Bitcoin in Crisis. With a score of “fear” levels, the Crypto Fear and Greed Index—an indicator of Bitcoin sentiment—has hit its lowest point in the past 18 months. Two primary worries are contributing to the decline in market mood. The recent large withdrawals from U.S. spot Bitcoin ETFs and the potential selling of $8.5 billion worth of Bitcoin by Mt. Gox. The convergence of these causes has stoked fear and uncertainty among investors.
Bitcoin Fear and Greed Index
The Crypto Fear and Greed Index, which monitors investor sentiments on Bitcoin and the cryptocurrency market as a whole, has reached its lowest point in almost 18 months, as was to be expected.
The index had one of the most significant daily dips in the past few years on June 24, when it dropped 21 points into the “fear” zone during the trading session. The cryptocurrency market is suffering severe volatility and uncertainty due to investors’ mounting fears, as demonstrated by the steep decrease that has occurred.
On May 3, around seven weeks ago, the index made its most recent entry into the danger zone, which is defined as a score between 24 and 50. However, since January 11, 2023, it has never been lower than 30. Bitcoin in Crisis: The price of Bitcoin was trading at $17,200 just two months following the bankruptcy of the FTX cryptocurrency exchange trading platform. At roughly the same time the previous week, a score of 74 was assigned to the “greed” zone.
Outflows and Fears of Mass Selling Fuel the Fear
In the past ten trading days, spot Bitcoin exchange-traded funds have experienced outflows totalling more than one billion dollars, leading to a pessimistic outlook. At the same time, there have been indications that Mt. Gox may be getting ready to sell Bitcoin to its creditors for $8.5 billion. Germany has reportedly started selling off a portion of its Bitcoin reserves. The cumulative impact of these problems has led to an increase in market concern, which has, in turn, resulted in a tremendous decline in the value of Bitcoin.
However, an executive from Galaxy Digital, a cryptocurrency investment firm, believes the market is reacting slightly too strongly to the anxieties expressed about Microsoft Gox. The negative sentiment in the market may have been caused by several other factors, such as miners selling Bitcoin because the network hash rate is decreasing.
Will Bitcoin Withstand the Pressure?
On June 24, Bitcoin in Crisis reached a low that had not been seen in seven weeks before it recovered to a trading price of over $60,300. There is a significant risk that Bitcoin’s price support of nearly $60,000 will continue to exist in the foreseeable future. The market volatility accounts for twenty-five per cent, trends account for ten per cent, and trading volume accounts for ten per cent of the total valuation. One-tenth of the index is comprised of Bitcoin, which is the dominant cryptocurrency. Surveys used to be considered a measurement, but that plan has been put on hold for now.
Since reaching 90 for “Extreme Greed” on March 5, the score has been moving lower, even though Bitcoin’s price has surpassed its all-time high of $69,000, reached in November 2021. The ongoing decline in the index score can be attributed to investors’ growing reluctance and uncertainty regarding Bitcoin and the future of the cryptocurrency market.
