According to CryptoPotato, the Crypto Fear and Greed Index, a tool that measures market sentiment towards Bitcoin and the broader cryptocurrency sector, has plummeted to its lowest level in nearly a year and a half. This comes after Bitcoin fell below $60,000, its lowest since early May. On June 24, the index dropped 21 points, entering the 'Fear' zone with a score of 30. Here's one of the most significant daily declines in recent years and a move away from the 'Greed' zone, where it was at 74 just a week earlier.
Bitcoin also saw a significant drop of more than 4% in the past 24 hours, hitting a seven-week low. The digital currency hit a low of around $58,400 on June 24 before recovering. Bitcoin is currently trading at $61,115, according to CoinGecko data. Several factors have contributed to this increase in fears. Over the past 10 trading days, Bitcoin spot exchange-traded funds have seen significant outflows of over $1 billion. Additionally, reports that the bankrupt Mt. Gox exchange may be preparing to liquidate $8.5 billion worth of BTC to creditors have added to the uncertainty.
Despite these developments, some experts believe the market reaction may be overblown. Samson Mow, CEO of Galaxy Digital, reassured the market that the Bitcoin price drop was purely due to sentiment and fear, not the sale of large holdings. He stressed that large institutions are very good at not moving the market, citing the imbalance in ETF inflows a few weeks ago, where demand was 27 times the supply, but the price remained largely stable.
The Crypto Fear & Greed Index takes into account a variety of factors, including market volatility (25%), trading volume (25%), Bitcoin dominance (10%), and trend (10%). Since peaking at 90 in the ‘Extreme Greed’ zone on March 5, when Bitcoin hit a high of $69,000, the index has been trending down.
