Why extreme fear is back in crypto in a big way

Why extreme fear is back in crypto in a big way

The data shows that the crypto market has once again sunk into a state of extreme fear after showing some signs of improvement over the past few months.

The Crypto Fear and Greed Index says the market is extremely scary right now

According to the last weekly report from Arcane ResearchThe market has seen a fearsome sentiment for five months straight.

index of fear and greed” is an indicator that tells us about the general mood among investors in the crypto market.

The metric uses a numerical scale ranging from zero to one hundred to represent this sentiment. All values ​​above 50 indicate that investors are currently greedy, while those below the threshold indicate a fearful market.

End range values ​​greater than 75 and less than 25 represent feelings of “extreme greed” and “extreme fear,” respectively.

Historically, the tops of coins like Bitcoin were formed when investors were going through extreme greed, while the bottoms occurred during periods of extreme fear.

Now, here’s a chart showing the trend of the crypto fear and greed index over the past year:

Looks like the value of the metric has gone down in recent days | Source: Arcane Research's The Weekly Update - Week 35, 2022

As you can see in the chart above, the Crypto Fear and Greed Index rebounded during July and August, after the market was previously under a long period of extreme fear.

The indicator almost reached greedy values ​​during this surge in optimism, but as Bitcoin’s recent rally has died down, so has the investor mentality.

Sentiment quickly moved back deep into fear, and the decline has now continued, bringing the index to just 22. This means the sector is now experiencing extreme fear again.

The report said sentiment has remained in the fearful region since April, making it a five-month fear. Since the fear and greed index was designed back in February 2018, this fear section was the longest such.

BTC price

At the time of writing, Bitcoin price hovers around $18.7K, down 8% over the past seven days. Over the past month, the cryptocurrency has lost 18% in value.

The chart below shows the coin’s price movement over the last five days.

Why extreme fear is back in crypto in a big way

The value of the crypto seems to have plunged down below the $19k mark for the first time in more than two months | Source: BTCUSD on TradingView
Featured image from Hans-Jurgen Mager on Unsplash.com, charts from TradingView.com, Arcane Research

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