Corruption fear index hits 2-year low
Recently, the sluggish trend of Bitcoin ($BTC) has plunged the entire cryptocurrency market into an atmosphere of silence. According to data from Glassnode, the Cryptocurrency Fear and Greed Index, an important indicator for tracking market sentiment, has fallen on July 9. to 27, touching its lowest level since January 2023.
The Crypto Fear & Greed Index is an indicator used to measure market sentiment. The value ranges from 0 to 100. The lower the value, the more fearful the market is. The higher the value, the more greedy the market. The index takes into account a variety of factors. Factors, including volatility, market trading volume, social media popularity, etc., comprehensively reflect investor sentiment fluctuations.
This number of 27 undoubtedly means that the current market is in a state of extreme panic, and many people are worried that the price of Bitcoin will fall further. However, experts point out that judging from historical data, the too low fear and greed index may also indicate that Bitcoin is preparing to bottom out and usher in the dawn of a rebound?
Bitcoin may be ready to hit bottom
It is worth noting that, judging from Glassnode’s chart, the last time the fear and greed index was such a low was in January 2023, only two months after the collapse of the cryptocurrency exchange FTX, and the fear and greed index was at the same level that month. It fell to a low of 26.
When the Fear-Greed Index hit 26 in early January 2023, Bitcoin was trading around $16,500, but the price has since reversed course and by the end of January was trading near $22,000.
As for whether the market will see a similar rebound this time, investors are paying close attention to it.
The other side of the story
Interestingly, despite rising market panic and increased pressure from the German government’s sell-off and Mt. Gox repayments, there are also some positive data values that have attracted the attention of experts.
First, Bitcoin exchange reserves, or the amount of Bitcoin held by exchanges, have declined steadily since 2021 and are now at multi-year lows. This means there are fewer Bitcoins circulating in the market, which acts to offset selling pressure.
In addition, the miner supply ratio and miner position index also show that miner reserves have been exhausted, and the selling pressure of miners should be minimized at this time. This also indicates that the selling pressure in the Bitcoin market may decrease, helping to stabilize prices.
In the face of the recent decline in the price of Bitcoin, fund investors responded by buying on dips. Amid the downturn in the cryptocurrency market, 11 Bitcoin spot ETFs in the United States raised US$295 million on July 8. It set the largest single-day net inflow in more than a month, showing that market sentiment is panic, but institutional investors are still optimistic about the long-term prospects of Bitcoin.
Overall, the current market sentiment index shows extreme panic, but this is not necessarily a bad thing. Historical data shows that when market sentiment reaches extreme panic, it is often a precursor to price bottoming out. In the next few weeks, investors should pay close attention to the market sentiment index and related data, adhere to investment strategies and manage risks well. They may also wish to be optimistic and look forward to another rebound in the Bitcoin market.
This article is reproduced in cooperation with: CryptoCity
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