Bitcoin Sentiment Turns Neutral As BTC Plunges Below $29,000
Data shows that Bitcoin market sentiment has turned neutral today as the cryptocurrency price has dropped below the $29,000 level.
Bitcoin Fear and Greed Index Pulled Back to “Neutral” Territory
The “Fear and Greed Index” is an indicator that tells us about the general sentiment among investors in Bitcoin and the wider cryptocurrency market. This metric uses a numerical scale from 0 to 100 to represent this sentiment.
All index values above the 50 mark indicate that investors are currently greedy, while those below this threshold suggest that the market is fearful at the moment.
While this division might be uniform in theory, the territory at the edge of these ranges is generally considered to belong in a “neutral” sentiment. To be more specific, values between 46-54 can mean a neutral market.
In addition to these three feelings, there are also two other “extremes”, namely “extreme fear” and “extreme greed”. The first of these occurs at values below 25 and has significance as the region where cyclical bottoms have historically formed for the cryptocurrency.
Likewise, the last region, which occurs above a value of 75, is where tops usually form for the market. Because of this apparent relationship to price, some investors believe that it is better to buy during extreme fear and sell during extreme greed.
The followers of this idea are called “contrary investors”, as they go against the grain to make their moves. Warren Buffet’s famous quote also echoes the same philosophy: “Be fearful when others are greedy and greedy when others are fearful.”
Now, here’s a graph that shows how the value of the Fear & Greed Index has changed for Bitcoin and the wider cryptocurrency market over the past year:
The value of the metric seems to have plunged during the past day | Source: Alternative
As shown in the chart above, the Bitcoin Fear & Greed Index was mostly inside fear and extreme fear territory during the bear market, but with the rally that started this year, the indicator has rebounded sharply to neutral values.
Since then, the metric has managed to stay at or above neutral values, except for a temporary dip back into the fear zone last month. However, in recent weeks, the market has managed to maintain a constant feeling of greed with the asset’s price in a strong bullish moment.
In recent days, the investor’s mindset has taken a hit after the BTC price crash below the $30,000 level and now the $29,000 level.
Currently, the metric still has a value of 52, which suggests that sentiment is still not far from greedy territory. However, this shift towards neutrality is still notable, as the last time the indicator showed similar values was more than a month ago.
It now remains to be seen whether the market can regain its optimism, or whether the decline in sentiment would continue for the foreseeable future, and the metric would fall back into the fear zone.
BTC price
At the time of writing, Bitcoin is trading around $28,800, up 5% over the last week.
Looks like BTC has plummeted | Source: BTCUSD on TradingView
Featured Image of Kanchanara on Unsplash.com, Charts from TradingView.com, Alternative.me