Is the crypto market “bottom of the century” or a “falling knife”?

Author: Daii

The market is experiencing a “big blood loss”. On November 16,The “Cryptocurrency Fear and Greed Index” once fell to 9, the lowest point since the new crown epidemic triggered a global market crash in March 2020.

As of November 18, although the index rebounded slightly to 12, it was still in the “extreme fear” zone.As the leader of the industry, Bitcoin not only fell below the major psychological barrier of $100,000, but also hit a six-month low of $90,940 on the morning of November 18, triggering a plunge across the board for altcoins.

However, a puzzling paradox lies before us:Why is it that when the price of Bitcoin is at a high of around US$90,000, the market shows a level of panic comparable to the level in 2020 when the price was only US$5,000?

Why is the market so panicked?

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

First, it comes fromDark clouds in the external macro world.The crypto market is no longer an island; it is closely connected to the pulse of the global macroeconomics.

• “The Fed’s Spell”: The market had generally expected the Federal Reserve to cut interest rates in December, which was seen as the “last hope” to support risk assets.However, the Fed’s hawkish stance completely shattered this expectation.Cutting interest rates is equivalent to “releasing water” to the market, while maintaining high interest rates is equivalent to “turning off the tap.”Liquidity was drained and investors were forced out of risky assets like cryptocurrencies.

• “Data black hole” and uncertainty: Due to the previous 43-day shutdown of the U.S. government, the release of key economic data (such as the employment report) was severely delayed.This has caused both investors and the Fed to be “flying blind.”What the market hates most is not bad news, but no news.This uncertainty forces fund managers to choose “risk aversion.”

• The spillover effects of the “AI bubble”: Global technology stocks, especially AI-related stocks regarded as “market engines”, are experiencing a sharp correction.For example, SoftBank’s massive sell-off of its holdings in Nvidia has stoked concerns that the AI ​​bubble may be bursting.Cryptocurrencies and technology stocks belong to the same “high-risk” basket in the eyes of institutional investors, and they are selling both at the same time.

If the macro is the background, thenCollapse within the crypto ecosystemIt is the direct trigger of panic.This crisis is not only about price, but also about narrative.

This bull market is built on two narrative cornerstones:

• “Institutional Admission”: Represented by spot ETFs, it symbolizes traditional finance’s full acceptance of cryptocurrencies.

• “Hold for the long term”: Represented by the HODL beliefs of “Giant Whale” and “Diamond Hand”, they are believed not to sell in short-term fluctuations.

In the storm of November 2025, cracks appeared in these two cornerstones at the same time.

Narrative Collapse (1): ETF’s “Betrayal”

Spot Bitcoin ETFs were once regarded as the “engine” of this bull market, but now this “engine” is in reverse.Markets witnessed record net outflows.Data shows that so far in November alone, total net outflows from Bitcoin ETFs have exceeded $2.3 billion.On one of the days (November 13), the net outflow was as high as $866 million to $870 million, which was one of the worst outflow records since its listing.On-chain data company Glassnode also confirmed that ETF flows have turned “moderately negative.”

Narrative Collapse (2): The “Turnaround” of the Giant Whale

This is one of the most disturbing internal signals.On-chain data shows that in early November, long-term holders sold approximately 815,000 BTC in a rare and large-scale move.Data platform Santiment also confirmed that since October 12, “whale” wallets holding 100,000 to 10,000 BTC have sold approximately 32,500 Bitcoins.

It is not surprising that such fear arises when the market discovers that the “heroes who saved the market” can also “betray” (ETF outflows) and “believers” are also “cash out” (whale selling).

The truth behind the “Great Asset Transfer”

When “extreme fear” continues and worsens, the market enters a critical stage –“Capitulation”.

We are witnessing clear signs of “surrender”:

• Extreme mood readings: The panic index fell 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 huge amounts of assets are being sold at a price lower than the price at which they were purchased, and people are “cutting their flesh” and leaving the market.

• ‘Outrage and blame’ on social media: Analysts point out that market bottoms are often accompanied by anger and recriminations.Data shows that the proportion of positive comments about BTC on social media has dropped to a monthly low.

• Panic flight of retail investors: Huge outflows from ETFs are seen as a sign of “retail panic” and “capitulation.”

However, the truth about “surrender” is not that “everyone is selling.”Under the surface of panic, a complex and violent“The Great Transfer of Assets”is happening.

On-chain data clearly shows this split:

Who is selling?

• medium sized whale: Data shows that a key group of whales (those holding 10-1,000 BTC) have turned into net sellers in November, with Santiment data showing that wallets holding 10 to 10,000 BTC have sold tens of thousands of Bitcoins in recent weeks.They are likely to be veteran players with huge profits, choosing to cash out amid macro uncertainty.

• panicked retail investors: The huge outflows of ETFs and anxious discussions on social media indicate that retail investors who entered the market in the middle and late stages of the bull market may be “cutting their flesh” and leaving the market.

Who’s buying?

• large strategic entity: Data shows that although medium-sized whales are selling, the largest strategic entity (holding >10,000 BTC) continued to increase its holdings in November, with a net increase of 10,700 BTC.

• institutional whale: CryptoQuant data shows that during the market decline, giant whales set a record for the second largest single-week accumulation in 2025, with a net increase of more than 45,000 BTC.

• “Diamond hand” retail investors: Separate data shows that while some retail investors are panicking, “small retail wallets” (up to 10 BTC) have continued to accumulate during the decline.

• iconic figure: Just as the market is panicking, the company of Michael Saylor, one of Bitcoin’s most prominent evangelists, announced on November 10 that it had purchased an additional 487 Bitcoins worth $50 million and publicly dismissed any rumors that his company was selling.

The conclusion is clear: “Surrender” is not a moment when everyone is selling.It is the moment when the most dramatic transfer of ownership of an asset occurs.Assets are moving from the hands of emotional traders with weak beliefs to the hands of long-term investors with strong beliefs and rationality.When panicked sellers run out of ammunition and rational buyers completely take over the market – a true “market bottom” is formed.

“Be greedy when others are fearful”

At a time when the market is “bloody”, we must introduce the wisdom of the most famous contrarian investor in the history of investment, as well as cold historical data.

Warren Buffett has a classic quote: “Be fearful when others are greedy, and be greedy when others are fearful.”

At the heart of this quote is a value-based psychological discipline.

• “Fear when others are greedy”: means that when the market is frantic (fear index is extremely high), asset prices may be irrationally overvalued.

• “Be greedy when others are fearful”: means that when the market is panicked (the panic index is extremely low, such as the recent 9), asset prices may be irrationally undervalued.Panic creates “perfect opportunities” for rational investors to buy high-quality assets at discount prices.

From this perspective, the “Crypto Fear and Greed Index” is a quantitative indicator of what Buffett describes as the sentiment of “others.”A “single-digit” reading is exactly using data to declare loudly: “Others are in extreme fear!”.

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

We look back at some of the most famous “extreme fear” moments in crypto history and track Bitcoin’s price performance since:

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

Historical data clearly shows:“Extreme fear” is an excellent signal for medium and long-term accumulation, but it is not a timer for short-term precise rebounds..

The case of the 2022 FTX crash shows that even after the index hit an all-time low of 6, the market lingered at the bottom for more than 90 days.This shows that “extreme fear” can last for a long time.However, in all historical cases, buying at “extreme fear” levels and holding for 180 days (six months) resulted in significant positive returns.

The lessons of history are clear:Choosing to sell when the panic index falls into single digits is historically a wrong choice.Choosing to start accumulating in batches at this time requires patience, but the winning rate is extremely high.

Buying the dip or “catching a flying knife”?

As a rational crypto enthusiast, how should you act in “extreme fear”?

The panic index is not a crystal ball

We must emphasize the limitations of this index.It’s not a forecasting tool, it tells you how people are feeling now, not where the market will go tomorrow.It is a lagging indicator that reflects panic that has already occurred.Never make a trading decision based on this one indicator alone.

The True Value of Indexes: Confronting Your Own Demons

Its true value is as a psychological combat tool.Its purpose is to help you quantify market sentiment so that you can fight against your own inner irrational impulses.

• Fighting FOMO (Fear of Missing Out): When the index reaches 90 (extreme greed), it warns you: “The market may be overheated, and it may be time to take profits instead of chasing higher.”

• Fighting FUD (Fear, Uncertainty, and Doubt): When the index falls to 10 (extreme fear), it warns you: “The market may be irrationally too cold. Is this really a time to sell, or is it a discount sent by others?”

Financial markets are a pendulum that swings wildly between the poles of greed and fear.Today, the pendulum is firmly on the “extreme fear” end.Your job is not to predict the precise turning point of the pendulum, but to use data and strategies to resist the tremendous gravitational pull it exerts on your emotions as the pendulum swings to either extreme.

Summary

Currently, the Crypto Fear and Greed Index has fallen to its lowest point since the COVID-19 epidemic, and the market has fallen into “extreme fear.”The panic stems from the double whammy of tightening macro liquidity (hawkish Fed) and collapse of the internal narrative (record ETF outflows and rare “whale” selling).

However, on-chain data shows thatBehind the panic “capitulation”, a “big asset transfer” is taking place: medium-sized whales and panicked retail investors are selling, while large strategic entities and determined retail investors are actively increasing their holdings.Historical data shows that“Extreme fear” is a pretty good mid- to long-term buy signal.Therefore, for rational enthusiasts, the best strategy right now is not panic selling or blind bargain hunting, but a combination of dollar cost averaging (DCA) to maintain discipline amidst irrational market noise.