Bitcoin Drops Into ‘Fire Sale’ Zone as Fear Surges
On Thursday, Bitcoin’s price declined to levels that placed it below the “Fire Sale!” band on the Bitcoin Rainbow Chart, a situation not observed since the catastrophic FTX exchange collapse in November 2022. Concurrently, the Fear and Greed Index registered a reading of 12 out of 100, indicating a strong position within “Extreme Fear” territory. Bitcoin price commenced today at approximately $63,500, following a dip below $62,000 during the previous night. That positions BTC beneath even the most discounted valuation band on the Bitcoin Rainbow Chart — a threshold the model has historically identified as a rare and extreme buying signal. The Bitcoin Rainbow Chart illustrates a logarithmic growth curve, complemented by colour-coded sentiment bands.
The deepest band — labelled “Basically a Fire Sale!” — represents the lowest tier of the model’s projected fair value range. When Bitcoin trades beneath it, the asset exists outside the historical channel that has characterised BTC’s long-term price behaviour. The last confirmed breach of the “Fire Sale!” floor occurred during the FTX exchange collapse in November 2022, when Sam Bankman-Fried’s crypto empire imploded and BTC fell under forced selling pressure throughout the market. That event is notable as one of the most significant liquidity crises in the history of cryptocurrency. In March 2026, data indicated that Bitcoin’s price was beginning to approach levels below the “Fire Sale!” zone, marking its first descent into this territory since the FTX-induced crash.
The renewed descent on June 4 intensifies that breach, as the coin loses ground for the second consecutive week. The Fear and Greed Index, which operates on a scale of 0 to 100, recorded a value of 12 on Thursday — positioning the market firmly in “Extreme Fear”. The index integrates volatility, market momentum, social sentiment, and derivatives data into a cohesive score. A reading below 25 indicates extreme fear, a state that, according to the index’s framework, has historically preceded price recovery periods. In February 2026, the index fell to an unprecedented low of 5, driven by a remarkable 52% decrease from Bitcoin’s peak price of $126,000.
Thursday’s reading of 12 remains slightly elevated above that low point, as Bitcoin price continues its downward trajectory from cycle highs. On X today, Strategy’s Michael Saylor argued that the sell-off represents a movement of institutional capital towards AI infrastructure, rather than a deterioration in Bitcoin’s fundamentals. The decline may have been compounded by concerns over Strategy selling 32 BTC to fund preferred-share dividends — its first bitcoin sale since 2022 — despite the company recently reducing debt by repurchasing $1.5 billion of convertible notes at a discount.
