According to CryptoPotato, the Crypto Fear and Greed Index, a tool that gauges market sentiment for Bitcoin and the wider cryptocurrency sector, has plummeted to its lowest level in nearly a year and a half. This comes in the wake of Bitcoin's fall below $60,000, its lowest level since early May. On June 24, the index dropped 21 points, entering the 'Fear' zone with a score of 30. This represents one of the most significant day-to-day declines in recent years and a shift from the 'Greed' zone, where it was at 74 just a week prior.
Bitcoin also saw a significant price decrease of over 4% within the last 24 hours, hitting a seven-week low. The digital currency reached a low of approximately $58,400 on June 24 before making a recovery. As per CoinGecko data, Bitcoin is currently trading at $61,115. Several factors have led to this increase in fear. Over the past 10 trading days, Bitcoin spot exchange-traded funds have experienced substantial outflows exceeding $1 billion. Additionally, reports that the bankrupt Mt. Gox exchange might be preparing to liquidate $8.5 billion worth of BTC to its creditors have heightened the uncertainty.
Despite these developments, some experts believe the market's reaction may be overblown. Samson Mow, an executive at Galaxy Digital, reassured the market that the Bitcoin dip is driven purely by sentiment and fear, not by the selling of large holdings. He emphasized that large entities are adept at not moving the market, citing the imbalance in ETF inflows a few weeks ago, where demand was 27 times the supply, yet the price remained mostly stable.
The Crypto Fear & Greed Index considers various factors, including market volatility (25%), trading volume (25%), Bitcoin's dominance (10%), and trends (10%). Since reaching a peak score of 90 in the 'Extreme Greed' zone on March 5, when Bitcoin hit a high of $69,000, the index has been on a downward trend.