Bitcoin Fear & Greed Index Is Currently Pointing At 'Fear'

The “Fear & Greed Index” is an indicator created by Alternative that, in short, tells us about the general sentiment present among the traders in the Bitcoin and wider cryptocurrency markets.

The recent price action in Bitcoin (CRYPTO: BTC) has instilled a sense of fear among investors, according to a key metric.

What Happened: The “Fear & Greed Index” is an indicator created by Alternative which, in essence, highlights the prevailing mood among traders in the Bitcoin and broader cryptocurrency markets.

To gauge this sentiment, the index uses data related to the following five factors: volatility, trading volume, social media sentiment, market cap dominance, and Google Trends. The indicator denotes this mood as a score ranging from zero to 100.

Investors are said to be displaying greed when the metric has a value above 53. On the other hand, anything below 47 suggests fear is dominating the market, and the region between naturally corresponds to neutral sentiment.

Here's how the current Fear & Greed Index value looks like:

Bitcoin Fear & Greed Index Fear Zone Below 47 Suggests BTC Investors Still Scared As we can see in the above chart, the Bitcoin Fear & Greed Index is currently at 34, indicating that investors are showing fear.

This current fearful mood isn’t very strong given the distance to the neutral territory. Earlier in the month, the indicator had shown particularly low values, as seen in the chart below:

On August 6, the Fear & Greed Index hit a low of 17, the lowest it had reached in over two years. When the indicator reaches such lows, it is no longer simply indicating fear but a specific mood called extreme fear.

Extreme fear is defined as the zone that occurs at 25 and below. There is a similar region on the greed side, called extreme greed, occurring above 75.

Interestingly, the extreme fear low coincided with Bitcoin’s bottom at levels below $50,000. This aligns with an observation that has been noted throughout the asset’s history.

BTC tends to move in a manner opposite to the majority’s expectations, and these extreme sentiment zones are where we can expect this anticipation to be at its highest. Hence, it makes sense that reversals in price are also most likely to begin within them.

With the sentiment currently in the normal fear territory and the Bitcoin price consolidating, another foray into extreme fear may be necessary if Bitcoin has to kickstart fresh bullish momentum. It remains to be seen how the indicator pans out in the coming days.

BTC Price Action: Bitcoin has been unable to find a solid break above the $61,000 level recently, and it seems the latest attempt may have ended in another failure as BTC retraced to $60,800 at the last check.

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