Bitcoin Bulls Look To Extreme Fear as Potential Launchpad in Fed Uncertainty

• Bitcoin is currently in the Extreme Fear zone of the Fear and Greed Index, 
• Analyst Mags notes that Extreme Fear levels have historically preceded strong rebounds. 
• The Fed is expected to keep interest rates steady at 4.25%–4.50%.

Crypto analyst Mags recently pointed out that the Fear and Greed Index has once again dipped into “Extreme Fear” territory. Historically, this has often been a reliable buy signal for Bitcoin (BTC), with each previous drop into this zone preceding a significant price recovery.

The last time this occurred was in September 2024, when Bitcoin was trading around $54,000. Following that extreme fear signal, BTC experienced an impressive surge of 102%. Now that the index is back in Extreme Fear, traders are watching closely for a similar bounce. 

However, this potential trajectory could be influenced by external macroeconomic factors, particularly the upcoming Federal Reserve meeting.

Fed Policy and Market Reaction

The Federal Open Market Committee (FOMC) meeting concludes today, March 19, 2025, and Fed Chair Jerome Powell’s subsequent speech will be closely scrutinized. 

This meeting is especially critical given the current economic uncertainty stemming from President Donald Trump’s recently imposed tariffs on Mexico and Canada.

These economic shifts have already caused the crypto market to shed nearly a trillion dollars in valuation, making the FOMC’s interest rate decision even more impactful.

Currently, analysts expect the Fed to maintain rates between 4.25% and 4.50%, unchanged since December 2024. Market expectations for rate cuts in 2025 have shifted from anticipating two quarter-point reductions to a more cautious outlook. 

Bitcoin Price Analysis

Bitcoin is currently trading around $83,306, struggling to break through existing resistance levels. The Relative Strength Index (RSI) is at 43.73, indicating a neutral to slightly bearish momentum. 

Bollinger Bands suggest that BTC is trading closer to the lower band, which typically signifies high volatility and the possibility of a significant price move. However, the direction of this move will likely depend on overall market sentiment and the broader macroeconomic environment.

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Analyst Ali Martinez has highlighted the importance of Bitcoin’s moving averages. BTC is currently facing rejection at the 200-day Simple Moving Average (SMA), while the 50-day SMA is providing an additional layer of resistance around $91,000. 

Bullish momentum for Bitcoin may remain uncertain until these key levels are decisively cleared.

Potential Price Scenarios

If Fed Chair Powell’s commentary hints at potential future rate cuts or if market sentiment improves following the FOMC meeting, Bitcoin could indeed bounce back from this Extreme Fear territory. 

A successful break above the $91,000 resistance could then trigger a rally towards $100,000 and potentially beyond, mirroring the historical pattern observed in September 2024.

Related: Bitcoin’s Getting New Big Players: Fresh Whales Amassing Millions

However, if the Federal Reserve maintains a hawkish stance and economic conditions continue to deteriorate, BTC could revisit support levels around $77,000 or even lower. In this scenario, the Fear and Greed Index might remain in Extreme Fear for an extended period, delaying any potential recovery.