Leverage Is Faking the Fear

According to Bitbo, Bitcoin’s Fear & Greed Index has dropped to 10 today. That’s extreme fear - so extreme that we didn’t see numbers this low even at the bottom of the 2022 bear market, or during the COVID flash crash when Bitcoin lost more than 50% in a few hours.

Where is all this fear coming from? For months, Bitcoin was trading near all-time highs. It wasn’t exactly the safest moment to buy - or at least not the smartest - so countless people were patiently waiting for a pullback. Something modest, maybe 25%, just to start accumulating. And now that we finally got a correction… suddenly everyone is terrified? Instead of celebrating the dip, the market behaves as if Bitcoin just dropped 75%.

Do you really believe this fear is genuine and not just an artifact of how these indexes are built? Maybe you actually feel it yourself?

My guess: this extreme reading is heavily influenced by the recent boom of on-chain perpetuals platforms. They hand out XP for trading volume, which pushes users to open oversized positions using leverage - often far beyond what they can realistically afford. And when you’re trading with high leverage, even a small price move in the wrong direction feels catastrophic.

Meanwhile, when I look at Bitcoin swaps on rabbit.io, I see no signs of panic at all. People keep exchanging BTC calmly in both directions, just like they always have.