- February 16, 2022
- Posted by: Bogdan
- Category: bitcoin, BTC, btcusd, crypto fear and greed index, market sentiment
Last week, Bitcoin sentiment shifted to greed for the first time in four months, but has since fallen back down into fear territory amid the current geopolitical and macro uncertainties.
Bitcoin Fear And Greed Index Slips Down From Four Month High
As per the latest weekly report from Arcane Research, the crypto market sentiment has once again sunk down to fear after briefly entering greed last week.
The “fear and greed index” is an indicator that tells us about the general investor sentiment in the Bitcoin and wider crypto market.
The metric uses a numeric scale that goes from zero to hundred for representing this sentiment. All values above the “fifty” mark mean that investors are currently greedy.
On the other hand, values below this cutoff imply that the market is fearful at the moment. Extreme values of above 75 and below 25 belong to the “extreme greed” and “extreme fear” territories, respectively.
Some investors think that buying while the market is extremely fearful is the best as bottoms often tend to happen during such periods.
Related Reading | Bitcoin Breaks Above $44K, Can Bulls Push Price To Next Level?
Similarly, selling during extreme greed may be a viable strategy due to historical top formations in such periods. This philosophy is often called “contrarian investing.” This quote from Warren Buffet sums it up the best:
Be fearful when others are greedy, and greedy when others are fearful.
Now, here is a chart that shows the trend in the Bitcoin fear and greed index over the past year:
Looks like the value of the indicator is at 46 right now | Source: The Arcane Research Weekly Update - Week 6
As you can see in the above graph, over a week ago, the metric observed some sharp uptrend as it crossed the 50 mark for the first time in four months.
However, since then, the value of the index has declined, and now the Bitcoin market sentiment is once again that of fear.
Related Reading | Bitcoin Mining Stocks Lose 50-60% Value Since Crypto Price Peak
The report suggests that this trend may be because of broader financial markets derisking in response to current geopolitical and macro uncertainties.
Also, according to some other data, the Bitcoin leverage ratio has sharply dropped over the past week, further suggesting that investors are reassessing their risk.
At the time of writing, Bitcoin’s price floats around $44.2k, up 1% in the last seven days. Over the past month, the crypto has gained 3% in value.
The below chart shows the trend in the price of BTC over the last five days.
BTC's price has surged up over the past couple of days | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, Arcane Research