Data shows that crypto investor sentiment has once again plunged into extreme fear, as the market continues to crash.
The Crypto Fear & Greed Index Now Points To A Situation Of “Extreme Fear”
The “Fear and Greed Index” is an indicator that measures the general sentiment among investors in the crypto market.
The metric uses a numerical scale that runs from zero to a hundred to represent this sentiment. All values above fifty indicate a greedy market, while values below the threshold suggest fearful holders.
Values greater than 75 and less than 25 indicate specific emotions called “extreme greed” and “extreme fear”, respectively.
The significance of extreme greed is that cyclical tops in bitcoin and other coins form during periods with this sentiment.
On the other hand, bottoms usually form in areas where the market has been extremely fearful.
Now, here is a chart that shows the trends in the Crypto Fear and Greed Index over the past year:
Looks like the value of the metric has taken a plunge in recent days | Source: Alternative
As you can see in the graph above, the Crypto Fear and Greed Index has been showing the fear value for a year now, with the market actually spending a lot of this period in extreme fear.
The latest rally in the price of coins such as bitcoin significantly improved investor sentiment recently, as the indicator rose from 20 to 40, meaning it was almost on the edge of greed.
However, the latest market-wide crash over the past few days has dealt a violent blow to the holder mentality, bringing it back into the extreme fear zone.
The fear and greed index needle currently points at 22, an extreme fear value | Source: Alternative
The latest failure to run into greed means the market has been fearful for almost a year now (with the exception of a few very brief spikes), continuing the longest stretch of such sentiment since the indicator conceived in 2018.
And the way the market environment is currently developing, this trend is probably still going to last for some time.
At the time of writing, bitcoin is priced around $16.2k, down 19% over the past week. In the past month, the crypto has lost 16% in value.
The chart below shows the coin’s price trend over the past five days.
The value of the crypto seems to have taken a deep dive during the last couple of days | Source: BTCUSD on TradingView
Featured image from Elizabeth Meyers on Unsplash.com, charts from TradingView.com, Alternative.me