Why Extreme Fear Is Back In Crypto In A Big Way

The data indicates that crypto markets have once again fallen into extreme fear, despite showing improvement in the last few months.

Crypto Fear and Greed Index: Market Extremely Fearful Now

According to the Arcane Research weekly report, market sentiment has been soaring for the past five months with no break.

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

For displaying sentiment, the metric employs a numeric scale that can range from zero up to one hundred. Any value above 50 indicates that investors feel greedy at the moment, while values below this threshold indicate a fearful market.

End range values of more than 75 and less than 25 represent sentiments of “extreme greed” and “extreme fear,” respectively.

Coin tops like Bitcoin were formed historically when the investors experienced extreme greed. Bottoms, however, have occurred during times of fear and extreme anxiety.

Below is a chart that illustrates the change in the cryptocurrency fear and greed index for the last one year.

Crypto Fear And Greed Index

 Source: Arcane Research's The Weekly Update - Week 35, 2022| Source: Arcane Research's The Weekly Update - Week 35, 2022

The graph above shows that the index of crypto fear and greed has been recovering since July/August, when the market was under an extended spell of extreme fear.

During this period of optimism, the indicator nearly reached greed value, but the investors mentality died down with the recent rally in Bitcoin.

The sentiment quickly receded into fear and now the index is at 22. This is a sign that this sector is experiencing severe fear.

This report shows that fear sentiment is unchanged since April, which makes it five months straight of fear. This stretch of fear is the longest since the Fear and Greed Index was created in February 2018.

BTC Prices

At the time of writing, Bitcoin’s price floats around $18.7k, down 8% in the last seven days. In the last month, crypto lost 18%.

Below is a chart showing the change in coin price over the past five days.

Bitcoin Crypto Price Chart

 Source: BTCUSD on TradingView| Source: BTCUSD on TradingView
Hans-Jurgen Mager featured image on Unsplash.com. Charts from TradingView.com. Arcane Research

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