Bitcoin Fear and Greed Index Drops to 2-Month Low
The cryptocurrency industry experienced its own set of failures last year as a number of internal companies and projects imploded, resulting in plummeting prices, countless bankruptcy filings and, somewhat predictably, many investor losses.
This year started on a positive note, but crypto has once again taken a serious hit – this time, the most obvious reason coming from external players.
All of this has hurt the performance of bitcoin and most altcoins, resulting in yet another change in overall sentiment.
BTC closed amid banking woes
The first few weeks of 2023 saw BTC finally overcome $17,000, fueling a mini-bull run that drove the asset to and beyond $25,000 in February. After adding nearly 50% during this time frame and charting a multi-month high, the popular fear and greed index skyrocketed from deep in “fear” and “extreme fear” to greed.
Still, bitcoin failed to double on its positive run, even though many industry experts suggested that the bear market was finally over and BTC could go back to charting new highs. On the contrary, the asset stalled before falling back to around $22,000.
More price drops followed, with possible reasons ranging from the US government allegedly selling seized BTC from Silkroad on Coinbase to further interest rate hikes. Then came some less expected problems. Silicon Valley Bank – a major commercial bank, or what bitcoin was created to fight against, collapsed on Friday after it failed to raise additional capital.
One might at first think that this would actually be beneficial for the primary cryptocurrency, as it shows that even giants of the traditional financial world could implode as easily and violently as something like the Terra ecosystem. After all, BTC emerged after the biggest US banking collapse in history to be something of an alternative. And SVB became the second highest such explosion.
However, it emerged that some crypto firms had exposure to the failed bank. One of these names is Circle – the industry giant behind the second largest stablecoin – USDC. When news emerged that the firm held at least $3.3 billion in SVB, the native stablecoin lost its dollar parity and plunged to and below $0.9.
Back to fear
All this affected bitcoin’s price, and it fell all the way down to $19,500 yesterday. This was the lowest position in two months. Naturally, the general sentiment changed once again, as demonstrated by the fear and greed index.
The calculation, which takes into account various factors, such as volatility, comments on social media, surveys, etc., fell to 33 – a state of fear. Just for reference, it was above 55 in February, showing a greedy sentiment, and was around 50 last week – neutrality.
