Crypto markets, especially Bitcoin, have been shrouded in a cloud of worry and panic for about 3 months. Every guess and prediction continues to fail, every rally is followed by another crash, BTC struggles to climb back to USD 40,000. Once the torchbearer of optimism, Bitcoin is now the number one cause of concern, and its effect can be seen in market sentiment.

Fear and greed

Sentiment is one of the biggest driving factors in the crypto markets. Be it the news of Ethereum’s new upgrade or the refusal of BTC to buy due to environmental hazards by a certain influencer * cough, cough *; Instead of looking at the numbers first, people hear and act. Such movements show the influence that people have on a cryptocurrency and vice versa.

Hence, the Fear and Greed Index is the best indicator when it comes to understanding market sentiment. The numbers drawn in this index are the result of combining the values ​​of several other indicators.

Right now, the Bitcoin market is not in good shape. On the index, the king coin had a rating of 25, which meant extreme fear. BTC has been flickering in this area for a few days.

Values ​​of the fear and greed index | Source: Santiment

Why is that important?

This index has proven to be comparatively accurate compared to other indicators. Every time the index hits the bottom, the coin bounces back. If you look at the index from March to April 2020, you can see that the index was the lowest this year with only 9 points. This indicated that the market was in extreme fear at the time. At the moment the situation is almost similar. The index is back in the 10-20 range and the coin is dictating extreme fear in investors’ minds.

Fear and Greed (April 2020) shows rally after reaching the low | Source: Santiment

However, this can also be seen as a good sign. As I said, if the index falls, the coin will pick up a bullish pace shortly thereafter and shoot up. And since fear is actively gripping the market, there is only one way up. Such a spot is also considered a good time to buy, as Bitcoin currently has the lowest average trader returns in 14 months.

Bitcoin 1 year MVRV | Source: Mood

In the past few weeks, too, capital from stablecoins has flowed back into the Bitcoin market. This observation comes from the stablecoin supply ratio (SSR) oscillator, which fueled a few weeks ago and has just started an uptrend in the past few weeks.

Bitcoin SSR oscillator | Source: Glass knot

In addition, active addresses have increased, which is a positive sign for Bitcoin.


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