The data shows that the Bitcoin Fear and Weed Index remains within the fear zone despite the asset recovering from $72,000.
The Bitcoin Fear and Greed Index still has a pretty scary value
The “Fear and Greed Index” is an indicator created by Alternative that tells us about the average sentiment of traders in Bitcoin and the broader cryptocurrency markets.
The index measures investor sentiment using data from these five factors: trading volume, market capitalization dominance, volatility, social media sentiment and Google Trends. It uses a numerical scale from zero to one hundred to express emotion.
Any value above 53 on this scale corresponds to greed among investors, while those below 47 correspond to a state of fear. Naturally, the levels between these cuts imply pure neutral thinking.
In addition to these three main zones, there are also two “extreme” zones called fear (25 and below) and extreme greed (above 75). Historically, extreme sentiment has been important for Bitcoin and other digital assets: they have been where market volatility is most likely to occur.
The relationship between market trajectory and sentiment has been an inverse one, however, meaning that intense fear is where lows often occur, while extreme greed leads to highs.
Recently, the Fear and Greed Index has been positioned within the former of these two areas, as shown in the chart below.
Looks like the value of the metric has spiked in recent days | Source: Alternative
The indicator fell into the extreme fear zone at the end of January as the price of Bitcoin witnessed a crash. A continuation of the decline in February took the metric deeper into the zone, reaching a value of 5, a very rare level by historical standards. In March, investor sentiment improved due to the recovery seen in assets. The increase in prices during the previous day, in particular, led to a significant increase in sentiment.
Despite the increase in the Fear and Fear Index, it reflects an extremely fearful market and is valued at 22.
The latest value of the Fear & Greed Index | Source: Alternative
Thus, it appears that the bullish action has not yet been enough to move market sentiment into the normal fear zone. With this latest value, the Fear and Greed Index is showing a 35th consecutive day of fear.
As mentioned earlier, extreme fear has tended to form the main bottom in the past. With this in mind, the current streak may once again favor such a formation. However, it should be noted that the previous bear market saw the index spend a long time in the region before Bitcoin and other assets turned around.
BTC price
Bitcoin rose to the $74,000 level during its recent rally, before seeing a slight decline to the current $72,300 mark.
The trend in the price of the coin over the last five days | Source: BTCUSDT on TradingView
Featured image from Dall-E, chart from TradingView.com
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