Bitcoin Fear and Greed Index Plummets to 6-Year Low: Is The Worst Over?

The previous few weeks have been brutal for BTC and the remainder of the market. The largest digital asset plummeted by roughly $30,000 in lower than ten days, and bottomed out (at the least for now) on Friday morning with a drop to $60,000.

Given this calamity, it’s virtually anticipated that the general investor sentiment has plunged simply as badly. In truth, it has reached multi-year lows.

Fear Continues to Dominate

Since the cryptocurrency markets (in addition to most different monetary fields) may be extremely emotional, the Fear and Greed Index was created to reveal the speedy adjustments. Market momentum and general volatility are answerable for half of the index’s last end result, which ranges from excessive worry (0) to excessive greed (100).

As such, it’s no marvel that it has been principally downhill recently. Bitcoin’s worth peaked at over $95,000 in mid-January, and stood above $90,000 simply over ten days in the past – on January 28. However, what occurred subsequent was tough (if not not possible) to predict, because the asset plunged by $30,000 in days to its lowest worth ranges in nicely over a 12 months.

Although it rebounded to $69,000 as of press time, this hasn’t been enough to transfer the needle on the Index. The metric has constantly declined recently and tanked to 6, its lowest stage since August 2019.

Is a Rebound Next?

As Warren Buffett has mentioned up to now, buyers must be fearful when others are grasping and vice versa. As such, they need to be grasping now, proper? Previous cases of sharp will increase or declines within the metric have led to quick pattern reversals, which might lastly convey some hope for the bulls.

However, if we return to the developments again in 2019, historical past doesn’t precisely help this narrative. At the time, BTC had really begun to get well from its late 2018/early 2019 bear market and traded 2-3x increased than the $3,500 backside. Nevertheless, it couldn’t penetrate the $10,000 barrier and failed to achieve this for months.

Then got here 2020 and a significant black swan occasion (the COVID-19 crash), and BTC dumped additional earlier than it lastly went on the offensive. It took the cryptocurrency over a 12 months to break past $10,000. But the excellent news is that it by no means appeared again and has by no means traded inside a four-digit worth territory since then.

The ethical of the story now’s that sure, excessive worry dominates the markets, which is usually adopted by a pointy pattern reversal. However, the present market atmosphere is sort of unsure given the rising geopolitical stress, inside points, market instability, completely different asset courses exploding, and so on.

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