The Crypto Fear and Greed Index, a barometer of investor sentiment in the cryptocurrency market, has hit its lowest level in nearly 18 months. The Crypto Fear and Greed index, which tracks emotions surrounding Bitcoin and other cryptocurrencies, dropped sharply as Bitcoin fell below $60,000, its lowest point since early May.
Market Sentiment Turns Fearful
On June 24, the index plummeted by 21 points to reach a score of 30, indicating a shift from “Greed” to “Fear” within a week. This sudden drop is one of the most significant declines in recent years, reflecting heightened uncertainty among investors.
The Crypto Fear and Greed Index considers several factors including market volatility, trading volume, bitcoin’s dominance, and trends. Since its peak score of 90 in the “Extreme Greed” zone on March 5, coinciding with Bitcoin’s high of $69,000, the index has been on a declining trend, reflecting shifting investor sentiment.
This situation underscores the volatility inherent in cryptocurrency markets, where sentiment can rapidly sway from optimism to fear, influencing prices and investor behavior worldwide.
Simultaneously, Bitcoin’s price saw a steep decline of over 4% within 24 hours, hitting a seven-week low of approximately $58,400 before showing signs of recovery. As of the latest data from CoinGecko, Bitcoin is trading around $61,115.
Contributing Factors to Decline on Crypto Fear and Greed Index
Several factors contributed to the market’s fear. Notably, Bitcoin exchange-traded funds (ETFs) experienced outflows exceeding $1 billion over the past 10 trading days. Additionally, reports of the bankrupt Mt. Gox exchange potentially liquidating $8.5 billion in BTC to settle debts further added to market uncertainty.
On June 24, the rehabilitation trustee of Mt. Gox announced plans to commence repayments in Bitcoin (BTC) and Bitcoin Cash (BCH) to its creditors starting in July 2024, more than a decade after the exchange’s collapse in 2014. Reports also surfaced indicating that Germany has initiated the sale of some of its bitcoin reserves, adding to market jitters.
Expert Insights and Market Reaction
Despite the tumultuous developments, experts like Samson Mow from Galaxy Digital suggest that the market’s reaction may be exaggerated.
Mow emphasized that recent dips in Bitcoin’s price are driven by sentiment and fear, rather than significant sell-offs by large entities like Germany or Mt. Gox. He pointed out that such entities are adept at managing their trades without causing major market disruptions.
