Bitcoin and the broader cryptocurrency market have been hit on the last day, sending Bitcoin below $20,000 for the first time in two months. This decline was followed by a sharp drop in investor sentiment. The sharp decline sent sentiment down to negative levels not seen since January.
The crypto index of fear and greed sits in fear
Over the past two months, the market has been able to bounce back to $25,000 at some point, leading to a recovery in investor sentiment. As a result, the Crypto Fear & Greed Index briefly moved into greed territory, but that all came to an end with the latest drop.
The index fell 10 points in one day, one of the sharpest falls in the last year. With a score of 34, this shows that investors have become very bearish again. The result of this is panic selling as participants in the space try to avoid further losses.
Crypto Fear & Greed Index drops to 2-month low | Source: alternative.me
This is a far cry from last month’s greedy market, which peaked at 62 points on the index. The last time the market saw such a sharp drop was in May 2022 after the collapse of the Terra network (LUNA).
Is the Bitcoin bear market back?
Looking at the historical data, we can conclude that the bearish trend will continue from here. As mentioned above, the last time the Crypto Fear & Greed Index had such a sharp decline was when LUNA crashed, causing the Bitcoin price to drop from $30,000 to $20,000.
If this turns out to be a repeat of the previous trend, then Bitcoin could continue to decline. It is even possible to see another decline below the current cycle low of $15,500. If this happens, the market bottom may be further than expected.
Interestingly, the net flows over the past day were almost neutral for the leading digital assets in space. According to Glassnode’s report, the Bitcoin exchange had $782.9M inflows versus $796.6M outflows, resulting in a negative $13.7M net flows. Ethereum recorded the same trend, with net flows after all that was said and done at a negative $29.6 million.
📊 Daily online exchange flow#Bitcoin $BTS
➡️ $782.9 million in
⬅️ $796.6 million
📉 Net Flow: -$13.7M#Ethereum $ETH
➡️ $498.2 million
⬅️ $527.7 million
📉 Net flow: -$29.6M#leash (ERC20) $USDT
➡️ $795.4 million in
⬅️ $852.6 million
📉 Net flow: -$57.2 millionhttps://t.co/dk2HbGwhVw— glass node alerts (@glassnodealerts) March 10, 2023
Historically, it has always been more profitable to enter the market when the majority are afraid to do so. This could mean that the current downtrend provides a buying opportunity for investors looking to enter at low prices.
At the time of writing, Bitcoin is still trading below $20,000. It is changing hands at just above $19,900, down 8.21% over the last day and down 11.16% on the weekly chart.
BTC price falls to $19,600 | Source: BTCUSD on TradingView.com
Credit : www.newsbtc.com
