Recent data indicates that the Bitcoin Fear & Greed Index has plummeted to its lowest point since the bear market of 2022, following the recent downturn in BTC prices.
Current Bitcoin Fear & Greed Index Value: Just 10
The “Fear & Greed Index” is an indicator developed by Alternative that reflects the average sentiment among traders in the Bitcoin and broader cryptocurrency markets.
This metric utilizes a numerical scale from zero to one hundred to depict market psychology. It can be categorized into five distinct zones: extreme fear (25 and below), fear (26 to 46), neutral (47 to 53), greed (54 to 75), and extreme greed (76 and above).
Currently, the Fear & Greed Index looks like this:
The current value of the metric is 10 | Source: Alternative
As shown above, the Bitcoin Fear & Greed Index stands at 10, indicating that sentiment is deeply entrenched in extreme fear. A few days ago, traders had a markedly different outlook, as the index was situated within the neutral zone.
This significant shift in sentiment is attributed to the decline in cryptocurrency prices over the past few days.
The trend of the indicator over the past year | Source: Alternative
The recent drop in the Fear & Greed Index has brought its value to the lowest level since mid-2022, during a previous bear market for Bitcoin. This decline suggests that the recent downturn has significantly impacted investor confidence.
However, if historical trends are any indication, this may not be an unfavorable outcome for cryptocurrency. Historically, BTC tends to establish a floor when the sentiment reaches extreme fear.
A similar phenomenon occurs at the extreme greed end of the spectrum, where the coin typically reaches a peak. Last month’s highs coincided with the index being in this vicinity.
Thus, Bitcoin tends to move contrary to the expectations of the majority. Followers of a contrarian investing strategy take advantage of this insight to time their investments.
These investors tend to buy when the average trader is fearful and sell during euphoric market phases. Warren Buffett’s famous quote encapsulates this principle: “be fearful when others are greedy, and greedy when others are fearful.”
With the Bitcoin Fear & Greed Index now at an extremely low level, contrarian investors might start considering purchasing the asset. It will be interesting to see if BTC can establish a bottom at these levels or if the sentiment needs to deteriorate further before that occurs.
Current BTC Price
As of now, Bitcoin is hovering around $84,700, down nearly 14% over the past week.
The coin's price has seen an additional decrease in the last day | Source: BTCUSDT on TradingView
Image sourced from Dall-E, Alternative.me, chart from TradingView.com
