The indicator that displays the general sentiment toward bitcoin – the BTC Fear and Greed Index – dropped to “Fear” territory on June 13 and June 14. The last time the metric remained in that zone for two consecutive days was in the first half of March.
One possible reason behind the trend’s change could be the shockwave the US SEC caused on the crypto market after filing lawsuits against Binance and Coinbase. Bitcoin stood well above $27,000 last Monday but went through some highly volatile trading days and multi-month lows during the week.
Is it Time for ‘Fear’ Again?
The legal war that the US SEC waged against Binance and Coinbase has affected the entire cryptocurrency market and mostly the numerous altcoins the agency claimed to be unregistered securities.
Nevertheless, the actions of the regulator also harmed BTC’s price, which went from $27,000 to a multi-month low of under $25,400 after the two lawsuits were announced. Despite recovering some of its losses, the damage seems to be done, at least according to the popular Bitcoin Fear and Greed Index, which headed south.
It entered into a “Fear” zone on June 6 (the day when the American securities regulator filed a lawsuit against Coinbase and 24 hours after it did so with Binance) for the first time in nearly three months.
The SEC lawsuit, which claimed that several altcoins should be deemed as securities, kept the metric within a “Fear” level for just one day. However, it tumbled again on June 13 and June 14 without any evident reason, which led the community to speculate that the SEC-induced panic has returned. Currently, the index points at 46, while yesterday, it flashed at 45 (with both results being in the “Fear” zone).
The indicator showed either “Fear” or “Extreme Fear” during the bigger part of 2022, mainly because of the numerous scandals and collapses. Some examples are the Terra crash, the Three Arrows Capital bankruptcy, and the FTX meltdown.
Nonetheless, investors started changing their sentiment on bitcoin at the start of 2023 when the crypto market began showing signs of recovery.
Could This Be a Good Buying Opportunity?
Contrary to some alternative coins, the US SEC has not extended its crackdown toward bitcoin (at least for now). The asset could emerge as the big winner amid the regulatory chaos since investors might dump other digital currencies and focus on it.
This thesis is supported by MicroStrategy’s Executive Chairman – Michael Saylor – who believes BTC’s market share dominance could reach 80%, while its price could surpass $250,000 should the trends remain the same.
The recently announced US CPI numbers have also given investors hope that bitcoin’s valuation could start a new rally. The year-over-year increase in the Consumer Price Index of 4% was slightly lower than the expected 4.1%, meaning the Federal Reserve might cease raising the benchmark interest rates.
A possible pivot could be a breath of fresh air for businesses, increase spending, and make cryptocurrencies more attractive investment options.
Keeping those conditions in mind, being in the “Fear” zone does not sound that scary anymore. After all, one of Warren Buffett’s investment advice says one should be greedy when others are fearful and vice versa.
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