Why extreme fear is back in crypto in a big way
Data shows that the crypto market has once again sunk into a state of extreme fear after showing some signs of recovery over the past couple of months.
The Crypto Fear And Greed Index says the market is extremely fearful right now
According to the latest weekly report from Arcane Research, the market has now observed fear for five months without a break.
The “Fear and Greed Index” is an indicator that tells us about the general sentiment among investors in the crypto market.
The calculation uses a numerical scale that goes from zero to one hundred to show this feeling. Any value above 50 indicates that investors are greedy right now, while those below the threshold suggest a terrible market.
End range values of more than 75 and less than 25 represent feelings of “extreme greed” and “extreme fear”, respectively.
Historically, peaks in coins like Bitcoin have formed while investors have gone through extreme greed, while bottoms have occurred during periods of extreme fear.
Now, here is a chart showing the trend of the Crypto Fear and Greed Index over the past year:
Looks like the value of the metric has gone down in recent days | Source: Arcane Research's The Weekly Update - Week 35, 2022
As you can see in the graph above, the Crypto Fear and Greed Index had recovered during July and August, after the market had previously been under a long period of extreme fear.
The indicator reached near greed values during this optimism build-up, but as the recent rally in Bitcoin died down, so did the investor mentality.
Sentiment quickly fell back deep into fear, and the decline has now continued, taking the value of the index to just 22. This means that the sector is now once again experiencing extreme fear.
The report notes that sentiment has remained in the dreaded region since April now, making it a five-month streak of fear. Since the fear and greed index was conceived back in February 2018, this fear stretch has been the longest such run.
BTC price
At the time of writing, Bitcoin’s price is hovering around $18.7k, down 8% in the last seven days. Over the past month, the crypto has lost 18% in value.
The chart below shows the trend in the price of the coin over the last five days.
The value of the crypto seems to have plunged down below the $19k mark for the first time in more than two months | Source: BTCUSD on TradingView
Featured image from Hans-Jurgen Mager on Unsplash.com, charts from TradingView.com, Arcane Research
