Why Crypto Market Fear Mirrors Lull In Volatility

According to data, crypto market fears have been showing signs of volatility recently. The latest spike in Bitcoin’s price has helped investors feel more confident.

Crypto Fear And Greed Index Escapes Out Of “Extreme Fear” Zone

The “fear and greed index” is an indicator that tells us about the general sentiment among investors in the cryptocurrency market.

This metric displays sentiments using a numerical scale that ranges from zero to 100. Any value above fifty indicates greed on the market. Values below 50 indicate fear by investors.

Besides these two, there also exist two special sentiments called the “extreme fear” and the “extreme greed.” These take place at values lower than 25 and greater than 75, respectively.

This is significant because Bitcoin and other coins have seen top formations (extreme anxiety) during these times.

Now, here is a chart from this week’s Arcane Research report that shows the trend in the crypto fear and greed index over the past year:

Crypto Fear And Greed Index

 Source: Arcane Research's The Weekly Update - Week 42, 2022| Source: Arcane Research's The Weekly Update - Week 42, 2022

You can see that crypto fear and deceit index was moving in the opposite direction in the 20-25 range since the publication of the report, which came two days ago.

The market volatility was very low during this time of stagnation because Bitcoin, and other cryptocurrency had been consolidating hard.

In the last couple of days, however, this has clearly changed as BTC’s price has shot up. As a result of this fresh volatility, this is how the fear and greed index’s value looks like today:

Crypto Fear

 Source: Alternative| Source: Alternative

The sentiment within the crypto market has improved over the past 2 days. However, the cryptocurrency market is still in fear.

The investor mentality mirroring the volatility isn’t a surprise, as the two are related. As 25% depends on the volatility measure, this is also taken into account in the value of the index.

Since almost one year, the crypto market has been in the fear zone. Investors will see one year of fear if it stays in the same area for another two weeks.

BTC price

At the time of writing, Bitcoin’s price floats around $20.5k, up 7% in the last week.

Bitcoin Crypto Price Chart

BTC prices have risen in the past few days. Source: BTCUSD tradingview| Source: BTCUSD on TradingView
Featured image by Art Rachen at Unsplash.com. Charts and charts from TradingView.com. Arcane Research

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