Market correction echoes 2021 China mining ban phase
Fear and Greed Index rebounds to a 40% neutral zone
A 2x jump from current levels may signal extreme greed
Stress Mirrors 2021’s Mining Ban Shock
Crypto investors have been riding an emotional rollercoaster in this current bull cycle. The recent correction has proven to be one of the most stressful periods, closely resembling the turmoil seen in 2021 when China imposed a nationwide ban on Bitcoin mining. Just like then, uncertainty has spread across the market, with volatility shaking confidence.
While no global ban or regulation has triggered the latest dip, factors like macroeconomic shifts, regulatory debates, and profit-taking behavior have collectively added pressure. Many long-term holders are comparing the psychological impact of this phase with the 2021 crash — suggesting that fear among retail investors is still lingering.
Fear and Greed Index Signals Recovery
Despite the recent market turbulence, the Fear and Greed Index — a tool used to measure crypto market sentiment — is showing signs of recovery. The 30-day simple moving average (SMA30D) of the index has climbed back to 40%. This level reflects a more neutral sentiment compared to the panic-induced lows observed just weeks ago.
The Fear and Greed Index ranges from 0 (extreme fear) to 100 (extreme greed), and reaching 40% indicates that investors are starting to feel cautiously optimistic. If the index were to double from here and approach 80%, it would signal peak bullish sentiment, often a precursor to a market top.
This correction phase has been the most stressful in the current bull cycle, similar to the 2021 correction when mining was banned in China.
At the moment, the average (SMA30D) Fear and Greed Index has recovered and is at the level of 40%. A 2x increase will show the maximum… pic.twitter.com/iZkk7oyj1P
— Axel Adler Jr (@AxelAdlerJr) April 30, 2025
What This Means for Crypto Investors
A recovering Fear and Greed Index suggests that the worst of the correction might be over — but it also serves as a warning. Historically, extreme greed often precedes sharp pullbacks. For investors, this is a time to stay vigilant, diversify portfolios, and avoid getting swept away by hype.
Although market stress is high, the bounce in sentiment may open new opportunities for disciplined traders and long-term believers in crypto. Just as the market recovered post-2021, this correction could lay the groundwork for the next major upward phase.
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