline amidst the irrational market noise, possibly combining it with dollar-cost averaging (DCA).

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