According to data, the market is still extremely afraidful and the current fear of Bitcoin has exceeded that experienced during the selloff in 2021.
The Market Sentiment is Extremely Fearful this Week, according to the Bitcoin Fear and Greed Index
The latest Weekly Report from Arcane Research shows that BTC Investors are once more in extreme fear.
The “fear and greed index” is an indicator that tells us about the general sentiment currently among Bitcoin holders.
This metric is based on a numerical scale of one through 100 to represent the sentiment. All values above fifty signal “greed” in the market, while index values below the cutoff imply holders are fearful right now.
Market sentiments of extreme greed or fear are indicated by extreme values above 75 and below 25, respectively.
Bitcoin tops usually form when investors are greedy. Bottom formations also occur during times of extreme fear.
Some investors feel that extreme greed makes it best to buy, but extreme fear makes it ideal to sell.
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This investment philosophy is called “contrarian trading.” Warren Buffet sums it up the best: “Be fearful when others are greedy, and greedy when others are fearful.”
Below is a chart that illustrates the Bitcoin Fear and Greed Index’s trend for the past one year.
The current value of this indicator is around 21. Source: Arcane Research’s The Weekly Update Week 10 2022| Source: Arcane Research's The Weekly Update - Week 10, 2022
You can see that Bitcoin fear and greed has been in fear (usually extremely fearful) territory since November 2021. The exceptions are a few short spikes (around 50) to neutral values, which only lasted a very short time.
The current fear cycle is longer than that following last year’s selloff between July 2021 and May 2021. The metric currently has 21 points, which indicates that the market is very fearful.
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As usual, investor sentiment last week was one of fear and extreme anxiety. If the trend towards contrarian investing continues, then periods such as these may be good times to purchase more Bitcoin.
Current fear sentiment could be encouraged by the macro uncertainties that are looming above the market, like Russia’s invasion of Ukraine. Right now, it’s hard to say when greed may return among BTC investors.
BTC price
At the time of writing, Bitcoin’s price floats around $40.4k, down 4% in the last seven days. The chart below shows how Bitcoin has changed in value over five days.
Source: BTCUSD tradingview| Source: BTCUSD on TradingView
Unsplash.com featured image, Charts from TradingView.com and Arcane Research charts