Data shows the sentiment among the Bitcoin traders has deteriorated into extreme fear as BTC has plunged to start the new week.
Bitcoin Has Seen Another Setback To Kick Off Monday
Bitcoin renewed optimism among investors last week as its price showed signs of recovery, but it would appear that the cryptocurrency has decided to start Monday by shattering those hopes.
Below is a chart that shows how the asset’s recent trajectory has looked.
Looks like the price of the coin has been sliding down over the last few days | Source: BTCUSDT on TradingView
As is visible in the graph, Bitcoin was trading around $86,000 just yesterday, but over the past day, the asset has taken a hit that has sent its price down to $82,300.
The rest of the digital asset sector has also printed red returns during this window, although interestingly, Ethereum (ETH) has displayed more strength than the number one cryptocurrency as its price has gone down just around 2%.
With the market-wide downturn, it’s only natural that investor morale would have also been dealt a blow.
Crypto Fear & Greed Index Is Back In Extreme Fear Zone
The “Fear & Greed Index” is an indicator created by Alternative that tells us about the average sentiment present among the traders in the Bitcoin and wider cryptocurrency markets.
The index determines the investor mentality based on the data of the following five factors: trading volume, market cap dominance, social media sentiment, volatility, and Google Trends. It represents the sentiment as a score lying between 0 and 100.
All values under the 47 mark correlate to a sentiment of fear, while those above 53 suggest the investors as a whole are showing greed. The zone in-between these two thresholds corresponds to a neutral mentality.
Besides these three regions, there are also two ‘extreme‘ zones, known as the extreme greed (occurring above 75) and extreme fear (below 26).
The market currently happens to be in the latter of these special regions, as the latest value of the Fear & Greed Index suggests.
The value of the index appears to be 20 at the moment | Source: Alternative
As is visible above, the Bitcoin Fear & Greed Index has a value of 20 right now. Just yesterday, the metric was around the 27 mark, which put the market sentiment in the normal fear zone.
The trend in the Fear & Greed Index over the last twelve months | Source: Alternative
Compared to the low of 15 from earlier in the month, the indicator’s value is still improved even after the plunge. It remains to be seen, however, whether the sentiment would worsen in the coming days or not.
Historically, the extreme regions have held much significance for Bitcoin and other digital assets, as whenever the traders have held these sentiments, the prices have tended to approach a top or bottom.
The relationship has been an inverse one, however, meaning investor despair has led to a bottom and excessive hype has resulted in a top. As such, the latest drop into extreme fear could imply a low may be near for Bitcoin and others.
Featured image from Dall-E, Alternative.me, chart from TradingView.com
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