The crypto market has endured a long downtrend since the mid-June market crash. That pushed total market capitalization down to annual lows as both major and minor cryptocurrencies suffered. However, with the new week, a twist begins to occur. The cryptocurrency’s market capitalization, which had been below $900 for most of the week, was $100 billion.
Crypto sentiment is starting to turn
The market capitalization of cryptocurrencies is still under $1 trillion, but it has recovered to a good point. With the price of bitcoin above $22,000, it has come close to retaking this key position. Another thing that has moved the crypto market cap is the recovery of Ethereum, whose recent bullish tendencies have spilled over to other smart contract platforms in the space.
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With this, the sentiment of crypto investors began to change. One way this happened was by reading the Crypto Index of Fear and Greed. This index uses data from five different metrics to present a number that represents how investors feel about the market.
Crypto market cap recovers close to $1 trillion | Source: Crypto Total Market Cap on TradingView.com
For most of June, the index was in ‘Extreme Fear’ territory. This was while the bear trend was raging and investors were pulling out of the market due to losses. This resulted in the market closing the month with one of the lowest scores in the interest index at 6.
However, as some cryptocurrencies in the market have recovered, so has market sentiment. The Fear and Greed Index currently has a score of 20 at the time of writing. So, while it still remains in extreme fear territory, it is up 14 points from last month’s close.
No doubt Bitcoin’s recovery above $22,000 has a lot to do with this. The pioneering cryptocurrency is a market driver and if it continues to grow, market sentiment is expected to recover further.
One thing to note is that such a large recovery in such a short time can lead to a sell-off. For the most part, investors often see such moves as a ‘bull trap’; therefore, they are trying to exit the market before the inevitable pullback. In the last 24 hours, there was more BTC going to centralized exchanges with a positive net flow of 725.2 million. This supports the fact that investors use this time to sell their shares.
Featured image from Kapersky, chart from TradingView.com
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