Data indicates that sentiment in the Bitcoin market has shifted to fear following a recent retracement. BTC reached a significant level of $58,000 within the past 24 hours.
The Fear & Greed Index, an indicator developed by Alternative to gauge investor sentiment in the cryptocurrency market, is now pointing towards fear. This index is crucial because it reflects market sentiment, which can influence the cryptocurrency’s price trajectory.
The Fear & Greed Index aggregates data from five factors to estimate investor sentiment: volatility, trading volume momentum, social media sentiment, market cap dominance, and Google Trends. It then assigns a score between zero and one hundred. A value above 53 indicates greed among investors, while a score below 47 suggests fear. Values between these thresholds imply a net-neutral sentiment.
Currently, the Bitcoin Fear & Greed Index stands at a score of 39, indicating that most investors are experiencing slight apprehension. This is a significant shift from the previous day when the index was at 51, reflecting a neutral sentiment. Over the weekend, the index improved sharply as Bitcoin’s price climbed beyond the $60,000 mark. However, the beginning of the new week saw a decline back to $58,000, which correlates with the renewed sense of fear in the market.
It’s important to note that while the index has returned to the fear zone, it has not reached the 31 mark it previously attained before its recent recovery. This nuanced shift suggests that although sentiment has dipped, it hasn’t collapsed entirely, leaving room for potential market movements.
Historically, Bitcoin often moves contrary to the prevailing sentiment among the majority. When the Fear & Greed Index registers low values, indicating extreme fear, market bottoms can occur. Conversely, high values, signaling extreme greed, can indicate market tops.
With Bitcoin’s current sentiment only slightly fearful, the recent price drop has not significantly undermined investor morale. This suggests that while a further pullback is possible, it may be less likely unless sentiment worsens considerably.
Over the past 24 hours, Bitcoin’s price has dropped more than 3%, settling around $58,100.
