Data shows that sentiment in the cryptocurrency sector has plummeted into extreme fear as Bitcoin and other assets have crashed.
Bitcoin Fear & Greed Index has fallen to a low of 11
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 a numerical scale ranging from zero to one hundred to reflect investor mindset. All values on this scale above 53 correspond to a feeling of greed, while those below 47 correspond to a feeling of fear. The benchmark that lies between these two limits obviously indicates a net-neutral mentality.
In addition to these three main zones, there are two extreme regions: extreme fear (25 years and under) and extreme greed (over 75 years). Currently the market is in the first of these two zones.
As visible above, the Bitcoin Fear & Greed Index currently has a value of 11, which is deep in extreme fear. So it seems that investors are quite pessimistic about the market.
Just a few days ago, sentiment was within normal fear territory. The sharp deterioration since then is a result of the sharp decline that BTC and other assets have faced.
As shown in the chart above, the latest decline in the Fear & Greed Index has left its value at its lowest level since early April. Historically, digital assets have often been at odds with majority opinion, so this ultra-fearful mentality may not actually be a bad sign for the industry.
That said, the current value of 11 alone may not determine whether a bottom is close. In February, the index hit a low of 5 before the market found some stability.
In other news, the recent Bitcoin decline has been accompanied by declining market demand, as highlighted by Julio Moreno, CryptoQuant’s head of research in an after.
The chart shows that the 30-day change in combined Bitcoin spot and futures demand has been negative lately. Over the past month, demand on these markets has shrunk by 232,000 BTC. Moreno explained:
The ongoing price correction is entirely related to Bitcoin demand conditions and has nothing to do with equities (all-time records), oil or macro (e.g. manufacturing activity is growing faster).
BTC price
At the time of writing, Bitcoin is trading around $67,000, down more than 11% in the past week.