The current streak of extreme fear is already the longest ever in crypto history, and it’s continuing on still. Here’s a recap of the major events responsible for this bottom sentiment.
Crypto Fear And Greed Index Continues To Point At “Extreme Fear”
The “fear and greed index” is an indicator that tells us about the general market sentiment among crypto investors.
This metric is based on a numerical scale from zero to 100. Any value below fifty indicates a market that is fearful, and values above 50 indicate investors who are greedy.
End values of above 75 and below 25 indicate extreme sentiments of “extreme greed” and “extreme fear,” respectively.
Here’s a chart that Arcane Research has just released, which shows how the cryptocurrency fear and greed index has changed over the last year.
Source: Arcane Research's The Weekly Update - Week 25, 2022| Source: Arcane Research's The Weekly Update - Week 25, 2022
The above graph shows that the value of the Crypto Fear and Greed Index is currently at 10, which indicates the market’s extreme fear.
This run of extreme fear has been going on since more than two months now, and it’s the longest ever such streak in the history of the metric.
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Even before this latest run of extreme fear, the market sentiment wasn’t particularly well during the rest of 2022. However, it wasn’t still quite as rock bottom as the current streak.
So, what’s behind this historically low sentiment? A number of market factors have contributed to this sentiment and are likely to continue doing so.
First, the May UST crash is worth noting. Tether USD, a large stablecoin that lost its peg in May, created fear among investors.
A second factor is the growing macro uncertainty over the market, such as the possibility FED rates increasing and various countries tightening their regulations.
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All of these factors combined to create a bottom sentiment that led to greater consequences for the whole crypto market, in the form a crash.
The collapse of Three Arrows Capital (3AC), which is a crypto hedge fund, was one of the side effects of the recent crash. Celsius, a lender company that stopped withdrawals and could be heading for bankruptcy was another.
This negative news keeps the fear-and-greed index from rebounding after its historic lows. Bad news, like a vicious circle, leads to worse news which further fuels the fear and greed sentiment.
BTC price
At the time of writing, Bitcoin’s price floats around $20k, down 1% in the past week.
Source: BTCUSD on TradingView| Source: BTCUSD on TradingView
Featured Image from Kanchanara, Unsplash.com. Charts from TradingView.com. Arcane Research