Data shows the Bitcoin trader sentiment has plunged back into the extreme fear zone as the asset’s price has erased its recent gains.
Bitcoin Faces Volatility After Surge
Bitcoin and the rest of the cryptocurrency market kicked off this new week positively as prices across the sector marked a sharp improvement following US President Donald Trump’s Crypto Strategic Reserve announcement. It would appear that this optimism couldn’t last, however, as the various assets have already witnessed a retracement. Below is a chart showcasing the rollercoaster that Bitcoin has gone through recently.
As the graph shows, Bitcoin touched the $95,000 mark at the height of the surge but has since plunged to $82,600.
This means that the number one cryptocurrency has erased all its gains from the Crypto Reserve rally and has, in fact, gone even lower than where it started. Over the last 24 hours, BTC has lost around 11%. The altcoins have performed even worse on average, with Ethereum (ETH) and XRP (XRP) in the red at 13% and 14%, respectively. Given all this volatility, it’s expected that investor sentiment would have experienced a drastic shift. Indeed, the trend in the Fear & Greed Index confirms this.
Bitcoin Fear & Greed Index Overview
The “Fear & Greed Index” is an indicator created by Alternative that tells us about the sentiment of the average trader in the Bitcoin and broader cryptocurrency markets. The metric uses a numeric scale from 0 to 100 to represent the market mentality. Values higher than 53 correlate to a sentiment of greed, while those under 47 suggest the dominance of fear. The index between these thresholds implies a net-neutral mentality.
There are also two special zones: extreme greed (occurring above 75) and extreme fear (below 25). The market appears to be in the latter of these regions right now, as the latest Fear & Greed Index value displays. The indicator is currently at a value of 15, but just yesterday, it was at a much higher level of 33. Here is a chart that shows how the index has changed recently
As is apparent from the graph, the Bitcoin Fear & Greed Index fell to a low of 10 at the end of February, but optimism among investors returned as the Trump announcement came. Now, the crash has once again wiped out hope among the traders. The return to extreme fear may not be so bad for BTC and the others, however, as this zone is where their prices have historically bottomed out. It remains to be seen how much worse sentiment would have to get before a low is hit this time.
Final Thoughts
This paper offers a perceptive analysis of Bitcoin’s volatility and how it influences investor mood, shown by the Fear & Greed Index. From a jump to $95,000 with the unveiling of the Crypto Strategic Reserve to a dramatic drop to $82,600, it emphasizes the tremendous price swings Bitcoin has just gone through. This retracing removes the recent increases and causes Bitcoin to fall below its beginning point for the surge.
The price decline has caused a significant change in attitude; the Dread & Greed Index dropped to 15, suggesting overwhelming investor dread. Although Bitcoin and other cryptocurrencies have historically found support in this zone, this severe concern may indicate a possible bottoming out. The critical question is whether sentiment has further room to drop before reaching a genuine bottom.
