The data shows that emotions among Bitcoin traders have been exacerbated by extreme fear as BTC plummeted to start a new week.
Bitcoin has seen another set-off kick-off on Monday
Bitcoin renewed optimism among investors last week as its prices showed signs of a recovery, but it appears that cryptocurrency has decided to start Monday by shattering those hopes.
Below is a chart showing what the recent trajectory of the asset looked like.
The price of the coin appears to have been slipping down for the last few days | Source: BTCUSDT ON TRADINGVIEW
As can be seen in the graph, Bitcoin was trading around $86,000 yesterday, but yesterday the assets earned a hit that reduced its price to $82,300.
The rest of the digital assets sector printed a red return during this window, but interestingly, Ethereum (ETH) shows more strength than the number one cryptocurrency, as its price has dropped by around 2%.
It is natural that the market-wide recession has also hit investors’ morale.
Crypto Fear & Greed Index is back in the extreme fear zone
The “Fear & Greed Index” is an indicator created by an alternative that tells us about the average sentiment that exists between traders in Bitcoin and the broader cryptocurrency market.
The index determines the investor mentality based on data on five factors: trading volume, market capitalization domination, social media sentiment, volatility, and Google Trends. This represents feelings as a score between 0 and 100.
All values under the 47 mark are correlated with feelings of fear, but over 53 suggest that the entire investor is showing greed. The zone between these two thresholds corresponds to a neutral mentality.
In addition to these three regions, there are also two “extreme” zones known as extreme greed (occurring above 75) and extreme fear (below 26).
As the latest value of the Fear & Greed Index suggests, the market is currently in the second half of these special regions.
The index value appears to be 20 at this time | Source: Alternative
As you can see above, the Bitcoin Fear & Greed Index value is currently 20. Just yesterday, the metric was around the 27 mark, placing market sentiment in the normal fear zone.
Trends in Fear and Greeding Index over the last 12 months | Source: Alternatives
The indicator values have improved even after the rush, compared to a low of 15 from the beginning of the month. But it remains to be seen whether emotions will worsen in the next few days.
Historically, extreme regions have retained great importance to Bitcoin and other digital assets, just as prices tend to approach the top or bottom whenever traders hold these feelings.
The relationship was the opposite, but it means investor despair led to the bottom and excessive hype led to the top. So the latest drop to extreme fear could mean that something low could be approaching for Bitcoin and others.
Featured Images of Dall-E, Altortative.me, Charts on tradingview.com
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