The Bitcoin sentiment index, the Crypto Fear and Greed Index, has reached the lowest score in the last 18 months, dropping to “fear” levels. This weakening of market sentiment is fueled by two main concerns.
That is, the possible sale of 8.5 billion dollars of Bitcoin by Mt. Gox and the recent significant outflows from spot Bitcoin ETFs in the United States. The combination of these factors has generated uncertainty and fear among investors.
Let’s see all the details below.
Bitcoin Fear and Greed Index: Mt. Gox and the threat of an 8.5 billion dollar dump
As anticipated, the Crypto Fear and Greed Index, which measures the market sentiment for Bitcoin and the broader cryptocurrency sector, has reached the lowest score in nearly 18 months.
The index dropped by 21 points on June 24, reaching the “fear” zone, marking one of the largest daily declines in recent years.
This drastic drop reflects an increase in concerns among investors, which translates into significant uncertainty and volatility in the cryptocurrency market.
The last time the index was in the fear zone (a score between 24 and 50) was about seven weeks ago, on May 3. However, it has not touched a score below 30 since January 11, 2023.
That is when Bitcoin was being traded at $17,200, just two months after the collapse of the cryptocurrency exchange FTX. Last week, around this time, the score was 74 in the “greed” zone.
Outflows and fears of mass selling fuel the fear
The negative sentiment has arrived amidst the outflows from spot Bitcoin exchange-traded funds: over 1 billion dollars in the last ten trading days.
To this is added the news that Mt. Gox might be preparing to sell 8.5 billion dollars of Bitcoin to its creditors, while Germany has also started selling some of its Bitcoin reserves.
These combined factors have further fueled fear in the market, leading to a significant drop in the value of Bitcoin.
Despite these concerns, an executive from the cryptocurrency investment company Galaxy Digital believes that the market might be reacting slightly excessively to the concerns of Mt. Gox.
However, other factors, such as the sale of Bitcoin by miners due to a declining network hashrate, may have further contributed to weakening market sentiment.
Will Bitcoin withstand the pressure?
Currently, Bitcoin is trading at around $60,300 after dropping to a seven-week low on June 24. The crucial question now is whether BTC’s price support at $60,000 can hold.
The Crypto Fear and Greed Index takes into account market volatility (25%), trading volume (25%), Bitcoin dominance (10%), and trends (10%). In the past, it considered surveys (15%), but this metric is currently on hold.
The score has had a downward trend since it achieved a score of 90 “Extreme Greed” on March 5, when Bitcoin surpassed its previous all-time high price of $69,000 set in November 2021.
This continuous decline in the index score suggests that investors are becoming increasingly cautious and uncertain about the future of Bitcoin and the cryptocurrency market in general.