Data shows the crypto market nearly escaped extreme fear territory earlier this week, but sentiment has fallen again over the past few days.
Crypto Fear and Greed Index Still Pointing to “Extreme Fear”
According to the latest weekly report from Arcane ResearchThe current streak of extreme fear, which is the longest ever, could not be broken this week.
“index of fear and greed” is an indicator that measures the general mood of investors in the crypto market.
The metric uses a numerical scale ranging from zero to one hundred to represent this sentiment. All index values above fifty indicate greed, while those below the threshold indicate fear.
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Values greater than 75 and less than 25 toward either end of the range indicate feelings of “extreme greed” and “extreme fear,” respectively.
Now, here’s a chart showing the trend of the crypto fear and greed index over the past year:
The value of the indicator seems to have slumped back down after a rise | Source: Arcane Research's The Weekly Update - Week 27, 2022
As you can see in the chart above, crypto fear and greed had a value of 16 two days ago, when the report came out. According to alternative.methe value is 18 today, slightly more than that.
Still, both values are firmly inside extreme fear territory, meaning the current record streak of bottom sentiment continues for 70 days.
Over the past week, the indicator’s value appeared to be gathering some upward momentum as it briefly rose to 24 over the weekend, just on the edge of the extreme fear region.
However, this improvement in sentiment did not last too long and the index fell again, before the longest extreme fear in the history of the crypto market could be broken.
However, the report notes that the index may be overestimating fears of the current state due to special conditions. The value of the fear and greed index depends on two main factors, volatility and trading volume. Binance removing trading fees from its platform certainly affected the values of these two metrics and thus the index.
For the cryptocurrency market to escape this extreme fear, positive news and price action will be needed to make investors more optimistic.
At the time of writing, Bitcoin price hovers around $19.7K, down 3% over the past week.
Looks like the value of the crypto has declined over the last few days | Source: BTCUSD on TradingView
Featured image from Pierre Borthiry on Unsplash.com, charts from TradingView.com, Arcane Research