Market sentiment went from greed to extreme fear in a matter of a week. Users see the moment of “extreme fear” as a buying opportunity.
Investors’ thoughts towards bitcoin are not as nice as it was before. According to the Fear and Greed (fear and greed) index, the stance on bitcoin (BTC) reached a point of “extreme fear”, crumbling down to levels like the ones in the 2020 crisis, which happened right after the start of the COVID pandemic. 19.
This Sunday, May 16, said index reached 20, a mark that indicates the “extreme fear” towards investing in BTC according to the Fear and Greed Index. This Monday’s update places the index at “fear”, with the mark at 27.
The Fear and Greed Index measures market sentiment. In the case of cryptocurrencies, the behavior is closely related to emotions, which explains alternative.me, in its section dedicated to this index.
This index usually works as a buy or sell indicator, depending on general market sentiment. For this reason, data such as the dominance of bitcoin in the market, appearances in social networks, volatility, trade volumes, and search interest on the subject on Google are under analysis.
The index reached levels not seen since last year’s crisis, amid the controversy sparked by Elon Musk’s criticism of bitcoin and its alleged energy expenditure, which has caused the price of BTC to fall above 20% in the last seven days.
Musk’s apparent war against Bitcoin seems to have quickly taken a toll on investment interest. Just a week ago, the general sentiment was one of “greed,” with a 72 on the index.
According to the Description of the Index, there is More Greed
This index’s “extreme fear” is seen more as a buying opportunity than a bearish sign. The description of the index also states that when there is more greed, the market must correct.
Historical data shows that there has been a correlation between the Fear and Greed Index and the price of bitcoin. In fact, about the crisis of February-March 2020, users hit the point of greatest fear in the market, at least since 2018.
From that point to the present, the price of bitcoin came to multiply up to 17 times. And right now, despite the decay in recent days, it remains 11 times above its price at that time.
At least, so far in 2021, as it has moved from maximum greed to fear, the price of bitcoin has been climbing, with ever higher support, even taking into account market corrections.
The graph, published by Ilia Sakowski in response to a post about the moment of “extreme fear” on Twitter, shows how bitcoin has performed in the market, in contrast to the drop in greed among investors. This behavior seems to relate to the view of ‘extreme fear’ as a buying opportunity for BTC, waiting for a price recovery.
Expectations for this year are also high, according to some analysts. These analysts talk about bitcoin not just surpassing $ 100,000, but approaching $ 300,000. Right now, those predictions seem far off, although the re-live pandemic fears floor could indicate otherwise.
By: JensoN Nuñez
