Data shows that sentiment on bitcoin is almost in the extreme fear zone. Here's what this could mean for the asset's price.
bitcoin Fear and Greed Index is currently in the depths of 'fear'
The “Fear and Greed Index” is an indicator created by crypto/fear-and-greed-index/” target=”_blank” rel=”noopener nofollow”>Alternative This tells us about the general sentiment among investors in bitcoin and other major cryptocurrencies.
The index represents sentiment as a score on a scale of zero to one hundred, which is determined using the following five factors: volatility, trading volume, social media sentiment, market capitalization dominance, and Google Trends.
When the indicator has a value above 53, traders share a feeling of greed. On the other hand, if it is below 47, it implies the presence of fear in the market. Naturally, the area between the two cut-off points corresponds to a clearly neutral mindset.
Now, here's where the bitcoin market stands right now according to the Fear and Greed Index:
<img decoding="async" class="alignnone wp-image-319187 size-large" src="https://technicalterrence.com/wp-content/uploads/2024/09/Has-Bitcoin-already-bottomed-What-trader-sentiment-can-tell-us.png" alt="Fear of bitcoin” width=”980″ height=”459″ srcset=”https://bitcoinist.com/wp-content/uploads/2024/09/chart_86ad98.png?w=1119 1119w, https://bitcoinist.com/wp-content/uploads/2024/09/chart_86ad98.png?w=640 640w, https://bitcoinist.com/wp-content/uploads/2024/09/chart_86ad98.png?w=768 768w, https://bitcoinist.com/wp-content/uploads/2024/09/chart_86ad98.png?w=980 980w, https://bitcoinist.com/wp-content/uploads/2024/09/chart_86ad98.png?w=750 750w” sizes=”(max-width: 980px) 100vw, 980px” data-recalc-dims=”1″/>
Looks like the index has a value of 26 at the moment | Source: crypto/fear-and-greed-index/" target="_blank" rel="noopener nofollow">Alternative
As you can see above, the bitcoin Fear and Greed Index has a value of 26 right now, meaning the market is deep in the fear zone. The metric is right on the edge of a special region known as extreme fear.
Extreme fear occurs when the indicator reaches a value of 25 or less and represents a state of immense distress among investors. A similar but opposite zone for the greed side, called extreme greed, occurs at 75 years of age and older.
The market sentiment in recent times contrasts with that of just a week ago, when the index was still showing “greed values”. The following chart shows how the value of the indicator has changed over the last year.
<img loading="lazy" decoding="async" class="alignnone wp-image-319187 size-large aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/09/Has-Bitcoin-already-bottomed-What-trader-sentiment-can-tell-us.png" alt="Fear of bitcoin” width=”980″ height=”459″ srcset=”https://bitcoinist.com/wp-content/uploads/2024/09/chart_86ad98.png?w=1119 1119w, https://bitcoinist.com/wp-content/uploads/2024/09/chart_86ad98.png?w=640 640w, https://bitcoinist.com/wp-content/uploads/2024/09/chart_86ad98.png?w=768 768w, https://bitcoinist.com/wp-content/uploads/2024/09/chart_86ad98.png?w=980 980w, https://bitcoinist.com/wp-content/uploads/2024/09/chart_86ad98.png?w=750 750w” sizes=”(max-width: 980px) 100vw, 980px” data-recalc-dims=”1″/>
The value of the metric appears to have been relatively low recently | Source: crypto/fear-and-greed-index/" target="_blank" rel="noopener nofollow">Alternative
The current fear in the market is natural because bitcoin has recorded another drop, this time with its price below $58,000. If history is anything to go by, this development may not be all bad for the asset.
btc has tended to move in the opposite direction than most expect, and the likelihood of a counter-move has only increased the more confident investors are in the asset’s direction.
This expectation is strongest within zones of extreme sentiment, so it is not surprising that important highs and lows have generally formed when the index has been in these regions.
Since the Fear and Greed Index has been on the verge of the extreme fear zone for the past few days, a drop is possible in the coming days, which could lead bitcoin to bottom out. That is only if the price does not show a sudden sharp change from now on.
btc Price
bitcoin had recovered above $59,000 earlier in the day, but the recovery was rather short-lived as it was already at $57,700.
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The price of the asset appears to have plunged | Source: BTCUSD on TradingView
Featured image by Dall-E, Alternative.me, chart by TradingView.com
