Last week, Bitcoin sentiment shifted to greed for the first time in four months, but then fell back into fearful territory amid the current geopolitical and macro uncertainties.
Bitcoin Fear and Greed Index Slips Down From Four Months High
According to the latest weekly report by Arc Researchthe sentiment of a crypto market once again dropped to fear after briefly entering greed last week.
The “index of fear and greed” is an indicator that tells us about the overall investment sentiment in the Bitcoin and broader crypto market.
The metric uses a numerical scale, ranging from zero to one hundred to represent this feeling. All values above the “fifty” mark mean that investors are currently greedy.
On the other hand, values below this cut imply that the market is fearful at the moment. Extreme values of above 75 and below 25 belong to the “extreme greed” and “extreme fear” territories, respectively.
Some investors think that buying while the market is extremely timid is the best because funds often tend to occur during such periods.
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Similarly, selling at extreme greed may be a viable strategy due to historical peak formations in such periods. This philosophy is often called the “opposite investment”. This quote from Warren Buffet sums it up best:
Be timid when others are greedy, and greedy when others are timid.
Now, here’s a chart that shows the trend in Bitcoin’s fear and greed index over the past year:
Looks like the value of the indicator is at 46 right now | Source: The Arcane Research Weekly Update - Week 6
As you can see in the chart above, more than a week ago, the metric observed some sharp upward trend as it crossed the 50 mark for the first time in four months.
However, since then, the value of the index has declined, and now the sense of the Bitcoin market is once again that of fear.
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The report suggests that this trend may be due to broader financial markets slipping in response to current geopolitical and macro uncertainties.
Also, according to some other data, the Bitcoin leverage ratio fell sharply over the past week, further suggesting that investors have reassessed their risk.
At the time of writing, the price of Bitcoin is floating around $ 44.2k, up 1% in the last seven days. Over the past month, the crypto has gained 3% in value.
The chart below shows the trend in the price of BTC over the last five days.
BTC's price has surged up over the past couple of days | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, Arcane Research