Data reveals that Bitcoin market sentiment has plunged into extreme fear once more, following a retrace of the asset’s price to the $59,000 mark. The Fear & Greed Index, an indicator developed by Alternative to gauge market sentiment, displays this downturn. The index evaluates sentiment using five factors: volatility, trading volume, social media sentiment, market cap dominance, and Google Trends. It represents this sentiment on a scale from 0 to 100. Values above 53 indicate investor greed, while values below 47 suggest fear. The range between 47 and 53 is considered neutral.
In addition to these categories, there are two special sentiments: extreme fear and extreme greed. Extreme fear is registered at 25 and below, while extreme greed is noted at 75 and above.
The current value of the Bitcoin Fear & Greed Index stands at 25, indicating that the market is deeply entrenched in extreme fear. This marks a significant shift compared to just a day earlier. Tracking the index over the past month, one can see a high value near the end of July. However, the bearish momentum that followed led to a notable drop in the index’s value.
On the 29th, the index reached 74, nearing extreme greed. By the 6th of this month, it had plunged into the extreme fear zone at 17. Though there was a brief recovery that pushed the index back up to 48, this growth was short-lived, and sentiment has again plummeted as Bitcoin’s price retraced.
Interestingly, this deteriorating sentiment could potentially be a positive sign for the cryptocurrency. Historically, Bitcoin often moves contrary to the majority’s expectations. Extreme regions, like the current one, are where these expectations are most pronounced. Often, market tops and bottoms form when sentiment reaches these extreme zones. Given that the Fear & Greed Index is now back in extreme fear, there is speculation that a market bottom might be imminent. However, it remains uncertain whether this drop marks the end of the decline, or if there is more downward movement ahead.
Amidst these changes, Bitcoin has shown signs of a rebound, with its price climbing back up to $59,700 from an earlier low of under $58,000. The past day’s data reveals a dipping pattern, but the latest figures suggest a potential recovery may be underway.
