Bitcoin is now in its longest “extreme fear” period ever

by · July 15, 2022

Bitcoin (BTC) may have avoided new losses since falling to $ 17,600 last month, but the feeling is on the floor.

Now a classic mood gauge for the crypto market shows how long and hard the average investor has suffered.

70 days of “extreme fear”

While sentiment in the crypto market was already “comparable to burial” before the start of 2022, the subsequent fall in prices in Bitcoin and altcoins gave cold feet like never before.

This has now been quantified by the Crypto Fear & Greed Index, a tool that takes several sources into account to create an overall score for how markets feel.

As of July 15, Fear & Greed has spent 70 days in its lowest bracket – “extreme fear” – marking a new bearish record.

The index consists of five such parentheses, the others being “fear”, “neutral”, “greed” and “extreme greed”.

A score below 25/100 on his normalized fear corresponds to “extreme greed”, and it is the points zone that has characterized the last two months. The last time the market was more optimistic than “extreme fear” was May 5 – days before Terra (LUNA) – now called Terra Classic (LUNC) – debacle.

Crypto Fear & Greed Index (screenshot). Source: Alternative.me

Commenting on the data, Philip Swift, creator of the chain analysis platform LookIntoBitcoin, noted that this “extreme fear” period is longer than even those around the 2018 Bitcoin bear market and the March 2020 cross-market crash.

2022, despite its bearish overtones, has not been without its effervescent phases. The last time the index was in its “greed” or “extreme greed” zone – which tends to indicate an overheated market – was in March this year.

Research eye “signs of potential outbreak”

When we look at what can help Bitcoin and altcoins’ recovery, the analysis company Santiment meanwhile believes that the cryptocurrency correlation to traditional assets must decline.

Related: Bitcoin whales still “hibernate” as the BTC price approaches $ 21,000

While it is already falling, BTC must continue to strike out on its own and avoid the central bank’s money tightening due to inflation.

“Crypto is growing at its fastest pace when it has very little correlation with stocks,” it said argued in a Twitter post July 14th.

“According to yesterday’s CPI report, $ BTC & alts have recovered while the SP500 & Gold are falling. If they remain uncorrelated, it is a good sign of a potential outbreak.”

Comparison chart for crypto market values. Source: Santiment / Twitter

A more striking inverse correlation to the eye has been between crypto and US dollars, currently close to twenty-year highs against a basket of trading partner currencies.

The US dollar index (DXY) continues to trade at around 108 after reaching several peaks during the week, data from TradingView shows.

US Dollar Index (DXY) 1-hour light chart. Source: TradingView

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