Market remains fearful
Despite the most recent short-term rally in the cryptocurrency market, sentiment among traders in the sector still leaves much to be desired as one of the most popular social indicators suggests the market is in “extreme scare.” .
About the Fear and Greed Index
The Fear and Greed Index is one of the most popular sentiment indicators in the industry that includes measuring volatility, market movements, social media, dominance and other factors that could affect the sentiment of cryptocurrency and Bitcoin traders.
The index is used quite often to reflect current market trends. With “extreme fear” reigning among the majority of investors, it is likely that we will not see any major inflows from retail traders and investors as long as Bitcoin’s price action remains the same.
Indicator’s history
According to historical data, the indicator almost completely correlates with Bitcoin price action, which is not surprising since 50% of the index’s value is being calculated based on market volatility and momentum.
Since December 28, the Fear and Greed index has rapidly fallen from 41 to 10 at one point following the price of Bitcoin which plunged from $50,000 to $40,000 in less than two weeks.
Previously, the lowest value ever tracked was reached in August 2019 when Bitcoin was trading at approximately $9,500. At that time, the value of the indicator reached 5, which still has not been reached by it after Bitcoin bounced back from $10,000.
At press time, the top cryptocurrency is trading at $36,660 and showing negative daily performance losing 0.5% in the past 24 hours. Additionally, digital gold failed to break above $40,000 causing the current price to plummet.
