Recent data indicates a significant decline in sentiment among Bitcoin traders, plunging into extreme fear as the cryptocurrency kicked off the week with a steep price drop.
Bitcoin Has Seen Another Setback To Kick Off Monday
Last week, Bitcoin sparked optimism among investors with signs of recovery, yet the start of this week has shown a rapid shift as it all but shattered those hopes.
Below is a chart illustrating the recent trajectory of the asset.
As depicted in the graph, Bitcoin was trading around $86,000 just yesterday, but has since experienced a considerable decline, now sitting at approximately $82,300.
Other digital assets have similarly seen negative returns in this timeframe, although Ethereum (ETH) has shown relative resilience, dropping only around 2%.
In light of this market-wide downturn, it’s no surprise that investor morale has taken a hit.
Crypto Fear & Greed Index Is Back In Extreme Fear Zone
The Fear & Greed Index—an indicator developed by Alternative—assesses the average sentiment prevalent among traders in the Bitcoin and broader cryptocurrency market.
This index evaluates investor mentality using five key factors: trading volume, market cap dominance, social media sentiment, volatility, and Google Trends, scoring sentiment on a scale from 0 to 100.
Scores below 47 are indicative of fear, while those above 53 illustrate a state of greed. The middle ground signifies neutrality.
Additionally, there are extreme zones: extreme greed (above 75) and extreme fear (below 26), with the market currently positioned within the latter.
Currently, the Fear & Greed Index sits at a value of 20, which is a notable decline from the 27 it recorded just a day prior, marking the sentiment as increasingly fearful.
Despite this drop, the indicator’s value remains an improvement from earlier this month when it hit a low of 15. The key question moving forward is whether sentiment will continue to decline in the upcoming days.
Historically, extreme sentiment zones have proven significant for Bitcoin and other digital assets. Periods of extreme fear often coincide with market bottoms, whereas excessive optimism tends to lead to market tops. Hence, the current plunge into extreme fear could imply that a low for Bitcoin—and potentially other assets—may be on the horizon.
