Data shows that the crypto market has been facing extreme fear for two months now, causing investors to panic as bitcoin crashes to $20k.
Crypto Fear & Greed Index Still Pointing To “Extreme Fear”
According to the latest weekly report from Arcane Research, the cryptocurrency market has been facing extreme fear for two months now, the longest streak in history.
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 over fifty mean that investors are greedy at the moment, while those below the threshold indicate a fearful market.
Edge values above 75 and below 25 mean holder sentiment of “excessive greed” and “excessive fear” respectively.
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 indicator has been very low recently | Source: Arcane Research's The Weekly Update - Week 24, 2022
As you can see in the above graph, the value of the Crypto Fear and Greed Index is currently 9, indicating that the market is extremely fearful.
Such low sentiment prices have been in place for over two months now, making it the longest extreme fear run in the market so far.
Related Reading | Crypto Market Crash Ahead: Bitcoin (BTC) and Ethereum (ETH) Fall in Price
These indicator values are stagnant while the entire crypto sector has gone through a crash and a large portion of investors have turned red.
Historically, streaks with extreme fear have occurred when coins such as bitcoin are on the downside (and similarly, tops during extreme greed).
Because of this, some analysts believe that an extremely fearful market may provide new buying opportunities for crypto.
Related Reading | Bitcoin “Diamond Hands” Over 1 Year As Supply Begins To Break Down And Selling Accelerates
Trading techniques that follow this idea are called “contrast investing”. This famous quote from Warren Buffett encapsulates the philosophy: “Be fearful when others are greedy and be greedy when others are afraid.”
If historical trends are anything to go by, the current extreme fear trend may occur when bitcoin and other coins observe a downward trend. And if so, now may be when an opposite investor would believe it to be an ideal buying point.
bitcoin price
At the time of writing, the price of BTC is down 1% over the past seven days to around $20.4k. In the past month, the value of crypto has dropped by 30%.
The chart below shows the coin’s price trend over the past five days.
The value of Bitcoin seems to have dropped down over the past day | Source: BTCUSD on TradingView
Featured image from Thought Catalog on Unsplash.com, charts from TradingView.com, Arcane Research
