According to data, the Bitcoin market fell back into extreme fear after the price plunged over the week.
Bitcoin Fear and Greed Index: Market Extremely Fearful
The latest Arcane Research weekly report shows that extreme fear is back on the BTC market. It suggests now could be a good time to purchase.
The “fear and greed index” is an indicator that tells us about the general sentiment among investors in the Bitcoin market.
To represent sentiment, the index uses a numeric scale ranging from one to 100. All values above the “50” point signify greed, while those below the cutoff imply the market is fearful right now.
The values towards the ends of the spectrum of over 75 and under 25 signify extreme greed and fear.
Tops tend to form when there is extreme fear, while bottoms are formed during times of great greed.
This is why some investors feel that it’s best to buy during extreme fear than sell during extreme greed.
Bitcoin Long-Term Holders Start Capitulating Amid Panic| Bitcoin Long-Term Holders Start Capitulating Amid Panic
“Contrarian investing” is a trading method that follows this idea. Warren Buffet’s famous quote best sums the philosophy up:
Fearful of others being greedy. Greedy of others who are afraid.
Here’s a chart showing the Bitcoin fear-and-greed index trend over the last year.
The indicator's value seems to have fallen in the past week. Source: Arcane Research's The Weekly update - Week 18, 2022| Source: Arcane Research's The Weekly Update - Week 18, 2022
You can see that the Bitcoin Fear and Greed Index now stands at 10 which indicates that sentiment has fallen to extreme greed.
The report notes that the value of the metric hasn’t been worse than this since the COVID crash back in March 2020.
This sentiment, as mentioned above, usually leads to buying opportunities. However, even so it’s not a sure buy signal either.
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This year’s January was the last time that the index had reached an equivalent value. Then, the bottom didn’t actually form until two weeks after the sentiment turned extremely fearful and Bitcoin observed another drop of 20%.
So, it’s not certain if Get it nowIt is the best time to invest. Investors should be on the lookout for possible bottoms in the near future if there is such extreme fear.
BTC Prices
At the time of writing, Bitcoin’s price floats around $29.5k, down 25% in the past week.
The price of crypto seems to have dropped today. Source: TradingView – BTCUSD| Source: BTCUSD on TradingView
Unsplash.com featured image, Charts from TradingView.com and Arcane Research charts
