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The bitcoin Fear and Greed Index has plunged into ‘Extreme Fear’. Just a few months ago it was firmly in Greed.
Those who follow the index know that periods of Extreme Fear have historically been a good time to buy. Bitcoin whales have started to buy again at these low prices, another indicator that the violent market sell-off of the last few months may be exhausting itself.
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Christo de Wit, SA country manager at Luno, walks us through the index and what it means.
“It’s an indicator of overall market sentiment,” he says. “But it’s not all doom and gloom. Usually in these crypto cycles, when there’s extreme fear and we see a downturn in the market, that’s when those crypto whales start accumulating more.”
After a more than 50% drawdown, institutions and whales are starting to re-enter the market, which is typical for this stage in the market cycle.
Crypto bear markets have traditionally meant lower volumes for local exchanges, but this time is a bit different, says De Wit.
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The market downturn coincided with the seasonal December drop-off in volumes, but it happened so fast that volumes are now starting to return as buyers are on the hunt for bargains.
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Another factor weighing on the bitcoin price is the four-yearly “halving” event – when bitcoin issuance reduces by half, thereby creating scarcity. The last halving was in April 2024, meaning we are now nearly two years away from the next halving.
Historically, bull markets tend to emerge a year or more ahead of these events.
De Wit expects bitcoin to range sideways in the coming months, though this is dependent on events in the wider market – such as geopolitical tensions, interest rates and economic growth.
“Another point that is very interesting: if we compare this cycle to some of the previous cycles, all of the downturns that in previous cycles were based on internal indicators, meaning it was crypto industry-specific instances that led to the downturn of the market.
“I think the previous biggest downturn – I think you will remember very well, was in 2022 with the collapse of FTX, when the crypto market as a whole was in complete shock.
“This time around, we are not seeing a crypto-specific event driving this. This [downturn] is more macro-related. Also, we see this decoupling from other asset classes and that crypto is now more behaving like tech stocks and other riskier assets. So there’s also a very interesting change in pace that we’re seeing as we observe the market at the moment.”
There’s also been a decoupling between bitcoin and gold, which rocketed above $5 000 an ounce in the past month.
De Wit also discusses the entry of banks into the crypto market, pointing to Discovery Bank’s tie-up with Luno, which allows customers to purchase crypto assets directly through their banking app.
He also highlights Absa’s collaboration with Ripple – the company behind the crypto token XRP – which could form a crucial part of cross-border and inter-bank payments in the future.
Absa has also announced the piloting of its own stablecoin as a test for potential future use among its clients.
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Luno was also one of the partners in the February 2026 launch of ZARU, a rand-pegged stablecoin with Standard Bank, acting as custodian and Sanlam Specialised Asset Management serving as asset and liability manager.
The stablecoin’s reserves are audited monthly by Moore Johannesburg for transparency and full redeemability. ZARU is aimed at institutional cross-border flows as well as domestic transfers, with the aim of competing with USD- and EUR-pegged stablecoins.
“If you look at where cryptocurrency is going and what the future holds, this downturn in the market is just a mere ripple, right?” says De Wit.
“And I think that the banks are not necessarily too spooked about it as they are continuing [with] their crypto projects. And we are seeing that convergence of the crypto industry and the traditional finance sector.”
This holds huge potential for companies like Luno.
De Wit says the company’s focus is on adding more products to its existing suite of cryptocurrencies, stablecoins, xStocks and new yield-bearing products that allow crypto holders to earn a return.
“We’re working really hard this year to look at how our platform is performing. Is it ideal and fit for purpose for professional traders? Are we able to improve that to make a better experience? We’re looking at some yield products that could potentially see the light of day.”
Read:
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Luno now has nearly 16 million customers worldwide and about six million in SA. Having built a formidable footprint in the retail market, it is now focused on expanding that into the institutional space.
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