The crypto market’s Fear and Greed Index has dropped to its lowest level since March, raising concerns about investor sentiment, even as Bitcoin and Ethereum attempt to recover.

According to data shared by CryptoQuant analyst JA Maarturn on September 29, market sentiment has dropped from a neutral level of 40 in August to an “extreme fear” level of 28. The last time the index hit a similar level was in March, when Bitcoin was trading around $80,000.

Meanwhile, the decline in sentiment was accompanied by sharp sell-offs across major assets. Bitcoin and Ethereum fell below the psychologically important $110,000 and $4,000 levels last week, adding to the market sentiment uncertainty.

However, this decline was short-lived. At the moment, BTC price has recovered to $114,000, while ETH is trading above $4,200, showing that panic selling is giving way to a more balanced market.

Cryptocurrency Market Fear and Greed Index | Source: CryptoQuant

Is the market finding a bottom?

Asset manager Bitwise believes the current market landscape could mark a “bottoming” phase.

The company said:

“Last week, market sentiment hit ‘extreme fear’ levels twice during the day, but Bitcoin remained relatively stable, holding around ~$108,000 – the average purchase price for short-term investors. This suggests that Bitcoin is being supported by a drying up of selling supply.”

Bitwise also noted that, despite last week’s volatility, Bitcoin was still up nearly 3.7% in September, a notable point given that September is typically the weakest month of the year for the digital currency.

Conversely, the final quarter of the year typically delivers strong returns, with November repeatedly being Bitcoin’s most profitable month. This historical trend makes the current weakness more of an opportunity than a warning, according to Bitwise.

Data from Glassnode supports this view, showing that short-term holders are taking a net loss – something that historically has marked “reset” points before accumulation flows return. Periods of selling, where recent buyers sell at a loss, often lay the groundwork for longer-term rallies.

Net profit and loss of short-term Bitcoin holders | Source: Glassnode

Bitcoin Prepares for “Uptober”

In terms of Bitcoin price momentum, cryptocurrency trading firm QCP predicts investors should expect a strong rally in October, also known as “Uptober.”

According to QCP, bullish sentiment is gradually returning to the perpetual futures market, where leveraged long positions have returned after last week’s liquidations.

Bitcoin open interest has increased from $42.8 billion to $43.6 billion, the company said, while the funding rate remains positive and positions on platforms like Hyperliquid have become heavily tilted toward longs.

However, QCP warns that a sustainable uptrend will only be confirmed when Bitcoin breaks above the $115,000 threshold. They note:

“The options market reflects this caution, with BTC and ETH put spreads and open interest slowly returning to normal as traders rebuild confidence.”