Bitcoin eyes ‘Uptober’ rally despite extreme fear levels

The Crypto Fear and Greed Index has slipped to its lowest level since March, raising fresh concerns over investor confidence even as Bitcoin and Ethereum attempt a recovery.

Data shared by CryptoQuant analyst JA Maarturn on Sept. 29 showed sentiment falling from a neutral 40 in August to an extreme fear level of 28. The index last touched this range in March, when Bitcoin traded around $80,000.

Meanwhile, the sharp deterioration in sentiment coincided with heavy sell-offs in major assets. Both Bitcoin and Ethereum slipped below key psychological levels of $110,000 and $4,000 last week, deepening the sense of uncertainty.

Yet the retreat proved short-lived. As of press time, Bitcoin price has recovered $114,000 and Ethereum traded over $4,100, suggesting that panic selling has given way to a more balanced market.

Market bottom?

Asset manager Bitwise argued that the fear-driven backdrop could represent a bottoming phase.

It stated:

“Last week, sentiment has twice reached ;extreme fear’ levels on an intraday basis, yet bitcoin has shown relative resilience, holding around ~$108k – a level that also aligns with the short-term holder cost basis – this appears to provide a strong support for bitcoin right now as sellers are increasingly exhausted.”

The firm further pointed out that Bitcoin was still up nearly 3.7% in September despite last week’s turbulence. This is notable considering September is historically the weakest month of the year for the top crypto.

In contrast, the final quarter often delivers strong gains, with November repeatedly ranking as Bitcoin’s most profitable month.

According to Bitwise, this historical pattern makes current weakness look more like an opportunity than a warning sign.

Data from Glassnode supports the case, showing that short-term holders are now realizing net losses, a condition that has historically marked reset points before renewed accumulation. Periods of capitulation, where recent buyers sell at a loss, have often provided the foundation for longer-term rallies.

Bitcoin prepares for Uptober

Considering the flagship digital asset price resilience, crypto trading firm QCP posited that BTC traders are optimistic of an “Uptober” rally.

According to the firm, gradual optimism has returned to the perpetual futures market, where leveraged longs have re-entered after last week’s liquidations.

QCP stated that Bitcoin open interest has risen from $42.8 billion to $43.6 billion. At the same time, funding rates remain positive and positioning on platforms like Hyperliquid has swung decisively back toward the long side.

However, the firm warned that a sustained uptrend will only be confirmed if BTC clears the $115,000 threshold. It added:

“Options markets reflect this hesitation, with put skew and OI in BTC and ETH slowly normalizing as traders rebuild conviction.”

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