The Crypto Fear and Greed Index has fallen to 29 points, the lowest printing since July 2022, when Bitcoin (BTC) fell from over $24,000 to below $21,000. Now, Bitcoin has fallen from $25,000 to almost $21,000 in just a few days and the market is feeling a stronger bearish pressure.
According to Alternative.me, the Crypto Fear and Greed Index has fallen from 47 points in August 2022, to 29 points now. Both printings represent a market with “fear,” however, the last result shows that the market could get into trouble if the trend does not change.
Despite the fact that the latest result shows “fear” in the crypto market, we could still fall below 25 and reach an “extreme fear” situation. For example, in mid-June this year, the Crypto Fear and Greed Index marked an “extreme fear” situation with 6 points. This was the moment in which Bitcoin fell below $20,000 for the first time since 2020.
It is worth taking into consideration that the Crypto Fear and Greed Index focuses on Bitcoin and analyses different aspects of this virtual currency. In order to offer a result, the team that developed the index aggregates volatility, trading volume, social media trends, Bitcoin’s dominance, Google Trends, and surveys. Thanks to all this data, they can share valuable information about the market and how they see the Bitcoin market.
As you can see in the image above, we are at the lowest point of the last month. This happened due to the fact that Bitcoin fell from $25,000 to almost $21,000 in just a matter of days. Additionally, trading volumes have also surged, showing that bears were ready to add selling pressure to the market.
But which are the reasons for Bitcoin to have fallen in the way that it did?
There might be different reasons why Bitcoin fell in the way it did in just a few days. One of the reasons could be related to mixed signals from central banks when it comes to interest rates. We have seen financial markets and cryptocurrencies recover over the last few weeks as inflation seemed to have reached a peak. This could be a signal for central banks to stop their hawkish posture and stop raising interest rates.
However, the most recent inflation data from some countries shows that inflation might still not be controlled 100%. Therefore, central banks do not discard possible interest rate hikes in the future, which would still push markets lower as capital flees from risk assets to bonds or fixed income and safer alternatives.
Another reason discussed by cryptocurrency analysts on social media networks was related to the fact that Bitcoin has broken an important ascending channel. As you can see in the chart, this is a technical pattern that has been repeated in the last few months. If history were to repeat itself, we could see Bitcoin falling lower in the future.
These are just some of the reasons why the Crypto Fear and Greed Index marked 29 points, which is one of the lowest printings in months. Therefore, we should pay close attention to what could happen to interest rates and the measures that central banks take in the coming months in order to stop inflation and cool the markets down.