For a few weeks now, bitcoin sentiment stemming from the Crypto Fear and Greed Index (CFGI) has been in the “extreme fear” range. While bitcoin gathered some gains on Monday, the CFGI is still in the “extreme fear” position with a ranking score of 16 out of 100.
Crypto Fear and Greed Index Remains in “Extreme Fear”
About 45 days ago, the Crypto Fear and Greed Index (CFGI) hit the “extreme fear” range with a score of 22. On that day, April 15, bitcoin’s 24-hour price range was between $39,823.77 and $40,709.11 per unit. Since then, markets have fallen even lower, and on May 12, the value of BTC bottomed out at $25,401, which was lower than the previous low last summer in July. If someone bought BTC on May 12, today it would be up more than 24% against the US dollar.
Despite the gains during the past two weeks, the CFGI is still in the “extreme fear” zone and the ranking is even lower than it was on April 15. At the time of writing, the CFGI ranking score is 16 out of 100, but it doesn’t necessarily mean markets will remain gloomy. The CFGI hosted on alternative.me measures market sentiment and the website notes there are two simple assumptions:
- Extreme fear may be a sign that investors are too worried. This could be a buying opportunity.
- When investors get too Gourmandthis means that the market must undergo a correction.
However, extreme fear can also lead to more capitulation and the so-called buying opportunity may be much lower. Or one could also assume the current time frame is a tiered buying opportunity and people are happy with purchasing BTC on the way down. The CFGI’s simple assumptions are just that, as they may be accepted as truths, but they may not end up coming to fruition.
Similarly, if “investors are getting too greedy,” as the CFGI puts it, that doesn’t necessarily mean crypto markets will correct. This means that if someone followed such advice, they could sell BTC at a lower price than what they could have earned while waiting. Then again, there’s still the age-old investment advice that there’s nothing wrong with taking profits along the way.
Crypto market sentiment, at least according to the CFGI, has been in the “extreme fear” region for well over a month. Yesterday, on May 30, the index tapped a ranking score of 10, which means the latest CFGI score of 16 is an improvement. Google Trends metrics for the query “bitcoin” show interest has ticked up from the recent Terra fiasco.
Interestingly, data from Google Trends (GT) around the world indicates that interest in bitcoin was prevalent for some time before the Terra LUNA and UST fallout. But in this specific week (May 8-14), GT data shows that the search term “bitcoin” skyrocketed to the highest GT score (100) since the second week of June 2021. The week after the Terra LUNA and UST market carnage, however, the GT data score for the term “bitcoin” dropped by 45%.
