Data shows that Bitcoin market sentiment has shifted to fear following the pullback. BTC reached a level of $58,000 during the previous day.
Bitcoin Fear and Greed Index is Pointing to ‘Fear’ Now
The “Fear and Greed Index” is an indicator created by Alternative This tells us about the general sentiment among investors in Bitcoin and the broader cryptocurrency market.
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Market sentiment can be useful as it can reflect the price of a cryptocurrency. Sometimes it plays a role in the trajectory of an asset, which may be unexpected for many investors.
The Fear & Greed Index uses data from the following five factors to estimate average sentiment among investors: volatility, trading volume dynamics, social media sentiment, market cap dominance, and Google Trends.
Based on these factors, the metric represents this mindset as a score between zero and one hundred. A score above 53 implies the presence of greed among investors, while a score below 47 suggests fear in the market. Scores between these two cutoff points suggest a net-neutral mindset.
Now, here is the latest Bitcoin market sentiment from the indicator’s perspective:
As can be seen above, the Bitcoin Fear & Greed Index has a value of 39, which suggests that most investors in the market are a bit fearful at the moment.
This is a notable change from yesterday, when the index was at 51 and holders shared a neutral mindset. The chart below shows a record of all the index’s changes over the past year.
As displayed on the chart, the Bitcoin Fear & Greed Index saw a sharp improvement over the weekend, caused by the recovery that the asset’s price surpassed the $60,000 mark.
However, the cryptocurrency started the new week with a drop to $58,000, which could be why sentiment also reset into the fear region.
That said, while the index is back in the fear zone, it has yet to reach the 31 level it was at before the previous rally. This fact, however, may not be a good sign for the asset.
Historically, Bitcoin tends to move against expectations of the majority. The likelihood of a counter-move occurring has only increased as investors have become confident of one direction.
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Thus, when the Fear and Greed Index is low (signifying a special sentiment called extreme fear), bottoms are likely to occur. Likewise, being high (extreme greed) can signal peaks.
With the Bitcoin market only slightly fearful at the moment, it seems that the cryptocurrency’s pullback hasn’t been enough to deal a serious blow to investor morale. Of course, a pullback could still occur for the coin, but it may be less likely if sentiment worsens further.
BTC Price
Bitcoin has fallen by more than 3% in the past day, taking its price to $58,100.
Featured image of Dall-E, Alternative.me, chart from TradingView.com