Bitcoin Fear & Greed Index Is Currently Deep Into The Fear Region

The “Fear & Greed Index” is an indicator devised by Alternative that basically tells us about the sentiment the average trader holds towards the Bitcoin

The Bitcoin Fear & Greed Index is currently indicating extreme fear in the market. This reading comes after a recent crash in BTC’s price, which has caused a sharp shift in sentiment.

The Fear & Greed Index is a metric that gauges the overall feeling among traders towards the Bitcoin and broader cryptocurrency market. It uses data from five key factors to determine the sentiment, including volatility, trading volume, social media sentiment, market cap dominance and Google Trends.

The indicator assigns a value on a scale from 0 to 100, with anything above 53 indicating greed and anything below 47 suggesting fear. The middle ground between these two thresholds corresponds to neutral sentiment.

Here's a snapshot of the current Bitcoin Fear & Greed Index reading:

As you can see, the index is currently showing a value of 26, which firmly places the market in the fear zone. In fact, this reading is close to qualifying for the extreme fear territory.

Extreme fear, as indicated by the index dipping below 25, corresponds to intense bearish sentiment in the market. On the flip side, there's also an extreme greed zone, which occurs when the index rises above 75.

Interestingly, just a week ago, the Bitcoin market was on the cusp of the extreme greed territory, but as the chart below shows, it has now shifted to the complete opposite end of the spectrum.

The reason behind this drastic change in market sentiment is, of course, the bearish trajectory that BTC has followed over the past week, including the crash that occurred during the last 24 hours.

However, as the chart also highlights, the market sentiment towards the end of July was only able to reach the nearly extreme greed zone after a similarly sharp reversal in the indicator from fear levels like the ones we're seeing now.

Those lows in the metric during the first half of July ultimately marked a bottom for the asset, and as it turned out, the nearly extreme greed values at the end of the month ended up forming a top.

This pattern is something that has been historically observed; Bitcoin has tended to make moves in the direction that's opposite to what the crowd expects. Among the extreme zones, this contrarian behavior is usually the most likely.

However, given that the last couple of reversals occurred just outside these zones, it's possible that we could see another one for the cryptocurrency at the current nearly extreme fear level.

It remains to be seen how the sentiment among Bitcoin traders will evolve in the coming days and whether a drop into the extreme fear zone will indeed materialize.

BTC Price Chart Shows Recovery After Crash, Could Fear Shift to Greed Again?

Bitcoin price took a hit and crashed below the crucial support of $50,000 on Monday. However, since then, BTC has shown some recovery and is currently trading around $54,800 at the time of writing.

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