The data shows that the feeling of extreme fear in the Bitcoin market has continued for almost a month, the longest period since April 2020.
Bitcoin Market Sentiment Remains in Extreme Fear Territory
According to the latest weekly report from Arcane Research, the crypto fear and greed index has continued to point to extreme fear this week.
The “Fear and Greed Index” is an indicator that measures the general market sentiment among Bitcoin and crypto investors.
The metric uses a numerical scale from one to one hundred to represent this sentiment. All values above “50” signify greed in the market, while those below the threshold suggest fear among investors.
Extreme values above 75 and below 25 imply feelings of “extreme fear” and “extreme greed”, respectively.
Historically, Bitcoin price lows have tended to form during periods of extreme fear. On the other hand, the cryptocurrency has seen spikes during stretches of extreme greed.
Some investors think that because of this, it is better to buy during extreme fear, while extreme greed is ideal for selling.
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Contrarian investing follows this approach. Warren Buffet’s famous quote sums it up: “Be fearful when others are greedy, and greedy when others are fearful.”
Now, here is a chart showing the trend in the Bitcoin Greed and Fear Index over the past year:
The value of the indicator seems to have been quite low recently | Source: Arcane Research's The Weekly Update - Week 21, 2022
As you can see from the chart above, the Bitcoin Greed and Fear Index is at 16 right now, which suggests that the market is extremely fearful.
These low values for the metric have held for almost a month, making it the longest stretch of extreme fear since just after the COVID crash in April 2020.
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The report notes that prolonged periods of poor confidence are not extraordinary in the cryptocurrency market, but in the past, such periods have generally seen temporary spikes in improving confidence.
In the month of May, there was no such disruption that gave Bitcoin investors a ray of hope.
At the time of writing, the price of Bitcoin hovers around $31,400, up 6% in the last seven days. Over the last month, the cryptocurrency has lost 16% in value.
The chart below shows the trend in the price of the coin for the past five days.
Looks like the price of the crypto has observed a push up in the last couple of days | Source: BTCUSD on TradingView
Bitcoin has now held strongly above the $31k mark for the first time since early May. However, at the moment, it is not clear whether this recovery will last.
Featured image from Unsplash.com, charts from TradingView.com, Arcane Research