Consolidation Takes Its Toll: Bitcoin Investors No Longer Greedy

Keshav Verma

3 weeks ago

3 mins read

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Data shows the Bitcoin Fear & Greed Index has returned back to the neutral territory, a sign that investors are losing optimism.

Bitcoin Fear & Greed Index Has Reset Back To Neutral

The “Fear & Greed Index” refers to an indicator created by Alternative that tells us about the average sentiment present among the traders in the Bitcoin and wider cryptocurrency markets.

The index makes use of the data of these five factors in order to determine the trader mentality: trading volume, market cap dominance, volatility, social media sentiment, and Google Trends.

The indicator represents the calculated sentiment as a score lying between zero and hundred. Values above the 54 mark correspond to the dominance of greed in the market, while those below 46 to presence of fear among the investors. All values lying between these cutoffs correlate to a net neutral sentiment.

Now, here is how the mood in the Bitcoin market is like right now according to the Fear & Greed Index:

As is visible above, the Bitcoin Fear & Greed Index has a value of 54 at the moment, which suggests the investors hold a neutral sentiment, although one that’s right on the edge of turning into greed.

The recent neutral mentality in the sector has come following a phase of greed among the traders, as the below chart shows.

Bitcoin Neutral — The value of the metric seems to have gone down in recent days | Source: Alternative

As displayed in the graph, the Bitcoin Fear & Greed Index spiked to a high of 72 earlier in the month as the asset’s price gave investors hope that its consolidation phase might be coming to an end.

As the recovery rally has fizzled out and the coin has returned to its range, however, optimism among the investors has predictably faded. If history is to go by, though, this development may not actually be so bad for the cryptocurrency.

Generally, digital asset markets tend to move in a way that goes contrary to the expectations of the majority. The probability of such an opposite move taking place goes up the more extreme the crowd opinion becomes.

Besides the three core sentiments, there are two special regions known as the extreme fear (under 25) and extreme greed (above 75). These zones are where the likelihood of a contrary move has been the strongest in the past, with tops and bottoms often taking form.

Although the market sentiment has recently only seen a reset to the neutral territory, the fact that the investors are no longer greedy could still be a positive for Bitcoin and other cryptocurrencies. There have been many instances in the past where a dip into the neutral zone was enough for the bull run to regain momentum.

It only remains to be seen, though, how the prices of BTC and others would develop in the coming days.

BTC Price

At the time of writing, Bitcoin is floating around the $102,800 mark, down more than 2% in the last seven days.

Bitcoin Price Chart — The price of the coin seems to have been going down | Source: BTCUSDT on TradingView

Featured image from Dall-E, Alternative.me, chart from TradingView.com

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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