In light of recent events in the crypto market, sentiment has changed dramatically. The Fear & Greed Index which tracks sentiment across a number of metrics and puts the data into four categories has shown that investor sentiment has taken another nosedive. Market sell-offs are returning, as this time the market fell back into extremist fear.
Investors are losing faith
After spending a long stretch of time in the greed territory last year, the Fear & Greed Index had moved back into the fear territory following major crashes towards the end of the year. The chart had fallen to 11 at the start of 2022, as it spent most of its month in extreme fear territory. The market saw a small rebound, but it was only temporary.
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Now, after falling back to greed in the fall months, crypto markets have reverted back to extreme fear. The market was swept away by the rise in bitcoin to $40K. But, geopolitical, macro and other uncertainty remain a major issue. It has affected sentiment in the financial markets.
Crypto Fear & Greed Index | Source: Arcane Research
With a score of 25, the index was opened Wednesday in extreme fear. Sentiment for the new year has remained mostly low, and with expectations of a ‘crypto winter’ spreading widely, sentiment may continue to plummet. More downtrends are expected in the weeks ahead, according to indicators. Investors have become more vigilant due to increasing social and financial problems.
The Crypto Market is awash with $400 billion
The crypto market experienced some turbulent times in the first 2 months of 2022. It entered the New Year with a market capital of more than $2 trillion. However, its market value has fallen by over $400 billion.
A total market cap of $1.7 trillion has been reached| Source: Crypto Total Market Cap on TradingView.com
The sentiment has turned into negative, and the top assets have seen their value drop by 50% to 50% since the highs. Now, the crypt market stands at $1.78 trillion. This is almost 200 billion less than last week’s crash that caused more losses.
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Multiple assets continue to show low momentum. With investors being skeptical of investing money in the market at the moment, recovery is unlikely and total market cap could remain low.
Featured Image from Northstar Church. Charts from Arcane Research and TradingView.com.