Data shows that the Bitcoin Fear & Greed Index has dropped to a neutral level recently. Here’s what this could mean for the cryptocurrency’s price.
Bitcoin Fear & Greed Index Points to ‘Neutrality’
The “Fear & Greed Index” refers to an index created by another method that tells us about the level of sentiment that exists between Bitcoin traders and the broader cryptocurrency market.
This metric uses data from the following five factors to calculate its value: volatility, trading volume, social media sentiment, market dominance, and Google Trends.
If the index has a value greater than 53, it means that investors as a whole share a feeling of greed. On the other hand, being below 47 means the reign of fear in the market. All values ​​in the range between these cutoffs correspond to neutrality.
Besides these three primary emotions, there are also two ‘extreme’ ones called extreme fear and extreme greed. The former occurs at or above 75 and the latter occurs at or below 25.
Now, here’s how the Bitcoin Fear & Greed Index currently looks:
As shown above, the index has a value of 50, which means that the overall sentiment in the market is exactly equal to the balance. This is a big change from yesterday, when the index sat at 69.
The chart below shows how the Fear and Greed Index has seen its value over the past twelve months.
A few days ago, the index value was as high as 78, which means that the market was carrying a lot of feelings of extreme greed. The biggest drop in investor sentiment since then is the result of the Bitcoin rally coming out and turning into a price drop.
It is the first time since the first half of October that the index has fallen into neutral territory. Between then and now, the market had only a positive attitude as the price of the commodity followed an upward trajectory.
With this reset, however, it seems that investors are now uncertain about the future of cryptocurrency. If history is anything to go by, this might not be such a bad thing.
Bitcoin and other digital assets often go against the grain of the crowd’s expectations; extreme greed is where the biggest highs have happened, including last year’s, and extreme fear is where the lows have happened.
Although the market is not yet panicked, the fact that there is no longer any excess tension could still be something that could help the price find a pullback. Now it remains to be seen how BTC and market sentiment will develop in the coming days.
BTC price
At the time of writing, Bitcoin is floating around $94,200, down about 4% over the past seven days.