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Bitcoin Fear and Greed Index Dumps to Lowest Levels Since the COVID-19 Crash

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Amid the ongoing carnage in the cryptocurrency market, the popular Bitcoin Fear and Greed Index has plummeted to a state of “extreme fear.” In fact, the rate is at its lowest level since the collapse of COVID-19.

Extreme fear becomes the new normal

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Cryptocurrency markets have deteriorated sharply since the end of March. At the time, bitcoin was surging high, around $50,000, and the community wondered if it could break that level and even head towards the new ATH.

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However, this was not the case and BTC entered its longest negative streak. The cryptocurrency closed the next nine weekly candles in the red and lost more than $20,000 in price in the meantime.

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It stayed near $30,000 for a while, but it started to drop again last Friday. The weekend brought more pain, as did the start of this week. As a result, Bitcoin plummeted to just over $20,000 this morning, its lowest price position since December 2020.

As expected, this predominantly bearish trend has led to a dramatic change in investor sentiment and market outlook. This is best represented by the Bitcoin Fear and Greed Index, a metric that measures general sentiment by measuring various types of data such as volatility, polls, social media comments, and more.

It displays end results from 0 (extreme fear) to 100 (extreme greed). Since the beginning of May, the Index has been deep inside “extreme fear”. Over the past few days, there has been another decline in the indicator, which now shows 7 – the lowest position since the COVID-19 pandemic.

Bitcoin Fear and Greed Index. Source: Alternative.i

Up to 13 thousand dollars or refusal?

Whenever such extreme price volatility hits the market, analysts rush to give their predictions as to what will happen next. Based on his prediction on the double top that BTC formed recently, experienced derivatives trader Peter Brandt said that bitcoin is poised to fall further, indicating a near-term bottom of just over $13,000.

In contrast, another popular analyst, Will Clemente, sees this crash as a buying opportunity as the idle flow rate fell to its lowest level ever. It describes the average number of days that each spent coin remained dormant before finally moving into action.

As shown in the chart below, once the rate declines, BTC tends to bounce in the short to medium term.

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