Bitcoin Sentiment Turns Neutral As BTC Plunges Below $29,000

Data shows the Bitcoin market sentiment has turned neutral today as the price of the cryptocurrency has taken a plunge below the $29,000 level.

Bitcoin Fear & Greed Index Has Retreated To “Neutral” Territory

The “Fear & Greed Index” is an indicator that tells us about the general sentiment among investors in the Bitcoin and wider cryptocurrency market. This metric uses a numeric scale that runs from 0-100 for representing this sentiment.

All values of the index above the 50 mark imply that investors are greedy currently, while those below this threshold suggest the market is fearful right now.

While this split may be even in theory, the territory on the boundary of these ranges is generally considered to belong to a “neutral” sentiment. To be more specific, the values between 46-54 may signify a neutral market.

Besides these three sentiments, there are also two other “extreme” ones, namely “extreme fear” and “extreme greed.” The former of these occur at values less than 25 and holds significance as the region where cyclical bottoms have historically formed for the cryptocurrency.

Similarly, the latter region, which takes place above a value of 75, is where tops have generally taken shape for the market. Because of this apparent relationship with the price, some investors believe it’s best to buy during extreme fear and sell during extreme greed.

Followers of this idea are called “contrarian investors,” as they go against the grain to make their moves. Warren Buffet‘s famous quote also echoes the same philosophy: “Be fearful when others are greedy, and greedy when others are fearful.”

Now, here is a chart that shows how the Fear & Greed Index’s value has changed for the Bitcoin and wider cryptocurrency market during the last year:

The value of the metric seems to have plunged during the past day | Source: Alternative

As shown in the above graph, the Bitcoin Fear & Greed Index had mostly been inside the fear and extreme fear territory during the bear market, but with the rally that started this year, the indicator sharply recovered to neutral values.

Since then, the metric has been able to maintain at or above neutral values, except for a temporary plunge back inside the fear zone last month. However, in the past few weeks, the market had been able to hold a constant sentiment of greed as the asset’s price rode a strong bullish momentum.

Over the last couple of days, the investor mentality has taken a hit following the plummet in the BTC price below first the $30,000 level, and now the $29,000 level.

Currently, the metric still has a value of 52, which suggests that the sentiment is still not far off from the greed territory. However, this shift towards neutrality is still notable, as the last time the indicator had similar values was more than a month ago.

It now remains to be seen whether the market can regain its optimism, or if the decline in the sentiment would continue in the near future, and the metric would sink back inside the fear zone.

BTC Price

At the time of writing, Bitcoin is trading around $28,800, up 5% in the last week.

Looks like BTC has plummeted | Source: BTCUSD on TradingView

Featured image from Kanchanara on Unsplash.com, charts from TradingView.com, Alternative.me