Crypto Fear And Greed Index Is Still Pointing To “Extreme Fear”
The metric uses a numeric scale that runs from zero to hundred for representing this sentiment. All values greater than fifty imply that investors are greedy at the moment, while those below the threshold signify a fearful market.
Edge values of above 75 and below 25 mean holder sentiments of “extreme greed” and “extreme fear,” respectively.
Looks like the value of the indicator has been very low recently | Source: Arcane Research's The Weekly Update - Week 24, 2022
As you can see in the above graph, the crypto fear and greed index has a value of 9 right now, suggesting that the market is extremely fearful.
Such low sentiment values have now persisted for two months now, making this the longest extreme fear run the market has ever seen.
Historically, streaks with extreme fear have been when coins like Bitcoin have tended to form bottoms (and similarly, tops have occurred during extreme greed).
Because of this, some analysts believe an extremely fearful market can provide fresh buying opportunities for cryptos.
Related Reading | Bitcoin “Diamond Hands” Start To Break As 1yr+ Supply Ramps Up Selling
The trading technique that follows this idea is called “contrarian investing.” This famous quote from Warren Buffet encapsulates the philosophy: “be fearful when others are greedy, and greedy when others are fearful.”
If the historical trend is anything to go by, the current long run of extreme fear may be when Bitcoin and other coins observe bottoms. And if so, now may be when a contrarian investor will believe to be an ideal buying point.
The below chart shows the trend in the price of the coin over the last five days.
The value of Bitcoin seems to have dropped down over the past day | Source: BTCUSD on TradingView
Featured image from Thought Catalog on Unsplash.com, charts from TradingView.com, Arcane Research