At the beginning of August, crypto market sentiment was on the rise, but as August draws to an end, it has been dragged back to August levels by a market crash. The Fear & Greed Index had previously reached a local peak of 42 when the price of bitcoin had recovered to $25,000. Since then the Fear territory has seen a downtrend.
Fear & Greed Index At Mostly Lows
The Crypto Fear & Greed Index has declined to a score of 25. The index is at danger of falling back to Extreme Fear. The reason market sentiment is important is that it allows investors to see how they feel about the whole market.
Take a score below 20 on the Fear & Greed Index. The market is experiencing extreme fear. Investors are very cautious about the market at these times, as there isn’t a lot money flowing. Because there’s not enough demand, prices will drop.
The total market capital is over $1 trillion. Source: TradingView.com Crypto Total Market Capital| Source: Crypto Total Market Cap on TradingView.com
The market is becoming more nervous each day as the current score stands at 25, compared to 28 on the previous day. This low point was last seen in the middle of July. One thing that marked the beginning July was low market prices.
What Does The Crypto Market Have to Offer?
It is fascinating to watch how investors feel and the market reacts. The score is so low that data shows it will continue like this for some time before any recovery is seen. Normally, there is hardly a time where the Fear & Greed Index touches a score of 25 that it does not continue down into extreme fear territory before any type of recovery is seen.
This is a sign that the cryptocurrency market could lose even more value over the next few days. If the market falls further into fear and investors feel more scared, then bitcoin prices could fall below $20,000 with an overall market value of $850 billion.
This is due in part to investors’ skepticism earlier in the year about bitcoin, even though the price was rising. Glassnode’s data indicates that Bitcoin investors didn’t increase volumes as much during recovery than they usually would.
At the moment, crypto markets are being watched with caution. While the bear trend is expected to persist, as it has in past bear markets and the recovery caught the majority of the market by surprise, most investors were not expecting the bullish momentum to last. It was believed to be a bull trend, so most people were not enthusiastic about the rally.
Featured image taken from African Leadership Magazine. Chart by TradingView.com
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