After Bitcoin crashed to $ 42,000, the Fear and Greed Index fell to extreme fear values not seen since July of last year.
Bitcoin Fear and Greed Index points to ‘extreme fear’
As one analyst pointed out in a CryptoQuant article, the BTC Fear and Greed Index has fallen to very low values.
The “fear and greed index” is a crypto indicator that measures the general sentiment of investors in the market.
The index uses numbers to represent sentiment on a number scale ranging from zero to one hundred. Indicator values above fifty mean that the feeling of the current holder is one of greed.
And values below 50 imply that the market is fearful right now. Index values below 25 and those above 75 fall into the “extreme” category, meaning extreme fear and extreme greed, respectively.
The indicator generally stays in the greed zone during bull racing. Extreme Greed Values have historically signaled that a Bitcoin price correction could be near and a top could form.
On the other hand, fear values may be present during downtrends, and extreme fear could imply that a bottom could form soon.
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Now here is a chart that shows the trend of the Bitcoin Fear and Greed Index over the past year:
The crypto fear and greed index seems to have sunk to extreme fear values | Source: CryptoQuant
As you can see in the chart above, the indicator has now dropped to a value of 15. This is the metric’s lowest value since July of the previous year.
Related reading | Beginning of the bear season? Current Bitcoin Trend Looks Like June
By the way, the day in July that such low values occurred was also around when the price of Bitcoin hit its lowest point. However, the quant in the post notes that this doesn’t necessarily mean the current price has bottomed out as well.
After the May crash, the months of May and June were also marked on several occasions with similar extreme feelings of fear.
So it is rather possible that the current low values of the indicator will persist for some time, as it was then, before the price rose again.
As of this writing, the price of Bitcoin is floating around $ 42.4,000, down 12% over the past seven days. Over the past month, the crypto has lost 16% in value.
The chart below shows the BTC price trend over the past five days.
After the crash down to $42k a few days back, BTC's price further plunged down to $41k yesterday | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com