The data shows that extreme fear sentiments in Bitcoin markets have been present for nearly a month, which is the longest period since April 2020.
Bitcoin Market Sentiment remains in Extreme Fear Territory
The latest Weekly Report from Arcane Research shows that the index of crypto fear and greed continues to indicate extreme fear.
The “fear and greed index” is an indicator that measures the general market sentiment among Bitcoin and crypto investors.
For this purpose, the metric employs a numeric scale that can range from one to 100. All values above “50” signify greed in the market, while those below the threshold suggest fear among investors.
The extreme values of above 75 and below 25 imply sentiments of “extreme fear” and “extreme greed,” respectively.
The price of Bitcoin has historically fallen during extreme fears. The crypto, on the other hand has seen tops in times of extreme greed.
Some investors think that because of this, it’s best to buy during extreme fear, while extreme greed is ideal for selling.
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“Contrarian investing” follows this approach. Warren Buffet’s famous quote sums it up: “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.
Source: Arcane Research's The Weekly Update - Week 21, 2022| Source: Arcane Research's The Weekly Update - Week 21, 2022
You can see that the Bitcoin fear and greed Index has an index value of 16. This indicates that market sentiment is very fearful.
The metric’s low levels have been in place for over a month. This is the longest time of extreme terror since the April 2020 COVID crash.
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The report notes that long periods of poor sentiment aren’t extraordinary in the crypto market, but in the past such stretches have usually observed temporary spikes to better sentiment.
Bitcoin investors were able to see a light of hope in May when there wasn’t any such disruption.
BTC price
At the time of writing, Bitcoin’s price floats around $31.4k, up 6% in the last seven days. The crypto’s value has fallen 16% over the last month.
Below is a chart showing the change in coin price over the past five days.
The price of crypto seems to have risen in the past few days. Source: BTCUSD on tradingView| Source: BTCUSD on TradingView
Bitcoin is now at $31k, the highest level since May 1st. However, at the moment, it’s unclear whether this recovery will last.
Unsplash.com featured image, Charts from TradingView.com and Arcane Research charts