There is a lot of fear about the cryptocurrency market right now. It has been at its highest level in six months.
Crypto Fear and Greed Index shows lowest value in six months
According to the Arcane Research weekly report, fear and greed reached its lowest level since July.
The “fear and greed index” is an indicator that measures the general sentiment around the Bitcoin and wider crypto market.
For the measurement of sentiment, the metric employs a numerical scale that ranges from zero up to one hundred. If the value is below 50, the market is fearful.
Values above 50 indicate that the market is greedy. Extremely low values (below 25) and high levels of greed (below 75), signify extreme fear or extreme greed.
Extreme values are often found around tops or bottoms. Hence, some traders believe it’s best to sell during extreme greed and buy more crypto like Bitcoin while the sentiment is that of extreme fear.
Warren Buffet believed in this idea, as suggested by a famous quote of his: “be fearful when others are greedy, and greedy when others are fearful.”
Baron Rothschild is thought to have been one of the first traders to adopt this strategy. He said “the time to buy is when there’s blood in the streets.”
SOPR Shows Bitcoin Holders Continue To Sell At A Loss, Similar To May-June 2021| SOPR Shows Bitcoin Holders Continue To Sell At A Loss, Similar To May-June 2021
Below is a chart showing how the Bitcoin Fear and Greed Index has changed over the past 12 months.
Source: The Arcane Research Weekly Update - Week 1| Source: The Arcane Research Weekly Update - Week 1
You can see that crypto market sentiment at this time seems to be extreme fear, as you can see from the graph. The indicator’s current value is 21.
Fear and greed were much lower than they were in July. Around that time, the Bitcoin price also reached its lowest point.
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However, it doesn’t mean a bottom will necessarily follow this time as well. These extreme fears existed for several months before the July bottom. This may be true again this time.
However, it is a great time to get more cryptocurrency, even if you believe the contrarian buying approach.
Bitcoin price
At the time of writing, BTC’s price floats around $42.8k, down 8% in the last week. Below is a chart showing the change in crypto’s price over the last five days.
BTC prices show some upward trend | Source: BTCUSD on TradingView
Unsplash.com featured image, Charts from TradingView.com and Arcane Research charts