Data exhibits the Bitcoin market has once more fallen again right into a state of utmost concern as the worth has plummeted down over the previous week.
Bitcoin Fear And Greed Index Says Market Is Extremely Fearful
As per the newest weekly report from Arcane Research, excessive concern has returned to the BTC market, suggesting now would be the time to purchase.
The “fear and greed index” is an indicator that tells us in regards to the common sentiment amongst traders within the Bitcoin market.
The index makes use of a numeric scale that runs from one to hundred for representing the sentiment. All values above the “50” level signify greed, whereas these under the cutoff suggest the market is fearful proper now.
Values in direction of the top of the vary of above 75 and under 25 point out sentiments of utmost greed and excessive concern, respectively.
Historically, bottoms have tended to kind in periods of utmost concern whereas tops have occurred when the market is extraordinarily grasping.
Because of this, some traders imagine that purchasing throughout excessive concern and promoting throughout excessive greed in optimum.
Related Reading | Bitcoin Long-Term Holders Start Capitulating Amid Panic
“Contrarian investing” is a buying and selling technique that follows this concept. Warren Buffet’s well-known quote greatest sums the philosophy up:
Be fearful when others are grasping, and grasping when others are fearful.
Now, here’s a chart that exhibits the development within the Bitcoin concern and greed index over the previous yr:
The worth of the indicator appears to have plunged down within the final week | Source: Arcane Research’s The Weekly Update – Week 18, 2022
As you possibly can see within the above graph, the Bitcoin concern and greed index now has a price of 10, suggesting that the sentiment has declined to excessive greed.
The report notes that the worth of the metric hasn’t been worse than this for the reason that COVID crash again in March 2020.
As talked about earlier than, such a sentiment often brings with it shopping for alternatives. However, even so it’s not a positive purchase sign both.
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The final time the index reached the same worth was again in January of this yr. Then, the underside didn’t really kind till two weeks after the sentiment turned extraordinarily fearful and Bitcoin noticed one other drop of 20%.
So, it’s not sure if now could be the time to purchase. But nonetheless, such a deep excessive concern sentiment may simply be a sign for traders to look out for bottoms forming within the close to future.
At the time of writing, Bitcoin’s worth floats round $29.5k, down 25% previously week.
Looks like the worth of the crypto has noticed a pointy drop right now | Source: BTCUSD on TradingView
Featured picture from Unsplash.com, charts from TradingView.com, Arcane Research