Why Analysts Stay Optimistic as the Fear and Greed Index Hits Record Lows in November
After the historic liquidation occasion on October 11, market sentiment has but to get better. In reality, it has grown much more pessimistic, as proven by key sentiment indicators. Still, analysts stay removed from bearish.
Many skilled buyers imagine that widespread worry usually creates alternatives for individuals who act swiftly. But is that this time any completely different?
Fear and Greed Index Falls to Record Low
On November 13, the Fear and Greed Index plummeted to fifteen factors, its lowest stage since February of this yr.
This index measures market sentiment based mostly on a number of components, together with worth volatility, buying and selling quantity, social media developments, Bitcoin dominance, and different indicators.
A rating of 15 represents a state of “Extreme Fear”, reflecting widespread pessimism throughout the crypto neighborhood.
The final time the index dropped under 20 was February 27, adopted by a 25% decline in Bitcoin’s worth to $75,000 one month later.
Because of this, the new dip to fifteen factors has raised issues {that a} comparable correction might be forward.
A current Santiment report analyzed neighborhood sentiment for the prime three cryptocurrencies — Bitcoin, Ethereum, and XRP — and discovered that unfavourable discussions are rising sharply.
The evaluation makes use of the Positive/Negative Sentiment ratio. When the ratio drops considerably, it signifies that unfavourable discussions dominate the market narrative. All three belongings at the moment are displaying sentiment ranges nicely under regular.
However, Santiment’s report views this as a possible bullish sign:
“When the crowd turns unfavourable on belongings, particularly the prime market caps in crypto, it’s a sign that we’re reaching the level of capitulation. Once retail sells off, key stakeholders scoop up the dropped cash and pump costs. It’s not a matter of ‘if’, however ‘when’ this can subsequent occur,” Santiment noted.
Several well-known market analysts share this view, arguing that panic promoting is just not the proper response — persistence is.
“Bitcoin market sentiment is as poor as it was throughout the February–April drawdown. A neighborhood backside is forming as weak arms are being shaken out. Patience is a advantage,” analyst Joe Consorti said.
Meanwhile, Kyle Reidhead from Milk Road offered a extra cautious outlook, suggesting that this unfavourable sentiment might push Bitcoin right down to the $90,000 vary earlier than a powerful rebound takes place.
History reveals that the “Buy the Fear, Sell the Greed” technique has worked well for Bitcoin over the years. However, most retail buyers nonetheless lose cash — both because they use excessive leverage or as a result of they lack the persistence to endure extended intervals of utmost worry.
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