For the past few weeks, Bitcoin sentiment has been in the “extreme fear” range based on the Crypto Fear and Greed Index (CFGI). While Bitcoin posted some gains on Monday, the CFGI still sits in the “extreme fear” position with a ranking score of 16 out of 100.
Crypto Fear and Greed Index Remains in “Extreme Fear”
About 45 days ago, the Crypto Fear and Greed Index (CFGI) entered the extreme fear zone with a score of 22. On that day, April 15, the 24-hour bitcoin price range was between $39,823.77 and $40,709.11 per unit. Since then, markets have fallen even lower and on May 12, the value of BTC bottomed at $25,401, lower than the previous bottom last summer in July. If someone had bought BTC on May 12, it would have been up more than 24% against the US dollar today.
Despite the gains over the past two weeks, the CFGI is still in the extreme fear zone and the ranking is even lower than it was on April 15th. At the time of writing, the CFGI ranking score is 16 out of 100, but it doesn’t necessarily mean markets will remain gloomy. The CFGI hosted on alternative.me measures market sentiment and the site notes that there are two simple assumptions:
- extreme fear can be a sign that investors are overly concerned. This could be a buying opportunity.
- When investors come too greedythis means that the market is due for a correction.
However, extreme fear can also lead to more capitulation and the so-called buying opportunity can be significantly reduced. Or, one could also assume that the current timeframe is a tiered buying opportunity and people are comfortable buying BTC on the way down. The CFGI’s simple assumptions are just that, as they can be accepted as truths but may not ultimately come to fruition.
When “investors get too greedy,” as the CFGI says, it doesn’t necessarily mean crypto markets will correct. This means if someone follows such advice, they could sell BTC at a lower point than they could have made by waiting. On the other hand, there’s always that age-old investment advice that says there’s nothing wrong with taking profits on the side.
Crypto market sentiment has been in the “extreme fear” region for well over a month, according to CFGI at least. Yesterday, May 30th, the index hit a ranking score of 10, meaning the latest CFGI score of 16 is an improvement. Google Trends metrics for the search query “Bitcoin” show that interest has increased since the recent Terra fiasco.
Interestingly, data from Google Trends (GT) globally suggests that interest in Bitcoin has fluctuated for a while prior to the Terra LUNA and UST fallout. But during this particular week (May 8-14), GT data shows that the search term “bitcoin” has skyrocketed to its highest GT score (100) since the second week of June 2021. However, in the week after the Terra LUNA and UST market carnage, the GT data score for the term “Bitcoin” fell by 45%.
What do you think of the Crypto Fear and Greed Index reaching a score of 16 and remaining in the extreme fear zone? Let us know what you think about this topic in the comment section below.
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