The Fear and Greed Index has achieved a new record for uninterrupted extreme fear. The negative perception has been active since BTC crashed from the $38,000 level on May 5.
While the Bitcoin market tries to generate the bottom of the current declining market, the Fear and Greed Index consistently remains in extreme fear. The index has been in a range of negative sentiment for a record 72 days.
The Crashdown of the digital asset market sentiment happened in May. At that time, Bitcoin lost backup at the $38,000 level and broke below the rising backup line. On May 12, it marked a low registered at $25,228 and started a consolidation above the support line.
However, it failed to hold, leading to an accelerated decadence in mid-June. The current low at $17,567 got generated on June 18. The consolidation is again going in line with the rising support line.
Fear and Greed Index Breaks the Fear Record
The day after the fall from the original support line on May 6, the Fear and Greed Index crumbled to a 22 level. This value belongs to the extreme fear in three of the 0-25 range. Since that day, the Fear and Greed Index remained in fear for 72 days.
This situation got observed yesterday by an expert called @PositiveCrypto, who revealed a long-term chart of Bitcoin color-coded according to Fear and Greed Index readings. In the past, focused on the data he gave, the index appeared twice in a negative fear sentiment.
The first time such a similar situation took effect was in the area of the absolute declining market bottom of 2018-2019 and lasted for at least 32 days. The second time it happened was during the COVID-19 outbreak of March-April 2020, and this time the Fear and Greed Index remained in the 0-25 range for at least 50 days.
According to the analyst, such a long-lasting extreme fear in the cryptocurrency market may be showing a potential trend reversal on its way.
On the one hand, the classic investor maxim appears to support this opinion. He said that people should be fearful when others are greedy, and people should
show greed when others are fearful.
On the other hand, the current macroeconomic situation, rising inflation and interest rates, the specter of recession, and the armed conflict in Ukraine keep generating a scenario unfavorable to high-risk assets such as digital currencies.
Is BTC an inflation hedge?
The suppressed price action made many market observers question Bitcoin’s frequently recognized properties as an inflation hedge. It isn’t behaving like one at the moment, having lost 70% in a year that has seen inflation surge to four-decade highs.
On July 13, the U.S. government highlighted that the consumer price index (CPI), a gauge of inflation, soared to 9.1%, beating expectations of 8.8% and marking the most prominent yearly high rate since 1981. Economist Alex Krüger described the CPI announcement as the “Crypto Pain Index” as Bitcoin crumbled to at least 4.36% in the hour after the announcement.
By: Jenson Nuñez
