The crypto market this yr noticed some ups and downs that had market sentiment fluctuating broadly. Investors had skilled a yr like no different given the a number of bulls runs and subsequent crashes and dips that then plagued the market. For some, it was one of the best yr after their portfolios lay within the crimson for the previous three years, whereas for others, particularly those that acquired in on the peak of the bull rallies, it has been a brutal yr.
Nonetheless, it has been a yr full of classes for all buyers. Moving from extremely bullish to bearish has helped educate buyers that it can’t at all times be darkish, neither can it at all times be vibrant. In this report, we check out the sentiment actions within the yr and the way feelings have moved with the market.
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Crypto Fear & Greed Index Fluctuates
Entering into the yr had investor sentiment at one in every of its highest. Right within the excessive greed territory, the more and more optimistic outlook of buyers would play out over the subsequent couple of months within the market. For 4 months, market sentiment was in excessive greed, and religion in cryptocurrencies remained excessive. However, this could change not too lengthy after.
The very first notable price crash within the crypto market had occurred in May, which noticed market sentiment plummet with it. After staying within the greed territory for thus lengthy, the sentiment was all of the sudden in concern and buyers had been cautious of the market. This continued by many of the summer time as market-wide dips continued to rock the market, in flip dragging sentiment extra into the destructive.
By spring, nonetheless, the market had as soon as once more begun to rally. Sentiment, slowly however absolutely, moved out of the concern territory and went into impartial, hovering between this and greed.
Fear & Greed Index fluctuates broadly in 2021 | Source: Arcane Research
August would market the start of one other stretch of optimistic sentiment because the market as soon as once more dived into greed territory. This was adopted by rallying costs, with investor favorites hitting new all-time highs.
This would show to not final lengthy as sentiment as soon as once more derailed again into the destructive following the September seventh market crash. The Fear & Greed Index would once more pattern low till one other rally in the direction of the top of September introduced it again up once more. This time round, the market sentiment would spend a substantial period of time within the greed territory earlier than reversing once more.
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Investors who’re principally seasoned have used instruments just like the Fear & Greed Index to revenue off the crypto market this yr. So whereas others have been afraid of placing cash within the market, these buyers have doubled down on their investments and have seen it repay. Arcane Research predicts that this pattern will proceed into 2022 and can assist buyers spot “buy the dip” alternatives within the coming yr.
Presently, the Fear & Greed Index is trending low at round 40, indicating that buyers are scared of the market.
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Featured picture from Institute of Entrepreneurship Development, charts from Arcane Research and TradingView.com