Recent data reveals that the Bitcoin Fear & Greed Index is on the cusp of entering extreme greed territory following the recent drop in BTC’s price.
Bitcoin Fear & Greed Index Signals Deep Fear Among Investors
The Fear & Greed Index, a tool developed by Alternative, gauges the current sentiment of traders towards the Bitcoin and wider cryptocurrency market.
This index derives its analysis from five key factors: volatility, trading volume, social media outlook, market cap dominance, and Google Trends.
Ranging from zero to one hundred, values above 53 indicate a sense of greed in the market, while values below 47 represent fear. The mid-range is considered neutral sentiment.
At present, the Bitcoin Fear & Greed Index stands at 26, signaling a deep fear among investors, almost nearing extreme fear levels.
Extreme fear, observed when the index drops below 25, reflects a highly bearish sentiment, contrasting extreme greed, which occurs above 75.
Just a week ago, the market was teetering on the brink of extreme greed, but has since shifted to the opposite end of the spectrum, as depicted in the chart below.
The recent shift towards fear is primarily a result of Bitcoin’s bearish trend over the past week, including the recent price crash.
Historically, Bitcoin has tended to move contrarily to market expectations, especially near extreme sentiment zones where expectations are strongest.
Given the recent shifts just outside the extreme zones, it is plausible for another reversal to occur with Bitcoin at its current near-extreme fear level.
The market sentiment in the upcoming days will be crucial in determining whether Bitcoin plunges into the extreme fear zone.
Current BTC Price
Following a decline below $50,000, Bitcoin has started to recover, with its price currently hovering around $54,800.
