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Bitcoin’s Decline Sparks Extreme Fear Among Traders
Recent data indicates a growing sense of extreme fear within the Bitcoin trading community as the cryptocurrency experiences a significant downturn at the start of the week.
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Bitcoin Faces Another Downward Trend on Monday
Last week brought renewed hope to Bitcoin investors as the cryptocurrency’s price showed signs of recovery. However, as this new week unfolds, Bitcoin has dashed these hopes with a fresh decline. The following chart illustrates the asset’s recent price movement.
The chart reveals a steady decline in Bitcoin’s value over the past few days. Just yesterday, Bitcoin was trading at approximately $86,000. However, within the last 24 hours, the asset has suffered a significant drop, bringing its price down to $82,300.
This downward trend isn’t isolated to Bitcoin alone. The entire digital asset market has shown negative returns during this period. Interestingly, Ethereum (ETH) has demonstrated relative resilience, with its price decreasing by only about 2%.
With this market-wide slump, it’s no surprise that investor sentiment has also taken a hit.
Current State of the Crypto Fear & Greed Index
The “Fear & Greed Index,” developed by Alternative, provides insights into the prevailing sentiment among Bitcoin and cryptocurrency traders. This index evaluates investor mood using five key factors: trading volume, market cap dominance, social media sentiment, volatility, and Google Trends data. The sentiment is expressed as a score ranging from 0 to 100.
Scores below 47 indicate fear, while those above 53 reflect greed. The region between these thresholds represents a neutral sentiment. Additionally, there are two extreme zones: extreme greed (scores above 75) and extreme fear (scores below 26).
Currently, the market resides in the extreme fear zone, as indicated by the latest Fear & Greed Index value.
The index now shows a score of 20. Just a day ago, it was at 27, signaling a shift from normal fear to extreme fear.
Analyzing the Fear & Greed Index trend over the past year reveals the significance of these extreme zones for Bitcoin and other digital assets. Historically, when traders exhibit these sentiments, prices tend to approach either a peak or a trough. Notably, the relationship is inverse, meaning despair often signals a bottom, while excessive enthusiasm suggests a peak.
With the current dip into extreme fear, it’s possible that Bitcoin and other cryptocurrencies are nearing a potential low point.
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