Data shows that the Bitcoin Fear & Greed Index remains within the extreme fear zone as the crypto market continues to struggle.
Bitcoin Fear and Greed Index Still Shows ‘Extreme Fear’
“Fear & Greed Index” refers to an indicator created by Alternatives that depicts the average sentiment that exists among traders in Bitcoin and the broader cryptocurrency market. The index uses data from five factors to determine market sentiment: trading volume, market capitalization advantage, volatility, social media sentiment, and Google Trends.
A value of the indicator greater than 53 means that the sentiment shared by the majority of investors is greed. On the other hand, a reading below 47 suggests that investors are feeling fearful. Naturally, values between the two thresholds indicate the presence of a net-neutral mindset.
In addition to these three main zones, there are also two “extreme” areas called Extreme Fear (under 25) and Extreme Greed (over 75). The recent market belongs to the former category.
The latest values for the Bitcoin Fear & Greed Index are:
As seen above, Bitcoin’s Fear and Greed Index value is 7, which puts it quite deep in the extreme fear zone. In fact, this level of desperation is something traders have rarely experienced historically.
As the graph below shows, the Fear and Greed Index has been consistently at similarly low levels over the past few weeks.
Overall, this indicator has now remained within extreme fear territory for 22 consecutive days. The recent poor market sentiment is a result of the decline faced by the Bitcoin price.
In the past, the cryptocurrency market has often tended to move in a direction contrary to most expectations. The probability of a contrarian move occurring is generally strongest in extreme sentiment zones because that is where the crowd is most confident about the market outcome.
Considering this, the recent extreme fear could help the sector bottom out. The indicator’s lowest value for this cycle is 5, which is similar to the low point of the previous bear market. However, in that bear market, the market consolidated even after the Fear and Greed Index hit its lowest point, spending more time within the extreme fear zone until it finally hit the bottom.
It remains to be seen how long it will take for Bitcoin and other currencies to reach a cyclical low this time.
BTC price
Since Bitcoin rebounded from the $60,000 level, it has not been able to recover much, with the price continuing to hover around $67,700.
