Bitcoin buyers reluctant to step in, fear and greed index suggests
Data shows that Bitcoin investor sentiment has recently improved, but buyers remain reluctant as fears persist in the market.
The Bitcoin Fear and Greed Index points to a dire sentiment
According to the latest weekly report from Arcane Research, BTC market sentiment peaked at 34 last week, but has now fallen back to just above extreme fear territory.
The “Fear and Greed” index is an indicator that measures the general sentiment among investors in the Bitcoin market.
The calculation uses a numerical scale that goes from zero to one hundred to represent this feeling. Any value above fifty suggests greed, while those below the threshold suggest fear.
Values towards the end of the range above 75 and below 25 indicate feelings of “extreme greed” and “extreme fear”, respectively.
Historically, tops have tended to form during periods of extreme greed, while bottoms have occurred during periods of the latter sentiment.
Because of this fact, some traders believe it is best to sell when the market is extremely greedy and buy when investors are extremely fearful.
“Contrarian investing” is a trading technique that reflects this idea. The famous Warren Buffet quote sums it up: “be fearful when others are greedy, and greedy when others are fearful.”
Now, here is a chart showing the trend of the Bitcoin Fear and Greed Index over the past year:
The value of the indicator seems to have surged up during recent weeks | Source: Arcane Research's The Weekly Update - Week 29, 2022
As you can see in the graph above, Bitcoin fear and greed has seen some growth lately and is currently at a value of 26, which suggests that a fearful sentiment is gripping the market at the moment.
This latest improvement in mentality was preceded by a long stretch of extreme fear, the longest in crypto history, in fact. It lasted 74 days.
Last week, the indicator’s value had risen to 34 as the coin’s price increased. However, as the race ended and the crypto once again sank, so did the sentiment among investors.
The report notes that this trend indicates that participants in the BTC (and broader crypto) market believe that this recent rally was just a fakeout.
Overall, sentiment is certainly an improvement over the extreme fear hell of June, but buyers are still reluctant.
BTC price
At the time of writing, Bitcoin’s price is hovering around $21.3k, down 10% in the last week. Over the past month, the crypto has increased by 2% in value.
The chart below shows the trend in the price of the coin over the last five days.
Looks like the value of the crypto has gone down over the last few days | Source: BTCUSD on TradingView
Featured image from Kanchanara on Unsplash.com, charts from TradingView.com, Arcane Research
