Data shows that Bitcoin’s Fear and Greed Index has dropped to a neutral level recently. Here’s what this could mean for the cryptocurrency’s price.
Bitcoin’s Fear and Greed Index Now Points to ‘Neutral’
“Fear and Greed Index” refers to an indicator created by substitute This tells us about the average sentiment among traders in the Bitcoin and broader cryptocurrency markets.
This metric uses data on the following five factors to calculate its value: volatility, trading volume, social media sentiment, market cap dominance, and Google trends.
When the index value is greater than 53, it means that investors as a whole have feelings of greed. On the other hand, being under 47 means fear prevails in the market. All values in the range between these boundaries are consistent with a pure, neutral mindset.
Besides these three main emotions, there are also two “extreme” emotions called extreme fear and extreme greed. The first occurs at age 75 or older, and the second occurs at age 25 or younger.
Now, here’s what the Bitcoin Fear and Greed Index looks like right now:
As shown above, the index has a value of 50, which means that the overall market sentiment is quite in balance. This is a stark change from yesterday, when the index was at 69.
The chart below shows how the Fear and Greed Index has seen its value change over the past 12 months.
Just a few days ago, the index value was higher at 78, meaning that the market was carrying a majority sentiment of extreme greed. The sharp decline in investor mentality since then is a result of Bitcoin’s recovery fading into a price collapse.
This is the first time since the first half of October that the index has fallen into the neutral zone. From then until now, the market has only carried an optimistic atmosphere as the price of the asset has been following an upward trajectory.
However, with this reset, investors now seem to be unsure about the future of the cryptocurrency. If history is anything to go by, this might not actually be such a bad thing.
Bitcoin and other digital assets in general tend to move in a way that is inconsistent with public expectations; Extreme greed is where the major peaks occurred, including last year’s peak, and extreme fear is where the bottoms occurred.
Although the market has not become fearful yet, the fact that there is no excess of noise can still be something that can help the price find a reversal. It now remains to be seen how BTC and market sentiment will develop in the coming days.
Bitcoin price
At the time of writing, Bitcoin is trading around $94,200, down approximately 4% in the past seven days.
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