When the price of Bitcoins and Ethereum picked up momentum, sentiment about the cryptocurrency market was high. After the price surge, both of these digital assets were able to hit a two-month record. This resurgence quickly saw positive market sentiment erode over negative and pushed the Fear & Greed Index close to “Greed.” However, before the market could enter this green territory, the retracement began.
Crypto Market is Shifting Away From Greed
The market had seen a shift in sentiment after the recovery in prices. This was something it hadn’t experienced in quite some time. The optimism had grown so quickly that the Fear & Greed Index had seen more than 30 points added during this time period. What this meant was that the market had been able to clear out of the “Extreme fear” territory and traverse into the higher end of fear.
The index was slowly but surely moving closer to greed as the recovery progressed. At its highest, it had reached a score of 44 on the index, only 6 points shy away from “Greed.” This was when the price of bitcoin had been trading close to $25,000, and Ethereum had beat $2,000.
It was anticipated that the trend would continue and the market would become greedy once again. However, this would not turn out to be the case. Market had reached 44 after a quick retracement and a reverse in investor sentiment.
Markets retrace before reaching "Greed". Source: Arcane Research| Source: Arcane Research
Presently, the Fear & Greed Index is sitting at a score of 41, still in the “Fear” territory. As Bitcoin is back below $24,000 and Ethereum threatens to fall below $1,800, this comes at a time when Ethereum could be in trouble.
The Recovery of Bitcoin may be Possible
However, recent market retracement has not had a significant impact on established margins. Bitcoin lost $2,000 at the peak of its value while Ethereum lost several hundred dollars. Both digital assets were able to get support throughout the drop, which shows there’s still a lot of momentum.
Source: BTCUSD on TradingView.com| Source: BTCUSD on TradingView.com
Markets have been abuzz about news about the Ethereum Merge. It is currently about a month before the upgrade, but anticipation has been building. Based on the performance of the market over the last few weeks, it is unlikely that recovery will be complete.
An occasional retracement can be expected following periods of double-digit cryptocurrency gains. Contrary to popular belief, a correction can be good for the market. These digital assets continue trading high over their 50-day moving mean. It is possible that the market will see another rebound.
Image from crosswalk.com. Charts by Arcane Research and TradingView.com.
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