The Bitcoin dread & Greed Index, created by Alternative, is approaching levels of intense dread as a result of Bitcoin’s price drop, suggesting a potential shift in the market.
The index quantifies trader emotion in the crypto market by considering five factors: volatility, trading volume, social media mood, market cap dominance, and Google Trends.
Any score beyond 53 signifies avarice, but scores below 47 imply fear. Intermediary scores suggest a mood that is neither positive nor negative.
The current index score is 17, indicating that the market is in a state of profound dread. It is near the extreme fear zone, which is below 25, and represents a strong bearish attitude.
The recent market move primarily stems from Bitcoin’s bearish trajectory in the past week, which includes a significant price decline during the last 24 hours.
This economic decline takes the anxiety & Greed Index closer to levels of acute anxiety. Historically, Bitcoin has tended to move in the opposite direction of market sentiment, particularly in highly volatile situations where investor expectations are most pronounced. The recent transition from greed to fear reflects previous trends, in which reversals occurred after changes in attitude.
The market’s proximity to the extreme fear zone indicates a potential reversal, as historical reversals frequently took place just beyond these zones.
If the indicator reaches the acute fear zone, it suggests that Bitcoin might be approaching a low point. The possibility of reversal is reinforced by Bitcoin’s inclination to defy collective expectations.
The present condition of the Bitcoin market exhibits heightened investor apprehension and ambiguity, as the abrupt transition from excessive avarice to nearly excessive trepidation accentuates market instability and swift shifts in opinion.
It is important to take into account other factors that have an impact on the price of Bitcoin, such as overall economic conditions, legislative changes, and improvements in the field of cryptocurrency.
