Bitcoin Investors Fall Into Fear As BTC Crashes To $26,500
19 August 2023 - 1:30AM
NEWSBTC
Data shows the Bitcoin market sentiment has plunged into fear as
the cryptocurrency’s price has observed a crash to the $26,500
level. Bitcoin Fear & Greed Index Points At “Fear” In The
Market The “Fear & Greed Index” is an indicator that tells us
about the general sentiment among investors in the Bitcoin and
wider cryptocurrency market. This metric uses a numeric scale that
runs from 0-100 for displaying the sentiment. All values above the
54 mark suggest the presence of greed among the investors, while
those below 46 imply a majority mentality of fear. The region
between these cutoffs reflects the neutral sentiment. As for how
the index calculates the sentiment, Alternative.me, the creator of
the metric, explains that it takes into account several different
factors. Namely; volatility, trading volume, social media
sentiment, market cap dominance, and Google Trends are what the
indicator currently makes use of to pinpoint the market mentality.
Now, here is what the Bitcoin Fear & Greed Index’s value looks
like right now: The value of the metric seems to be inside the fear
territory at the moment | Source: Alternative As you can see above,
the index’s value is 37 currently, which suggests that the majority
of the investors are fearful. This latest value of the indicator
reflects a new shift in the sector, as prior to today, the
indicator had been stuck inside the neutral territory for more than
three weeks straight. Related Reading: Bitcoin Liquidations Top
$500 Million Amid $1 Billion Crypto Decimation The below chart
displays the trend in the fear and greed index over the past year.
Looks like the value of the metric has taken a plunge recently |
Source: Alternative From the graph, it’s visible how sharp this
latest drop in the metric has been. In a flash, the market
sentiment went from being completely neutral (50), to firmly inside
the fear territory (37). The reason behind this hit to the investor
mentality has been the sharp crash that Bitcoin has observed during
the past day, as the cryptocurrency’s price has now slumped below
$26,500. Earlier, when the index was consolidating in neutral
territory, investors had been hesitant and undecided. But with this
price action, it would appear that their mind has been made up, and
they think that the asset would go down even lower. Historically,
the market has actually tended to make moves that the majority of
the holders aren’t expecting. The harder investors lean toward any
one direction (fear or greed), the more probable price action of
the opposite type becomes. The Bitcoin Fear & Greed Index also
has two sub-sentiments inside fear and greed called extreme fear
and extreme greed. These take place at values below 25 and above
75, respectively. Cyclical bottoms and tops in the asset have
usually always formed whenever the market has been inside these
zones, showcasing the aforementioned effect in action. Related
Reading: Will Bitcoin Volatility Continue? These Metrics Say Yes As
the market hasn’t yet dipped too deep into the fear region, the
probability of a bottom is likewise not raised too much yet. Back
in March, however, Bitcoin did manage to find its bottom when the
investors were fearful to a degree not much greater than right now.
It now remains to be seen how the market sentiment will develop in
the coming days, and if BTC will be able to find its bottom off the
back of this fearful situation. BTC Price At the time of writing,
Bitcoin is trading around $26,400, down 10% in the last week. BTC
has rapidly gone down during the past 24 hours | Source: BTCUSD on
TradingView Featured image from Kanchanara on Unsplash.com, charts
from TradingView.com, Alternative.me
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