Crypto Fear and Greed Index Drops to One-Month Low, Here’s What That Means
Sentiment for crypto investors is already on the downside following the market crash, erasing the progress made over the past month. The fear and greed index is now on a reversal, falling back to its lowest point in over a month.
The Crypto Fear and Greed Index is trending towards fear
Coming out of the weekend, the Crypto Fear & Greed Index has seen a decline that has sent it back towards fear territory. It currently stands at a score of 48 at the time of writing, which puts it closer to fear than greed. It also shows that investors are more cautious about entering the market, which would explain the subdued momentum in the market over the past couple of days.
It is also the first time that the fear and greed index has been so low since January. Generally, higher numbers follow a market rise and vice versa. It also shows how investors view the market, so a less favorable view can lead to less money flowing into the market.
Fear & Greed Index inches toward fear territory | Source: alternative.me
However, the current level of the Fear & Greed index is considered neutral as it falls within the 47-53 range. This means that even though the index is still closer to fear, investors are still considered to be indecisive when it comes to investing in crypto. But just a 2-point drop from here could easily put it back in fear as the bear market battle continues.
The market leaves quick gains
A good part of the selling pressure being felt in the crypto market right now is a result of the expected Ethereum Shanghai upgrade. With billions of dollars locked in the contract, it is expected that a fair amount of ETH will be dumped on the market as coins are gradually unlocked.
Market cap loses $12 billion during the weekend | Source: Crypto Total Market Cap on TradingView.com
This expectation also explains why the Crypto Fear & Greed Index remains in neutral territory for such a long period. Investors are waiting to see the outcome of the upgrade before throwing their hat in the ring, although the upgrade has now been pushed back from March to April.
With the crash, the market has now settled into a more sustainable pace which can be good for the market. There is also less volatility right now in the market with only a slight increase in Bitcoin trading volume, presumably a result of USD transfer suspensions across several exchanges.
At the time of writing, the total market cap is $985 billion, down $12 billion from the weekend peak of $997 billion.
