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January 20, 2022
Analysis

Crypto Market Bloodbath Creates Largest Stretch Of Fear Since April Peak

As the downtrend within the crypto market continues, so does excessive worry. What’s inspiring the sell-off? Is it Omicron? Or is it Evergrande? Is it a conspiracy? Or is it the vacations? All these questions and extra have had the Fear and Greed Index pointing left for a month straight. What does this imply? Where will we go from right here? That’s what we’re right here to discover. 

Related Reading | Blood In The Streets: Crypto Market Becomes Fearful As Bitcoin Dives

But first, let’s speak in regards to the Fear and Greed Index. One of the various Bitcoin indicators, it measures the market’s normal sentiment in the intervening time. Zero is excessive Fear. 100 is excessive Greed. And the indicator oscillates between these two at any given time. It’s been stated that the crypto market could be very emotional. The Fear and Greed Index is there to maintain buyers from making irrational selections based mostly on sentiment alone. 

Fear And Greed Index, Extreme Fear

Fear And Greed Index reveals Extreme Fear | Source: Arcane Research’s The Weekly Update

What’s The Fear And Greed Index Saying Now?

According to Arcane Research’s The Weekly Update, worry has settled in:

“The Fear and Greed Index has now signaled “Fear” or “Extreme Fear” for nearly one month straight. The final time we noticed such a protracted fearful market sentiment was firstly of the summer season when the market sentiment was fearful for greater than two months straight. With the sustained consolidation of bitcoin, the late autumn euphoria has dampened, and the general sentiment appears very unfavourable in the intervening time.”

The report additionally says that, “during steady sell-offs, bitcoin tends to outperform the overall crypto market.” And this time was no exception, BTC “outperformed all indexes so far in December, seeing a negative return of -18% after a relatively flat second week of trading this month.” On the opposite hand, “the Small Cap index has seen a lack of almost a 3rd of its worth in December.“ What does this imply on the whole?

“The bitcoin dominance has risen by 1.13% in the last week. This is the third time we’re seeing bitcoin dominance bottom at 40% in 2021. The last two times were May 19th and Sep 13th. It seems that the 40% threshold is a difficult area for alts to sustain”

BTCUSD price chart for 12/15/2021 - TradingView

BTC price chart for 12/15/2021 on Eightcap | Source: BTC/USD on TradingView.com

What Can We Expect In The Future?

To get our dose of technical and on-chain evaluation, let’s give the mic to this month’s Fear & Greed Newsletter:

“A major factor here is the cycle support band. We cannot ignore the fact that Bitcoin had just closed 2 consecutive weeks below the market support band. Historically, this meant that we’d see a longer consolidation phase before we could have a true reversal in the trend. The takeaway here is this, as long as Bitcoin closes the week below the cycle support band, we shouldn’t expect any major breakout in price to take place.”

Every canine has its day, although. Per week in the past, analyzing a really related market sentiment, NewsBTC knowledgeable you:

“A “Fear and Greed” Index on Extreme Fear ranges, in line with sure analysts, has traditionally preceded crypto market native bottoms. However, a run into new highs might see an impediment because the macro-economic outlook flip complicated.”

Related Reading | Bitcoin Price Bloodbath: Is El Salvador A “Sell The News” Event?

It’s additionally necessary to keep in mind that solely two months in the past, we had been in an identical scenario and the sentiment did an entire 180 in a matter of weeks. 

“The indicator dipped all the way down to extreme fear on 30th September, but in under two weeks the sentiment has already rebounded back to extreme greed. The report notes that this shows how fast the sentiment can change among the crypto market.”

With that being stated, and a disclaimer that this isn’t monetary recommendation, in a scenario like this there’s just one factor let’s imagine… hodl the road! 

Featured Image: PublicDomainPictures on Pixabay| Charts by TradingView

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