🥛 Checking bear market signals 🔍

GM. This is Milk Road, the newsletter that switches crypto investing to easy mode.

Here’s what we got for you today:

✍️ Extreme Fear hits. Now what?
✍️ Checking bear market signals
🎙️ The Milk Road Show: Why Bitcoin Could Fall to 60–70K: Michael Nadeau’s Full Bear Thesis
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WHAT FEAR & GREED TELLS US ABOUT THE NEXT MONTH 📈

As I learned in the months after I was pantsed onstage at my school assembly:

The beauty of hitting rock bottom is that you can only go up from that point.

Now, that doesn’t make those experiences all that much easier to deal with in the moment – but it's a silver lining none the less.

I feel like we’re in one of those moments with crypto right now.

In less than two months, the Fear & Greed Index has dropped from heightened Greed (everyone is bullish) to Extreme Fear (sentiment, meet toilet).

Source: Coinglass

This is the lowest it has been since Terra-Luna collapsed and took the rest of the market with it back in 2022.

It ain’t a fun place to hang out.

But remember the silver lining: the beauty of hitting rock bottom is that you can only go up from that point.

Now, just because we’re testing rock bottom, doesn’t mean we’re immediately going to reverse course and flip back to Greed territory – but historically, we rarely experience more than 1 month straight in ‘Extreme Fear’ territory.

We’ve been in Extreme Fear since the 10th of November, so history is telling us to expect an exit in the next 2-3 weeks.

Ok, so we’re going from ‘Extremely Fearful’ to ‘Fearful’? Still not great. This isn’t screaming “new all-time highs are just around the corner”.

True. But just because the market is in a mood, doesn’t mean near-to-medium-term strength is off the table.

Remember 2021? Aka: the most mania-driven, pick-any-token-and-you’ll-probably-make-money bull market in the history of crypto?

What’s easy to forget is that we spent May, June, and July of that year bouncing between Fear and Extreme Fear:

Source: Coinglass

… all before breaking out to new all-time highs (with BTC doubling in the span of 3-4 months).

The takeaway:

This current market sucks, and there’s a good chance that more immediate-term pain lies ahead (whether from dips, or grinding sideways).

But having almost hit rock bottom in sentiment, we get our silver lining – we can’t go much lower from here, and history is telling us two things:

A reversal will likely hit in the next 2-3 weeks
Lowered sentiment does not take new all-time highs off the table in the medium term

There’s a reason Coinglass shades their ‘Extreme Fear’ section in green and ‘Extreme Greed’ in red… as the saying goes:

Buy when others are fearful, and sell when others are greedy.

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CHECKING IN WITH THE 50W SMA (THE BTC BEAR MARKET SIGNAL) 🔍

While we’re on the topic of things that “aren’t great, but don’t necessarily spell doom” – let’s talk about Bitcoin’s 50-week simple moving average (50W SMA)…

When Bitcoin’s price closes out on the weekly timeframe below its average price over the trailing 50 weeks – it’s not a good sign.

(Multiple times, and it’s even worse.)

But that’s not to say it’s a death knell.

Sometimes weekly closes below the 50W SMA can lead to a bear market. Other times it has led to new highs. 👇

In 2020, we spent 2 months below the 50W SMA, right before BTC 16x’d
In 2021, we closed below the 50W SMA, then BTC ripped to new all-time highs
In the first half of 2022 – we weren’t so lucky, and it signaled the end of the bull run

Point is: It’s nuanced. Sure, it’s not what you want to see, but it’s not a guaranteed death sentence. 👇

Source: TradingView

… so what did 2020/2021 have that 2022 didn’t?

Short answer: a metric sh*t ton of fresh cash being pumped into the global economy (more money in people's pockets = more money to spend on crypto).

The outlook for 2026?

Source: @kobeissiletter

So here’s how we’re looking at the close below the 50W SMA that hit this past Sunday:

Similar to the Fear & Greed index bottoming – it’s not great, but it’s not a death sentence – and history tells us that new all-time highs are still on the table in the medium term.

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But despite the market bleed, we’re still in profit!👇

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