Crypto Fear Gauge Reaches Extreme Level Amidst Traders' Optimistic Bets on Relief Rally

Despite a significant drop into "Extreme Fear" territory, Bitcoin traders are expressing optimism following the US Federal Reserve's decision to maintain steady interest rates.

Key Takeaways

The Crypto Fear & Greed Index indicates extreme fear in the market.
Traders are optimistic about a potential relief rally despite Bitcoin's recent price drop.
Social media sentiment surged after the Fed's decision to hold interest rates at 3.5-3.75%.
Some analysts warn that current bullish signals might be deceptive, cautioning of a potential bull trap.

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Market Sentiment Rises Despite Negative Signals

The Crypto Fear & Greed Index, which measures market sentiment, had briefly shifted from an "Extreme Fear" rating to a "Fear" rating the day before, only to retreat back again shortly afterwards. Yet, traders seemed undeterred by this fluctuation. Following the Federal Reserve's announcement to keep interest rates steady at 3.5–3.75%, bullish discussions surged on social media. According to the sentiment analysis platform, Santiment, the score for social media discussions spiked from about nine to 71 within just a few hours of the announcement.

Social Sentiment

Bitcoin, however, presented a different perspective. Prior to the Fed's announcement, Bitcoin was trading around $70,150, marking a decline of more than 4% in just the last 24 hours.

🇺🇸 Today’s FOMC meeting has resulted in the anticipated outcome of keeping interest rates steady at 3.50-3.75%. Predictions suggest there may be another cut in 2026, followed by one in 2027. 📈 Currently, traders are looking forward to a bullish relief rally in spite of the uncertainty… pic.twitter.com/oBqLTcv3Ni — Santiment (@santimentfeed) March 18, 2026

Bitcoin Trading Chart

Traders Interpret Rate Hold as an Opportunity for Profit

The rise in positive sentiment among traders can be attributed to a shift in their outlook. Santiment pointed out that the negative price movement linked to the lack of rate cuts had already occurred a day before, allowing traders to reevaluate the unchanged rate decision as a potentially positive sign. Keeping the rates steady implies that future rate cuts might still be on the table.

The Federal Reserve's policies significantly influence how crypto traders perceive the wider economic landscape; rate cuts are widely viewed as beneficial for riskier assets like Bitcoin. Throughout 2025, traders monitored Fed actions closely, hoping for a bull run that never fully materialized.

Bitcoin Chart BTC/USD is currently trading at $70,228. Chart: TradingView

The S&P 500 has declined by 3.70% over the last 30 days, contributing to an already nervous atmosphere in the crypto market. However, not all analysts share the same optimism. Some on-chain analysts caution that the current bullish signs might be a bull trap—a signal that appears promising but could lead to a price decline.

While some market watchers predict that Bitcoin and the overall market might see a sharp rise once the stock market stabilizes, mixed opinions remain prevalent. The growing buzz on social media contrasts deeply with the fear reflected in the index. Whether traders' expectations for a rally will materialize or fizzle out before they begin is still uncertain.

Featured image from Unsplash, chart from TradingView