Infinite fear cycle in cryptopauses, what happens now?
The crypto market is pushing upwards as Bitcoin, Ethereum and other major cryptocurrencies make critical points of support. ETH’s price is currently leading the market recovery as it notes a 40% profit over the last seven days trading at $ 1500.
Related reading | Solana adds 70% more shine – can SOL keep the light on by coming?
On the other hand, BTC’s price is more conservative, but has begun to register important gains. At the time of writing, BTC is trading at $ 22,800 with a profit of 14% over the same period and is on track to secure further gains.
As a result of the bullish momentum, the Fear and Greed Index has broken out of its 74-day range and moved to extreme levels of fear, according to a report from Arcane Research. Again, this confirms profitability by taking long positions when this index consolidates around these levels.
As shown in the chart below, the Crypto Fear and Greed Index has returned to its Q1 2022 levels. This indicator fell in May when the price of Bitcoin broke below the $ 30,000 barrier and into a multi-year low of around $ 17,500.
Despite the current bullish momentum, the index is still gravitating in fear territory, suggesting BTC, ETH, and the crypto market will have to follow the index and regain its Q1 2022 prices before more market participants become more optimistic. Arcane Research noted the following:
While sentiment is improving, the fear and greed index remains deep in dreaded territory, and other viable sentiment indicators from the derivatives market suggest that market participants continue to exercise caution.
The chart above suggests that the sector is at a turning point as it pushes above 30 in the Crypto Fear and Greed Index. A break above these levels may confirm a change in the current market trend.
Why the crypto market could seize this window of opportunity
In the short term, the crypto market has a chance to extend the bullish momentum. The factors that push BTC and ETH to annual downturns appear to be mitigating.
These include the US Federal Reserve (Fed) trying to stop inflation by raising interest rates. The financial institution has entered a blackout period, which means that its representatives will not make public statements until the next Federal Open Market Committee (FOMC) meeting.
Inflation, measured by the consumer price index (CPI), appears to be declining. As NewsBTC reported, this calculation experienced a 40-year increase, but may take a step back as oil, copper and other downward trends. The CPI printout is strongly dependent on the price of raw materials.
Related reading | Polygon price explodes by 60% – Is MATIC approaching $ 1 target?
The crypto market also apparently receives support from traditional stocks. The two sectors have been correlated since the start of the downtrend, and thus BTC and other cryptocurrencies may benefit from stocks bouncing to previous levels.
#Stock keep pushing up, bring #Bitcoin with that. When markets correct 70 to 90%, you upload and trade the risk. Did it in March 2020 and did it again. Even just a relief rally is a big win at this point.
– IncomeSharks (@IncomeSharks) July 19, 2022
