Once again, crypto market sentiment is in dire straits. This trend has been in place since the Terra crash began and investors have scrambled out to exit the market. This and speculations about a market headed for one of the most severe bear markets ever seen has led to sentiment falling to levels never before witnessed since 2020.
The Extreme Fear Region
For a long time, crypto market sentiment was not positive. The last two months were spent in fear territory, and April was closed in fear. Nevertheless, the scores on the Fear & Greed Index had remained somewhat high until the LUNA crash. This has sent the market into extreme fear overdrive as the Fear & Greed Index now displays a score of 12, the lowest it has been in two years.
Similar Reading: Bitcoin and Exchange Inflows Show That Sell-Offs are Far from Over| Bitcoin, Ethereum Exchange Inflows Suggest Sell-Offs Are Far From Over
Notable is that last week, the index was at 8 points. It is the index’s second lowest score, with the previous low being 5 in 2018. The index had seen some recovery since its May 17th lows but it was not enough to hold up. The index is currently at 11 after losing another point.
Source: Arcane Research| Source: Arcane Research
This fear-based reading mirrors the current feelings of investors when it comes investing in crypto currencies. Simply put, the inflows of money that have been flooding the cryptocurrency market show investors are not willing to place their capital. Digital assets are further impacted by the exchange-wide selling, which only serves to increase already low sentiment.
Do You Think It’s Time to Buy Cryptocurrencies?
If the sentiment in crypto markets has dropped this low, you can see it as an opportunity to enter the market before the recovery. For investors, this has been a successful strategy many times. But there have also been times when it hasn’t returned exactly what was expected. The downtrend continued when the market was in extreme fear territory.
Recovering total market capital to $1.25 Trillion | Source: Crypto Total Market Cap on TradingView.com
This indicator is considered one of the most simple to buy. This indicator is extremely popular because traders and investors often use it to determine when the bottom is and then get in the correct moment.
Similar Reading: Institutional Investors Search for Safe Haven in Crypto Products During Market Uncertainty| Institutional Investors Seek Safe Haven In Crypto Products Amid Market Uncertainty
They are most commonly used to track the top cryptocurrencies on the market, such as Bitcoin or Ethereum. However, as with any volatile market like the cryptocurrency market there are no set rules. So while ‘buying the blood’ can yield good results, they can easily go bad.
Featured Image from The New York Times. Charts from Arcane Research and TradingView.com.
Follow Best Owie on Twitter for market insights, updates, and the occasional funny tweet…