The start of August saw the sentiment around the cryptocurrency market growing. However, now that the month is almost ending, a market meltdown almost sent it back to last month’s levels. The Fear & Greed Index peaked at 42 during the Bitcoin recovery to $25,000. However, the decline has been continuous since then, and the index is now in the Fear territory.
Fear & Greed Index Drops to 25
The Crypto Fear & Greed Index is currently at 25. That means it’s dangerously close to falling back to the extreme fear territory, which was the case the previous day. Since the last day’s score was 28, the market appears more fearful. Its current level is the lowest point in the index’s history, and it was also the start of July, characterized by low prices.
Since the Fear & Greed Index has gotten so low, it might maintain the low levels for a while before recovery. On the other hand, it is not unusual for the index to hit a score of 25 before any recovery occurs.
If this scenario plays out, then it will be very likely that the crypto market will continue to lose value in the coming days. For instance, if the market continues to fall into the extreme fear territory, the bitcoin price could drop to around $20,000.
The move is similar to earlier this year when investors showed fear in making investments. According to data from Glassnode, the number of people who bought and sold bitcoin during the recovery did not increase significantly.
Although the market has started recovering from its bear-market position, it might continue experiencing volatility. Most investors believed the recovery was a bull trap, so they took a cautious approach to the rally.
US Traffic Dominates Crypto Trading
Despite the minor gains in the cryptocurrency market today, major cryptos are still trading above their critical resistance levels. That suggests that the bulls may be able to push further higher. Ethereum and Bitcoin may revisit their highs and open the door for more gains if they can.
A study conducted by a research firm named Arcane Research revealed that the activities of traders heavily influence the performance of the cryptocurrency market in the US. During the past three months, the firm analyzed the traffic of over 30 exchanges.
Since they account for a majority of 14.33% of the 20 most active countries in the market, the positions taken by these traders are crucial to determining the market’s direction. More than 52% of all traffic through cryptocurrency trading platforms comes from these nations combined.
Nearly every nation in this list, except for the United States, is located outside the American continent. South Korea and Russia are the second and third-placed nations with 6.51% and 5%, respectively.
Where is BTC in all this?
BTC has dropped significantly over the past seven days. It lost 10% during this period and currently trades around $21,000.
According to a CryptoQuant analyst, the Bitcoin MVR Tripple Ribbon indicator indicates a negative signal that suggests that the BTC will continue to decline in the future. He noted that there had been five full-fledged warnings this year about the potential decline of Bitcoin.
After reaching a new two-month high of $25,200 earlier this year, the price of Bitcoin suddenly dropped to the low of $24,200. The decline, however, continued as the token traded in a range from last week until this week.
The Bitcoin MVR Tripple Ribbon indicator looks like it might make a complete crossover during this week. If this occurs, it could cause the price of Bitcoin to drop to the low $20,000 area.