Market Indicators Still Signal Extreme Fear Among Crypto Investors
The overall sentiment in the crypto market continues to linger around the negative territory, as bulls witness one of the longest bearish trends that surfaced when Terra crashed. This is the culmination of months of speculation and the sudden departure of investors from the market. It’s also the longest bear trend since the start of 2020.
Extreme Fear Is Evident
Over the last 24 hours, the crypto market cap has decreased 4.10% to $1.19T. In addition, the crypto market volume was $93.00B, which is a decrease of 0.25%.
The past couple of months has negatively affected sentiment in the crypto market. Cryptos spent most of April in the fear territory.
Despite the recent market volatility, the Fear & Greed Index remained high until the recent crash of the LUNA. The move sent the market into fear territory. In addition, the index has dropped to its lowest level in almost two years, at 12.
More alarming is that the index dropped to its lowest level in almost two years during the last week at 8. It is considered the second-lowest score recorded on the index, following the 5 in 2018. After reaching its May 17 lows, the index recovered some of its losses. However, it dropped to 11, and it is currently sitting at its lowest level since April 8.
The extreme fear reading on the Fear & Greed Index reflects how investors are feeling about cryptocurrencies at the moment. The index is low, at 12, showing extreme fear. This lack of confidence in the market is further evidenced by the large number of sell-offs in the space. These sell-offs are contributing to the already declining sentiment in the market.
Cryptos Are Going Low
Bitcoin continued to struggle this week, falling below $30,000 for the first time in over a month. It has been in a choppy trading range for the past couple of weeks, suggesting a recovery in the cards.
The S&P 500 managed to bounce back from its earlier losses. Despite the short-term volatility, the correlation between bitcoin and the stock market remains high.
The price of ETH has dropped by 7% to $1740. It is the latest in a series of losses for investors, who have lost more than $200 billion of their wealth due to the cryptocurrency’s decline. The move has created a concern due to the upcoming Merge. Notably, ETH gas fees have dropped to $2.54 and are forecast to fall further.
Even though bitcoin remained relatively stable during the day, various altcoins such as AVAX and Solana experienced significant losses. Due to the continuous selling pressure in major cryptocurrencies, the two lost around 8% and 5% over the past 24 hours. BNB, Cardano, Polkadot, and some of the other popular altcoins are also down 8-9%.
Should Investors Buy Crypto?
It’s generally believed that when the crypto market sentiment declines, it’s an opportunity to get in before it gets worse.
This strategy has worked out for investors for a long time. However, there have been times when it didn’t work out as expected. For instance, the decline in market sentiment during the extreme fear territory didn’t stop.
Despite the shortcomings of this strategy, it is still regarded as one of the most popular buy indicators of all time. It’s because it allows investors and traders to gauge the potential bottom of the market.
These are mainly used for analyzing the performance of the leading cryptocurrencies such as Bitcoin and Ethereum. Although “buying the blood” can provide promising results, it’s important to note that there is no exact science in analyzing the crypto market.
