As a researcher with experience in the cryptocurrency market, I find the sudden plunge of the Crypto Fear and Greed Index into the “Fear” zone with a score of 30 to be a concerning development. The steep day-to-day drop from a week ago when it stood at 74 in the “Greed” zone is significant and indicative of a shift in market sentiment.
The Crypto Fear and Greed Index, a tool that gauges investor emotions towards Bitcoin and the crypto market, has plunged to its most pessimistic level in approximately 18 months.
This development follows bitcoin’s drop below $60,000, reaching its lowest point since early May.
Crypto Fear & Greed Index Plummets
On June 24, the index experienced a significant decrease of 21 points, bringing its fear level to 30 and moving it into the “Fear” zone. This represents one of the most pronounced daily declines seen in recent history, as it had been in the “Greed” zone with a reading of 74 only a week prior.
In the last 24 hours, Bitcoin underwent a significant decrease in value, dropping by more than 4% and hitting a seven-week low of around $58,400 on June 24. However, it has since bounced back and is currently trading at $61,115 as per CoinGecko’s latest report.
Multiple elements have fueled this wave of fear. In the previous 10 business days, Bitcoin exchange-traded funds on the spot market have experienced substantial outflows totaling over $1 billion. Additionally, rumors that the insolvent Mt. Gox exchange could sell off approximately $8.5 billion in Bitcoin to settle debts have heightened the anxiety.
Starting in July 2024, Mt. Gox’s trustee declared repayments to around 127,000 creditors will commence using Bitcoin (BTC) and Bitcoin Cash (BCH). This development comes over ten years after the exchange’s downfall in 2014. Simultaneously, sources from Arkham Intelligence disclosed that Germany has initiated sales of a portion of its bitcoin holdings.
Experts Suggest Market Overreaction
As a crypto investor, I’ve noticed some concerns in the market lately regarding potential developments in Germany and Gox. However, I want to reassure you that, based on what Samson Mow, an executive at Galaxy Digital, has shared, these fears might be overblown. He emphasized during X that there isn’t a massive sell-off from these sources, and the recent bitcoin dip is more a result of sentiment and fear rather than large holdings being sold off.
Large entities’ actions in the market, such as selling large quantities of stocks, don’t necessarily indicate a market sell-off. In fact, these entities have the power to influence the market less frequently than individual investors might assume. For instance, remember the significant imbalance in ETF inflows a few weeks ago? These discrepancies often reflect more subtle movements within the financial world.
— Samson Mow (@Excellion) June 24, 2024
As an analyst, I’d like to add some depth to Mow’s observation. When large entities announce sales, many people assume it’s a market signal because they often engage in buying and selling activities themselves. However, Mow cautions against jumping to conclusions too quickly. Why? Because large entities are adept at not swaying the market significantly.
The Crypto Fear & Greed Index is a tool that considers several aspects, such as market instability (25%), trading activity (25%), the influence of bitcoin (10%), and tendencies (10%). Reaching an extreme score of 90 in the “Extreme Greed” area on March 5, coinciding with BTC‘s peak price of $69,000, marked the beginning of a descending trend for the index.
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2024-06-25 16:19