After hitting a high fear value on 9th of July, the famous Bitcoin Fear and Greed Index seems to be more volatile and positive as the market sentiment is changing. As of July 12, 2022, the index value has gone down to around 16, indicating that traders are growing more risk averse in the coming phase of the market compared to the last week.
The crypto market can be very much based on sentimental and emotional value. The index of fear and greed is relevant because it plays an important role in understanding how the trading community perceives the risk of buying/trading bitcoin. The market tends to get greedy when the market is rising which results in FOMO (Fear of Missing Out). Also, people often sell their coins in the irrational reaction of seeing red numbers.
The fear and greed index is based on the following factors:
- Market Volatility
- Market Momentum
- Social Media (Sentiment)
- Search Trends
- Relative dominance of Bitcoin
The mood of the market around bitcoin has recently changed. Even though the currency fell more than 60% in this quarter, after an initial period of panic, now traders and investors seem to be believing that the coin might have finally bottomed out and is on the way to recovery. The reasons could be many, and due to the diversity of the market, our guess could only be speculative. We think that the recent events that affected Bitcoin price have to do with a change in sentiment. Federal Reserve’s Christopher Waller said that any kind of recession is unlikely to hit the USA, meaning that traders in the cryptoverse could be breathing easier now. Also notable is that many analysts have put forward theories about a price rise. Notably, Deutsche Bank’s Analysts predicted that bitcoin will close at 28,000 USD this December. While JP Morgan also indicated that the worst might be over. The HODLers have been more optimistic this cycle as well. Glassnode’s Analyst James Check has mentioned in an interview recently, that people have been more ‘sure’ of holding bitcoin, not giving it away even in extreme market conditions.
There could soon be a recovery for cryptocurrencies, especially the world’s most beloved one – bitcoin. It may be too soon though to comment on numbers and predictions, but if past is any lesson, this is the time to buy and hold to gain profits.