Data shows that Bitcoin investors still hold a sentiment of fear as the cryptocurrency’s price continues to consolidate.
Bitcoin Fear & Greed Index Is Currently Pointing At ‘Fear’
The “Fear & Greed Index” is an indicator created by Alternative that, in short, tells us about the general sentiment present among the traders in the Bitcoin and wider cryptocurrency markets.
To determine this sentiment, the index uses the data related to the following five factors: volatility, trading volume, social media sentiment, market cap dominance, and Google Trends. The indicator represents this mentality as a score between zero and hundred.
Investors share a sentiment of greed when the metric has a value greater than 53. On the other hand, being under 47 implies dominance of fear in the market. The region between these two thresholds naturally corresponds to the neutral sentiment.
Now, here is what the current value of the Fear & Greed Index looks like:
As is visible above, the Bitcoin Fear & Greed Index is 34 at the moment, suggesting that the investors are feeling fear. The current fearful mentality isn’t too strong, given the distance to the neutral territory.
Earlier in the month, the indicator had shown particularly low values, as the chart below displays.
On August 6th, the Fear & Greed Index had hit a low of 17, the lowest that it had gone in more than two years. When the indicator achieves such low values, it no longer reflects just fear but rather a special sentiment called extreme fear.
Extremity fear is defined as the zone that occurs at 25 and under. There is also a similar region for the greed side, called extreme greed, occurring over 75.
Interestingly, the extreme fear low coincided with Bitcoin’s bottom under the $50,000 level. This is similar to what has been observed throughout the asset’s history.
BTC has tended to move opposite to the expectations of the majority, and the extreme sentiment zones are evidently where this expectation is the strongest, so it makes sense that reversals in the price would also be the most likely to occur inside them.
With the sentiment sitting in the normal fear territory and the Bitcoin price consolidating, another foray into the extreme fear may be needed if Bitcoin has to kickstart fresh bullish momentum. How the indicator develops in the coming days remains to be seen.
BTC Price
Bitcoin has been unable to find a solid break above the $61,000 level recently, and it appears that the latest attempt may have ended in a similar failure as BTC, which has retraced to $60,800.
Featured image from Dall-E, Alternative.me, chart from TradingView.com