Extreme fear continues to grow as the market falls. What’s inspiring the sell-off? Or is it Omicron. Oder is it Evergrande Or is it just a plot? Is it the holiday season? For a whole month, all these questions and many more have led to the Fear and Greed Index being pointed left. This is what does it mean? What does this mean? That’s what we’re here to explore.
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But first, let’s talk about the Fear and Greed Index. One of the many Bitcoin indicators, it measures the market’s general sentiment at the moment. Zero means extreme fear. Zero is extreme Fear. One hundred is extreme Greed. The indicator can oscillate between these two states at any one time. It’s been said that the crypto market is very emotional. To prevent investors making uninformed decisions solely based on sentiment, the Fear and Greed Index was created.
Fear And Greed Index shows Extreme Fear. Source :| Source: Arcane Research’s The Weekly Update
What’s The Fear And Greed Index Saying Now?
Based on Arcane Research’s The Weekly UpdateFear has set in.
“The Fear and Greed Index has now signaled “Fear” or “Extreme Fear” for almost one month straight. This was the last time that we witnessed such an extended fearful market sentiment. It was during the first of the summer. With the sustained consolidation of bitcoin, the late autumn euphoria has dampened, and the overall sentiment seems very negative at the moment.”
The report also says that, “during steady sell-offs, bitcoin tends to outperform the overall crypto market.” And this time was no exception, BTC “outperformed all indexes so far in December, seeing a negative return of -18% after a relatively flat second week of trading this month.” On the other hand, “the Small Cap index has seen a loss of nearly a third of its value in December.“ What does this mean in general?
“The bitcoin dominance has risen by 1.13% in the last week. This is the third time we’re seeing bitcoin dominance bottom at 40% in 2021. These were the last times that bitcoin dominance was at 40% in 2021. It seems that the 40% threshold is a difficult area for alts to sustain”
BTC Price Chart for 12/15/2021 on Eightcap. Source: BTC/USD at TradingView.com| Source: BTC/USD on TradingView.com
What can we look forward to in the future?
To get our dose of technical and on-chain analysis, let’s give the mic to this month’s Fear & Greed Newsletter:
“A major factor here is the cycle support band. It is important to note that Bitcoin closed two consecutive weeks below its market support band. Historically, this meant that we’d see a longer consolidation phase before we could have a true reversal in the trend. The takeaway here is this, as long as Bitcoin closes the week below the cycle support band, we shouldn’t expect any major breakout in price to take place.”
Each dog is entitled to its own day. Analyzing a similar market sentiment a week ago NewsBTC informed you:
“A “Fear and Greed” Index on Extreme Fear levels, according to certain analysts, has historically preceded crypto market local bottoms. However, a run into new highs could see an obstacle as the macro-economic outlook turn complex.”
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It’s also important to remember that only two months ago, we were in a similar situation and the The sentiment has done a complete 180In a matter of weeks.
“The indicator dipped all the way down to extreme fear on 30th September, but in under two weeks the sentiment has already rebounded back to extreme greed. The report notes that this shows how fast the sentiment can change among the crypto market.”
With that being said, and a disclaimer that this isn’t financial advice, in a situation like this there’s only one thing we could say… hodl the line!
Featured Image by PublicDomainPictures at Pixabay| Charts by TradingView