Bitcoin sentiment moved to greed for its first time in over four months last week. But, the market has since fallen into fear territory, despite the ongoing geopolitical, and macro uncertainty.
Bitcoin Fear and Greed Index Drops From Four-Month High
According to the most recent weekly report by Arcane Research the sentiment in the cryptocurrency market has sunk back down to fear, after briefly entering greed last Wednesday.
The “fear and greed index” is an indicator that tells us about the general investor sentiment in the Bitcoin and wider crypto market.
For this purpose, the metric employs a numeric scale from zero through 100. All values above the “fifty” mark mean that investors are currently greedy.
Values below the cutoff, on the other hand indicate market fear. Extreme values of above 75 and below 25 belong to the “extreme greed” and “extreme fear” territories, respectively.
Some investors believe buying when markets are extremely afraidful is the best option, as bottoms frequently occur during these periods.
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Due to historic top formations during such times, it may also be possible to sell when you are extremely greedy. This philosophy is often called “contrarian investing.” This quote from Warren Buffet sums it up the best:
Avoid being afraid of greedy people, but be greedy if they are afraid.
Here’s a chart showing the Bitcoin fear-and-greed index trend over the last year.
It looks like the indicator's value is 46 at the moment. Source: Arcane Research Weekly update - Week 6.| Source: The Arcane Research Weekly Update - Week 6
The graph above shows that the metric experienced a sharp uptrend over the past week, crossing the 50-mark for the first times in 4 months.
Since then the index’s value has fallen and the Bitcoin market sentiment now is one of fear.
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This report indicates that the trend could be due to broader financial market derisking as a response to macro and geopolitical uncertainties.
According to other data, Bitcoin’s leverage ratio also dropped dramatically over the week. These numbers suggest that investors are now reassessing their risk.
BTC price
At the time of writing, Bitcoin’s price floats around $44.2k, up 1% in the last seven days. The crypto’s value has increased by 3% over the last month.
Below is a chart showing the change in BTC’s price over the past five days.
BTC price surged in the past few days. Source: BTCUSD tradingview| Source: BTCUSD on TradingView
Unsplash.com's featured image. Charts by TradingView.com. Arcane Research: