Are We Near a Bottom or Another Drop?

The crypto market's pulse has tightened again: the Fear and Greed Index is reaching "extreme fear" levels—the lowest since April—while digital assets remain under selling pressure. These types of readings have historically signaled local inflection points, but they do not guarantee an immediate recovery. What happens in the coming weeks will depend on both macroeconomic factors and geopolitical events that are currently shaping investor sentiment.

Why is there so much fear? During 2025, we have seen a mix of catalysts that have fueled risk aversion: trade pressures between major powers, movements in US monetary policy, and occasional episodes of volatility in crypto assets. Recently, public statements and news about trade tensions—including measures related to strategic exports and diplomatic agendas between the US and China—have rekindled caution in global markets. At the same time, the Fed's rhetoric has evolved: Jerome Powell suggested that the quantitative tightening cycle may be nearing its end, a sign that for some investors paves the way for less pressure on risk assets.

TECHNICAL READINGS AND MARKET NARRATIVES

• 1. Contrarian Sentiment Signals: An index in "extreme fear" typically attracts the attention of contrarian buyers because it has historically often marked local bottoms; however, it has also occasionally preceded deeper corrections when combined with macroeconomic deterioration. Investors should distinguish between rumor-driven panic and fundamental deterioration.
• 2. Monetary Policy as an Anchor of Hope: If the Fed actually reduces or halts QT, the central bank's reduced liquidity absorption could ease tensions in risk markets. This possibility is a technical and psychological argument for a moderate rebound in cryptoassets, but it does not eliminate risks stemming from geopolitics.
• 3. Geopolitics: The Variable That Can Change Everything: Expectations about a possible summit or contacts between leaders—and the measures announced before or after—can quickly shift sentiment. A diplomatic rapprochement would create a more favorable environment; conversely, new sanctions or trade restrictions could exacerbate risk aversion.
• 4. The Rise of Tokenized Gold as a Safe Haven: Meanwhile, a significant phenomenon is the explosion in the volume of tokenized gold: it has registered daily volume peaks exceeding $1 billion and, accumulated in October, has displaced some traditional ETFs such as the iShares Gold Trust (IAU). Within this ecosystem, Tether Gold (XAUT) has captured a significant portion of the market, suggesting that many users are seeking refuge in products that combine crypto liquidity with the backing of the metal. This raises an interesting narrative: some of the capital fleeing risks in pure crypto may be ending up in tokenized instruments that act as a "bridge" between traditional gold and the digital economy.

There are no certainties, only probabilities. An index in "extreme fear" increases the likelihood of upward reversals, but it doesn't guarantee them. It's wise to act cautiously and stagger entries if you're looking for contrarian exposure. Keep one eye on the macro and the other on geopolitics. News about the meeting between leaders or new economic measures packages can change the outlook overnight; monitor official statements and reliable sources. The growing liquidity in tokenized gold suggests that some investors are using these instruments as a hedge. Considering them within a balanced strategy may make sense, always considering counterparty, custody, and jurisdiction. Avoid leveraged bets driven by sensational headlines; set clear loss limits and objectives.

The crypto market is going through a tense moment that combines fear, opportunity, and a lot of uncertainty. Is a recovery in sight? Possible, if the macro and geopolitical pieces align. Risk of further declines? Also possible, if tensions escalate. For the sensible investor, the key remains quality information, discipline, and risk management that puts capital preservation ahead of the desire for quick profits.

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