While data suggests that crypto markets have been deeply fearful recently, as Bitcoin’s price has fallen, sentiment is not at all extreme.
Crypto Fear and Greed Index Shows That Investors are Fearful Now
The latest Weekly Report from Arcane Research shows that crypto market sentiment remained steady in deep fear territory over the last week.
The “fear and greed index” is an indicator that tells us about the general sentiment among investors in the crypto market.
For this purpose, the metric employs a numeric scale which ranges from zero to 100. Values above 50 signify a market that is greedy, and values below it indicate investors who are afraid.
Values of the indicator towards the end of the range signify sentiments of “extreme greed” (more than 75) and “extreme fear” (less than 25).
Below is a chart to show the change in the cryptocurrency fear and greed index for the past one year.
The metric's value seems to be falling in recent days. Source: Arcane Research's The Weekly update - Week 34 2022| Source: Arcane Research's The Weekly Update - Week 34, 2022
You can see that crypto fear has been increasing for some time and was almost in greed territory, as Bitcoin prices soared.
However, after the rally ended, market sentiment plunged back into fear. This shows that the investor mentality is quite fragile.
This indicator’s current value is 27. That is two points from extreme fear territory. The indicator’s value was 28 at that time, so this is an improvement.
It looks like the indicator's value was 42 in the last month. Source: Arcane Research Weekly Update Week 34 2022| Source: Arcane Research's The Weekly Update - Week 34, 2022
The report nevertheless points out that, at $20k less Bitcoin prices than now, market sentiment in June was worse. It was still firmly within extreme fear.
This means that investors feel more secure at current price levels now than they did a few months ago.
At the time of writing, Bitcoin’s price floats around $20.3k, down 5% in the last week. In the past month, crypto lost 14%.
Below is a chart showing the change in coin price over the past five days.
The crypto's value has been moving mostly sideways in the last few days. Source: TradingView - BTCUSD| Source: BTCUSD on TradingView
Peio Bty featured image, Charts: TradingView.com and Arcane Research