Data shows that sentiment among Bitcoin investors has moved out of greed territory following the asset’s latest crash below $61,000.
The Bitcoin Fear & Greed Index is now in the neutral region
THE “Fear and Greed Index» is an indicator created by Alternative This tells us about the average sentiment traders currently share about Bitcoin and the broader cryptocurrency market share.
This index takes into account data from five factors to determine this sentiment: volatility, trading volume, social media sentiment, market cap dominance and Google Trends.
To represent sentiment, the indicator uses a scale from zero to one hundred. All values below 47 suggest the presence of fear among investors, while those above 53 signify market greed.
The region between these two zones naturally belongs to the neutral mentality. The Bitcoin Fear & Greed Index appears to lie within this third zone.
The value of the metric seems to be 51 at the moment | Source: Alternative
As can be seen above, the Fear and Greed Index is currently at 51. This is a notable change from the reading of 55 seen yesterday as the market had a sense of greed then .
The deterioration in sentiment is due to the fact that cryptocurrency prices faced strong bearish momentum in the last 24 hours. This decline in the metric is consistent with last week’s trend, as the asset’s latest drop is just a continuation of the recent downtrend.
The chart below shows how the Bitcoin Fear & Greed Index has seen its value change over the past year.
Looks like the value of the metric has been sharply going down in recent days | Source: Alternative
As the chart shows, the latest drop in the Bitcoin Fear & Greed Index was quite sharp. On June 18, at the start of this fall, the metric had a value of 74, which was quite deep in the greed zone.
This value is just on the edge of the “normal” greed zone, because above 75 the indicator begins to reflect the presence of “extreme greed” among investors. Historically, this region has been very important for cryptocurrency.
Indeed, the price of the asset tends to evolve against the expectations of the majority, and the more the chances of such a contrary evolution increase, the stronger this expectation becomes.
In the extreme zone of greed, investors experience euphoria; thus, a peak in the asset becomes that much more likely to occur. The asset’s all-time high (ATH) in March also occurred when the index was in this region.
While extreme greed can lead to corrections in the asset, “extreme fear,” which occurs below 25, can instead help the cryptocurrency bottom out. However, the indicator tends to stay inside or near the greed zone during bull markets.
So even if the feeling hasn’t yet escalated to extreme fear or even a fear zone during the last fall, the fact that it has cooled to neutral could still be an optimistic sign for the coin to end its decline. assuming an uptrend remains the dominant force in the long term.
BTC Price
At the time of writing, Bitcoin is floating around $60,300, down more than 10% over the past week.
The price of the coin appears to have seen a steep drop in the past day | Source: BTCUSD on TradingView
Featured image of Dall-E, Alternative.me, chart by TradingView.com
