Data shows that the Bitcoin Fear & Greed Index is still within the extreme fear zone as the cryptocurrency market continues to struggle.
Bitcoin Fear & Greed Index Still Indicates ‘Extreme Fear’
The “Fear & Greed Index” refers to an indicator created by Alternative that tells us about the average sentiment among traders in the Bitcoin and broader cryptocurrency markets. The index uses data from the following five factors to determine market sentiment: trading volume, market capitalization dominance, volatility, social media sentiment and Google Trends.
When the value of the measure is greater than 53, it means that the sentiment shared by the majority of investors is that of greed. On the other hand, the indicator below 47 indicates that investors are afraid. Naturally, values between the two thresholds indicate the presence of a net neutral mentality.
In addition to these three main zones, there are also two ‘extreme’ areas: extreme fear (25 years and younger) and extreme greed (over 75 years). Recently the market was in the first of the two.
Here’s what the latest value of the Bitcoin Fear & Greed Index looks like:
As visible above, the Bitcoin Fear & Greed Index has a value of 7, which is quite deep in the extreme fear zone. In fact, this level of desperation is something that traders have rarely harbored historically.
The Fear & Greed Index has been consistently at similarly low levels in recent weeks, as shown in the chart below.
Overall, the indicator has now been in extreme fear territory for 22 days in a row. The recent poor market sentiment is a result of the decline that the Bitcoin price has faced.
In the past, cryptocurrency markets have often tended to move in directions contrary to the expectations of the majority. The chance of a contrarian move is generally greatest in the extreme sentiment zones, because that is where the public is most certain of the market’s outcome.
Given all this, the recent extreme fear mentality could help the industry hit rock bottom. The lowest point the metric has reached this cycle is 5, which is similar to the lowest point of the previous bear market. However, in that bear market, the market consolidated and even after the Fear & Greed Index bottomed, spent more time in the extreme fear zone before eventually reaching a bottom.
It now remains to be seen how long it will take for Bitcoin and others to hit a cyclical low this time.
BTC price
Bitcoin has not been able to make much of a recovery since the jump from the $60,000 level, while the price continues to trade around $67,700.