The Fear and Greed Index fell to 8 compared to March 2020 levels. Then the bitcoin price hit the “bottom” at $3,800.

According to Arcane Research analysts, the index has been in the “fear zone” for 56 days, which is a record.

“Market participants are no doubt fed up with this, most of them capitulated. Historically, buying has been a profitable strategy in times of fear. However, it is not easy to catch the falling knife,” the researchers said.

In the context of technical analysis, the company noted that $20,000 is a critical level for bitcoin as it is the peak of the previous price rally.

“Throughout its history, Bitcoin has never traded below cycle peaks. Therefore, a possible visit below this level could lead to the surrender of many hodlers and downers.”

There is also significant open interest in Bitcoin options around $20,000. If the above level fails to withstand the onslaught of the bears, this is an additional pressure factor in the spot market.

Glassnode analysts had previously suggested that the market had entered the “deepest phase of the bear cycle.”