Data shows the Bitcoin Fear & Greed Index has slipped back into the extreme fear territory following the latest retrace in the asset’s price.
Bitcoin Fear & Greed Index Is Signaling Extreme Fear AgainTo represent the market mentality, the index make use of a numerical scale running from zero to hundred. When the metric has a value under 47, it means the average investor is showing fear toward digital assets. On the other hand, the indicator being above 53 suggests the dominance of greed in the sector. Values between these two cutoffs naturally correspond to a net neutral sentiment.
Besides these three main zones, there are also two ‘extreme’ regions called the extreme fear (values of 25 and below) and extreme greed (above 75). Currently, the index is in the former of these two zones.
As is visible, the Bitcoin Fear & Greed Index has a value of 25, which is right on the boundary of the extreme fear territory. Earlier in the week, the indicator had managed to escape out of this zone, but the latest level suggests that the improvement in sentiment couldn’t last.
Historically, the extreme sentiment zones have held much significance for the sector as they have been where major price tops and bottoms have tended to form. The relationship between sentiment and the market’s trajectory has been an inverse one, however, meaning that extreme fear is where bottoms have appeared while extreme greed has facilitated top formations.
Considering this, the return to extreme fear may not exactly be a negative for the market. That said, just entry into the zone alone isn’t enough to force a bottom, as in the past, the index has often stayed in the region for long periods before Bitcoin and others have reversed their course.
From the chart, it’s apparent that bearish sentiment has outweighed the bullish one on social media recently, indicating that the crowd on these platforms has also been pessimistic toward Bitcoin and others.
BTC PriceAt the time of writing, Bitcoin is floating around $75,400, down almost 3% in the last seven days.
